The Economic Boom in America

What was the economic boom in 1920s America?

During the 1920s the American economy grew so rapidly that it became known as the 'boom'. Wealth increased and businesses became much bigger.

What is an economic boom?

An economic boom is when the wealth and prosperity of a country grows very quickly. Businesses make more profit and expand, and the standard of living rises. The cycle of prosperity begins.

Why was there more money during the economic boom of the 1920s?

A number of circumstances meant that more Americans had more money to spend.

• ❖ The GDP of the USA increased by 40% between 1922 and 1929.
• ❖ The average wage had increased by 8% between 1920 and 1929.
• ❖ Ordinary people made money buying stocks and shares.
• ❖ More credit meant that there was more money available to borrow.

Why was there more demand for goods during the economic boom of the 1920s?

Demand increased, which meant that people wanted to buy more. This was caused by various changes in 1920s America.

• ❖ Advertising encouraged Americans to 'keep up with the Joneses', and to buy the latest goods to improve their social standing.
• ❖ Companies provided for a consumer society, producing more varieties and newer versions of goods to stimulate demand and encourage people to buy.
• ❖ Consumer goods such as vacuum cleaners, radios and gramophones, were invented and mass produced. With electricity in their homes, more Americans could use these.
• ❖ Mass production meant that goods were cheaper, so more people could afford to buy them, and wanted to do so.
• ❖ Hire purchase (paying in instalments) made goods more affordable, and increased the number of people who wanted to buy them.

Why was there more production during the economic boom of the 1920s?

During the 1920s, production in America increased dramatically. This was the result of a variety of changes.

• ❖ Mass production techniques such as standardisation, division of labour and moving assembly lines meant that more goods could be made.
• ❖ The use of electricity in factories helped to increase production.
• ❖ The money given to companies through the sales of stocks and shares allowed them to increase their capacity for production.

Why did employment increase during the economic boom of the 1920s?

In 1920s America there were more jobs available, and more people were able to find work. This was the result of several factors:

• ❖ Workers were employed so that factories could meet the demand for the new consumer goods.
• ❖ The car industry became enormous, with four million workers employed in it by 1929.
• ❖ The mass production of consumer goods had a knock-on effect on other industries that produced the materials needed. For example, more cars led to more jobs in the steel, glass and rubber industries.
• ❖ New industries provided many jobs. One example is the advertising industry, which employed 600,000 people by the end of the 1920s.
• ❖ People had more leisure time. This led to more jobs being created within the service and entertainment industries.
• ❖ Workers were employed to build 400,000 km of roads across America.

Who didn't benefit from the economic boom of the 1920s?

An estimated 60% of Americans lived below the poverty line during the 1920s, and didn't benefit from the economic boom. Some groups in particular were economically vulnerable:

• ❖ Many African Americans worked in agriculture in the southern states, with unstable employment and extreme poverty. Those who moved north found that there were few employment opportunities for them in the cities, and they had to work in low-paid jobs such as domestic service and casual labouring.
• ❖ Native Americans lived on reservations with poor soil, poor education and few opportunities. Those who left found that employment opportunities were limited to low-paid and casual work.
• ❖ New immigrants suffered from discrimination, especially if they were Jewish or Catholic. Often, only the lowest-paid jobs were available to them.
• ❖ Workers in declining industries, such as coal and textiles, saw their wages fall and did not benefit from the boom.
• ❖ Casual and unskilled workers were less likely to benefit from the boom.
• ❖ Farmers and other agricultural workers didn't benefit.

How was wealth distributed during the economic boom of the 1920s?

The wealth became even more unevenly distributed in the USA, and many Americans didn't benefit from it.

How many people benefitted from the economic boom of the 1920s?

78% of the profits made in the 1920s belonged to just 0.3% of the population.

How many lived in poverty during the economic boom of the 1920s?

An estimated 18 million Americans lived in poverty in in the 1920s.

How many were unemployed during the economic boom of the 1920s?

Approximately two million people were unemployed at the end of the 1920s.

Which industries didn't benefit from the economic boom of the 1920s?

Although many industries thrived in America in the 1920s, others went into decline, and their workers suffered lower wages and higher unemployment. These included:

• ❖ Agriculture.
• ❖ The textiles industry.
• ❖ Coal mining.
• ❖ Shipbuilding.
• ❖ Railways.