How and why did the USA achieve prosperity in the 1920's?
America achieved a degree of prosperity never seen before.
It was the age of the Ford Motor Car, Jazz, Cinema, and Stock Market Boom and of
consumerism. This prosperity only reached half the population. Poor workers, including
most blacks and farmers lived in great contrast to the rich. Society was divided and
increasingly violent through the activities of groups such as the Ku Klux Klan and of
gangsters during the period of Prohibition
October 1929 the "Roaring 20's" came to an abrupt end with the Wall Street Crash
when stocks and shares rapidly lost much of their inflated values.
Mass unemployment and the Great Depression followed.
Isolationism and its effects
At the beginning of the First World War the USA stayed neutral. It was seen as
nothing to do with the USA.
USA in the late nineteenth and early twentieth century’s became the 'melting pot' for
a huge mixture of immigrants. Loyalty was divided.
The Democrat President, Woodrow Wilson, hated the idea of war.
In 1917 Germany started its policy of unrestricted submarine warfare in the Atlantic.
The USA was forced to enter the war in defense of its own shipping. After training and
organizing essential equipment it was only in summer and autumn 1918 played an
important part on the Western Front.
100,000 American soldiers, sailors and airmen were killed. The surviving troops were
greeted as heroes as they returned. The image the soldiers gave of the fighting was
very different from the romanticised version believed by civilians.
Consequences for the USA
1920 - Warren Harding- Republican candidate was elected with 61%
His campaign included the return to 'normality'. It also defined the mood of many
people in returning to what it had been like before the war. In his opening speech as
President "We seek no part in directing the destinies of the world"
USA never joined the League which had major consequences for Europe. USA resumed
isolationism. It wasn't until 1921 that the USA officially declared the war with
Germany to be over.
During the 1920's USA had poor relations with most European countries. Many
resented the time that the USA had taken to come to their aid in the war.
During the war, US businesses had sold armaments and food to Britain and France. The
US was able to export while countries were focused on the war. By the end of the War
the US had overtaken Germany in supply of Chemical products; new materials using
plastic had been developed. USA had captured the markets that the old European
Industrial Countries had once used.
Refusal to Join the League of Nations
Wilson committed to the USA playing a leading role in policing the ToV through the
League of Nations. Most Americans now wanted to end 'entanglement' in European
affairs not ongoing commitment.
The Republican Party argued with Wilson
Senator Harry Cabot Lodge led the arguments "I can never be anything but an
American, and I must think of the United States first...The United States is the
world's best hope, but if you tangle her in the intrigues of Europe you will destroy her
power for good.
Wilson went across America trying to persuade the American people. He became so
exhausted he suffered a stroke. After this he became a semi invalid. In March 1920
there weren't enough votes in favour of the Senate for the ToV to be ratified.
"The arrangements of the Treaty of Versailles are just, but they need the support of
the combined powers of the great nations of the world"
As the USA did not accept the treaty and the League was part of the treaty. The USA
would not join the League either.
Tariff policy: The Fordney-McCumber Tariff, 1922
The encouragement of free trade under Wilson ended in 1922 when the FordneyMcCumber Tariff put high taxes on all foreign goods sold in the USA.
American goods were cheaper helping American Industries. It restored high pre-war
rates but now included Farm products. It gave the President the power to raise or
lower the rate as necessary. It was varied 37 times, 32 times by President Harding and
his successor Calvin Coolidge.
European Countries soon retaliated by putting tariffs on American made goods.
Mass Production
Ford built the motor car in 1896. The Ford Motor company was founded in 1903. 1909
the model T was produced, by 1914 he was using a moving assembly line. This meant
each worker had the same task. It now took 93 minutes to make a car instead of 14
hours.
In the 1920’2 over 1 million were produced each year. Prices went down, wages went up.
By 1925 the price was less than 3 months average wage. This had huge effects on the
economy and people lives. 4 million jobs depended on the motor industry. Modern
production techniques and electric motors saw other industries expand. Industrial
production almost doubled during the 20’s with the workforce staying the same size.
Telephones doubled. Canned fruit and veg doubled. Synthetic industries also
mushroomed, e.g. Rayon transformed the textiles industry.
Electric light and power companies prospered. Local companies became interconnected
in regional grids. Small firms merged into great utility empires. By 1930 10 large
company groups controlled 72% of country’s electric power.
The construction industry boomed, with visible signs of prosperity. New York gained a
new skyline with 20 storey sky scrapers being replaced with 60 storey high sky
scrapers
Consumer industries and advertising
Mass production techniques were used across many industries, vacuum cleaners,
washing machine, cookers, type writers, and so on. New advertising techniques were
being used – billboards, mail-order, newspapers, and radio.
Chain stores developed, e.g. Woolworths. By the end of the 1920’s the largest
companies possessed 20% of the Nations wealth, 40% of business wealth. Big
businesses grew as they bought up smaller ones.
Hire Purchase
Goods were often bought on Hire Purchase. A deposit is paid and the remaining balance
is paid off in instalments. Loans were relatively easy to get with low interest rates. As
long as wages continued to increase people could afford to pay what they owed.
Higher
wages
Boom in
sales
More
jobs
Higher
demand
Share Purchase; the stock market boom
Companies sell shares on the stock exchange to raise money for investment. Investors
bought with the hope to sell at a higher price, making profit. In 1920’s prices went up
300%
It seemed an easy way of making money, more ordinary people invested.
More profit
More people
buy shares
Prices increase
Demand goes
up
Investors began buying shares ‘on the margin’ – borrowing money to by, confident that
the money could be paid back as the value increased.
Banks would use the borrower’s house as a guarantee. Banks loaned more money than
they actually had in the deposits, confident the loans would be paid back before the
customers wanted to withdraw.
Government encouraged this with low taxes and little interference in business
activities. They believed in ‘laissez-faire’ (let them get on with making money) and
‘rugged individualism’ (make individuals responsible for their own lives)
Development in entertainment industries
1920’s many people, especially whites, were better off, and had more leisure time. More
money was spent on entertainment stimulating industry and business. All part of the
“roaring 20’s”
Jazz was popular and developed out of ragtime and blues music among the black people
in southern parts of the USA. It gave a way of black musicians gaining self-respect and
admiration.
Jazz clubs developed where young people would go. The cotton club in New York became
a famous nightclub. Black musicians such as Duke Ellington and Louis Armstrong became
famous.
Jazz style also spread with the availability of radio and early gramophone records. By
1929 10 million homes had a radio, local and national stations were set up. Radios
increased the popularity of sports; baseball, boxing, and American football.
More money and more leisure time meant more people watched sports and the
increased ownership in cars meant more could travel to watch matches.
New dances became fashionable. The Charleston, tango and the black Bottom became
popular among the young. These were sexually suggestive and frowned on by older
generations.
In the 1920’s dance marathons became poplar as did other stunts including sitting on a
flag pole or climbing the outside of a tall building. 1927 Charles Lindbergh was the first
man to fly solo across the Atlantic.
The Cinema
The most glamorous aspect of the Roaring 20’s.
By 1929 going to the movies was a national habit. 110 million people each week. Before
late 20’s movies were Silent. There were only captions. Emotions needed to be conveyed
through body language, Charlie Chaplin, and Rudolf Valentino, both famous actors.
Some were romantic others slapstick. Piano players provided appropriate background
music. Most film studios were in Hollywood, a suburb of Los Angeles. Big Film companies
developed, such as Warner Bros, Paramount and MGM. Each had large publicity
departments.
The First ‘talkie’ was in 1927 with Al Johnson starring in The Jazz Singer. After this,
silent screen stars tried to adapt their skills to the new era, many failed. Their voices
were unattractive and often didn’t match their ‘silent’ reputation.
How far was the USA a divided society in the 1920’s?
Rich V’s Poor
1920’s was a decade of contrasts. Extreme wealth and poverty. 1/3rd of the Nations
wealth was shared by 5% of the total population. National income of USA was bigger
than Britain, Germany, Japan, France and 18 other countries combined.
Blacks made up 10% population. Most lived in squalor and misery and were seen as
inferior. Many lived in the south; states of Mississippi and South Carolina were mostly
black. Living conditions in the remote cotton growing areas were appalling, especially if
compared with growing wealth elsewhere. Many blacks suffered at hands of Ku Klux
Klan.
Poor immigrants who weren't white European were seen as a threat to American culture
and living standards. Native Americans were mostly on reservations across the USA.
Some white groups did not benefit from the boom. Old industries of Northern USA
exploited these groups with bad working conditions and low wages. These included ship
building, textiles and coal mining.
In 1929 71% families had incomes under $2,500. The minimum for a decent standard of
living. Children were exploited in textile mills and in agricultural work. 2 million 14-15
year olds worked for up to 11 hours for very low wages.
Farmers struggled because of overproduction and subsequent low prices. During WW1
demand had been high for exports. Isolationism meant the introduction of tariff
barriers and with more competition many farmers fell into debt and lost land. Synthetic
fibres such as rayon reduced demand for cotton. Farmers experienced the Great
Depression before the Wall Street crash.
Race: immigration controls
Pre WW1 there was no restriction and so America had become the ‘melting-pot’ of
races and nationalities. More religions and languages were in the USA than in any other
country. Some Americans were concerned with this. Most immigrants came from
southern and Eastern Europe. Mostly Catholic they spoke languages that seemed
bewildering to those that spoke English or German. There was a feeling that recent
immigrants were inferior. A form of racial prejudice.
1917 a literacy test was imposed on immigrants. This favoured those from Northern
and Western Europe – mostly white protestant. This law was ineffective after WW1
leading to fears that millions of Europeans would flood into the USA.
In 1921 The Emergency Quotas act. Quotas were based on nationality. Number of
people admitted was restricted to 3% of all previous emigrants in 1910. Favouring
Northern/Western Europe as they were the largest group of emigrants in last 200
years.
1924 – National Origins Act. Further restrictions 3% reduced to 2%, and residency
moved back to 1890. Overall number now restricted to 150,000.
This reflected the mood of isolationism in 1920’s.
Race: The Ku Klux Klan
Black Americans in early 20th Century.
Blacks had received freedom in 1860’s from slavery, but still suffered from racial
discrimination
Segregation was legal in the southern states where the majority lived. Blacks usually
had the worst jobs and houses; they could not eat and travel with whites, and could not
expect fair treatment in courts where judges were white. Some states marriage
between blacks and whites was forbidden.
In 1896 Supreme Court gave legal approval of the ‘Jim Crow Laws’ – to treat blacks as
inferior.
In 1920’s with industrial expansion 1 million people left the south to migrate north
where there were more jobs. Conditions were better but there was still much racial
discrimination. Blacks were the lowest paid and the first to lose their jobs. Black
neighbourhoods, known as ghettos grew in some cities such as New York.
The activities of the Ku Klux Klan
The KKK preached intolerance and spread fear amongst blacks.
Klan formed in 1866, and became the focus for racist whites. Disbanded, but reformed
in 1915. It now opposed Catholics, Jews, and all foreigners as well as blacks. 1920-25
around 5 million members. Included judges, policemen, and local politicians. There were
many reasons for joining – excitement, fear if they didn’t support, or they believed
they were defending the traditional American way of life.
Klansmen met in secret at night. Some paraded in the day. They wore white sheets and
white hoods, carried American flags and at night time meetings lit burning crosses.
They spoke in code known as ‘klonversations’ and their book of rules was called the
‘kloran’
Blacks feared the Klan. They suffered acts of violence including beatings and rape.
Extreme cases included lynching. Blacks suffered murder on the slightest suspicion of
any crime being committed.
1925 – Scandal involving one leader David Stephenson who was found guilty of rape and
murder of a woman on a train. He was sentenced to life in prison.
Influence of the Klan decreased as did its membership. Racism itself was still strong.
Prohibition in the 1920’s
Drinking of alcohol was prohibited by law in the USA in the 1920’s
Jan 1919. Alcoholic drinks were forbidden through an amendment to the constitution.
The Volstead act brought this into force January 1920 defining liquor was any drink
containing 0.5% alcohol or more. This ‘noble experiment’ lasted until 1933
Moves against alcohol had started in the late 19th Century as poverty stricken homes
suffered through alcoholic activities of the father. Groups campaigned against alcohol
including Women's Christian Temperance Union, Anti-Saloon League. By 1914 12 states
of the USA were ‘dry’
During WW1, evils of alcohol were stressed further – absenteeism from work. Two
firms supplying peer, Pabst and Busch, were German. Patriotic Americans were told to
stop buying from them. By the end of the war 75% of states were ‘dry’
Supporters of prohibition were well organised. Organisation against prohibition began in
1918 with the Association against the Prohibition Amendment (AAPA). Claims of
benefits of alcohol for medicinal purposes. Attitudes varied regionally. There was more
support for alcohol in the North.
Law came into force 17th January 1920. The week leading up to this a huge quantity had
been bought from stores by those who wished to continue drinking. The expected
outburst of drunkenness did not happen. The Law came into force without major
protests. Churches held thanksgiving prayer meetings. Congregations were reminded
that it marked the end of a campaign against ‘the demon drink’. It would help cut down
social abuses.
Most Americans were either happy with the new law or resigned to it.
Groups for or against Prohibition
There were immediate problems of enforcement. Prohibition agents were appointed but
there were far too few.
Speakeasies began to appear in what had been saloons or in basements. Some disguised
as Jazz clubs. 30,000 in New York, around 200,000 across the USA. The quality of
alcohol varied, 5,000 a year died from drinking homemade moonshine.
Alcohol was smuggled across borders with Mexico and Canada. ‘Bootleggers’ brought in
alcohol and sold it at high prices.
Prohibition agents were outnumbered. Many took bribes; some went to elaborate
lengths to do their job. Izzy Einstein and Moe Smith wore disguises. They posed as
labourers, football players, college students, bus conductors, shipyard workers, truck
drivers and musicians. 3,000 speakeasies were raided. 4,900 people arrested. 3 million
bottles of spirits confiscated in the first 5 ½ years.
Organised Crime
Selling alcohol became big business and gangsters controlled much of the trade. They
supplied booze, set up speakeasies and ran ‘protection rackets’, threatening to damage
property unless they were paid to protect it.
Most famous gangster was Al Capone. He gained control of Chicago. He bribed, officials
including the police. He didn’t fear arrest and operated openly. 1,000 men were
employed in a private army. His business was reckoned to be worth $60-$100 million a
year. 227 murders in 4 years with no arrests. In the Famous St Valentine’s Day
Massacre in 1929, some of Capone’s gang, disguised as policemen, gunned down 6
member of the rival Bugs Moran gang.
It was clear prohibition was not working. After the Wall Street crash, with the onset
of the Great Depression, millions unemployed, it was easy to argue to end the
experiment. The drinks industry would then provide jobs.
1932 Presidential Election, Roosevelt promised to repeal the Prohibition law. The 21st
amendment this came into force in 1933.
Young people: fashions, flappers
In 1920’s many young women gained increased freedom. Greater wealth provided more
opportunities for leisure. Fashions changed and the conduct of some young middle-class
girls, or ‘flappers’ shocked their parents.
They cut their hair short, smoked in public, and wore rouge, lipstick and short skirts.
They stayed out late dancing. An age of frivolity and they were keen to cast aside all
social restraints.
Why did the US Stock Exchange collapse in 1929?
The Wall Street Crash, October 1929
Herbert Hoover, Republican, became President in March 1929 while the economy was
still booming.
Hoover promised the boom would continue – ‘a chicken in every pot’ and boasted ‘We in
America today are nearer to the final triumph over poverty than ever before. The poor
man is vanishing from among us.’ Within 6 months things had changed. June 1929,
overproduction in previous years led to industries cutting back on production.
September some investors began to worry about prices, warning of a crash. Some sold
their shares, during September the stock market recovered. Banks helped to restore
stability by buying vast numbers of shares.
Share prices plummeted
Late October, panic set in. 24th October, 13 million shares were sold. Banks could not
intervene by buying on this huge scale. Following days, millions of shares were sold and
prices plummeted as well. No one wanted to buy.
By 29th October, investors sold their shares for whatever they could get.
Effects were dramatic:
•
Big investors lost heavily. The Vanderbilt family lost $40 million.
•
Smaller investors had often borrowed money from banks with their homes as
security. Banks could now repossess their homes.
•
Some investors committed suicide.
•
Over 100,000 companies went bankrupt 1929-1933
•
Banks went out of business when they could not repay their investors.
•
Unemployment rose to 12 million by 1932.
•
Homeless built temporary shelters in parks. These ‘homes’ were nicknamed
Hoovervilles.
Republican government had been taken by surprise. Hoover assumed prosperity would
soon return – “Prosperity is just around the corner”. He was forced to try to help the
economy by cutting taxes, for example, and by providing soup kitchens for the
unemployed and homeless.
The Great Depression set in and became worse in 1931 and 1932.
unemployment
Reduction in
production
Economic
hardship
Slower
buying
Slow
down in
industry