IGCSE History
Depth Study: America
isabelle
,Factors leading to the economic boom in the 1920s
Industrial strength
The USA had the ability to produce the goods efficiently with all the factors of
production and knowledge of producing outputs at the lowest cost. It was a vast
country having rich natural resources allowing them to lead in production, growing in
industrialization, and growing agricultural power. Having rich natural resources
allowed the country to self-sustain without the need to import from other countries,
allowed them to mass produce outputs and lead in produce. Most of its growing
population lived in towns and cities, working in industry and commerce. They
became an important market for the country, forming mass consumption. The dense
population in towns and cities also provided a strong and large workforce for the
production, contributing to the mass production.
There was also continuous immigration from Europe to the USA in the years before
the War. This provided a plentiful supply of cheap labour. These resources provided
the foundation for US economic growth.
With the industrial strength, industries were increasingly skilled and professional,
growing fast into new industries, and they were selling more and more of their
isabelle
products. They were also selling to other countries, creating surplus and economic
growth. Industrial strength allowed the USA to develop further into new industries,
mass production and mass consumption. It put the resources and labour force into
good use and is the origin of other causes that led to the boom.
New industries
The car industry played a very important role in the boom of the 1920s, often leading
the way in technological change as well as stimulating the growth of other industries.
Ford introduced a much more efficient method of producing the cars-assembly line.
An electric conveyor belt carried the partly assembled car at a regular speed past
workers who stood in the same spot and did one job such as fitting on the wheels or
doors. Less time wasted, by 1913 the Ford factory in Detroit was producing one car
every three minutes. This greatly benefited the economy; firstly, the car industry used
much steel, wood, petrol, rubber and leather that provided jobs for more than five
million people. By the late 1920s, cars and the car industry were using 90 percent of
the petrol, 80 percent of the rubber produced in the USA.
Secondly, increased incomes mean buying habits were transformed; hire purchase
became a way of life for most Americans because it enabled an average family to
buy a car. Ford was also prepared to use modern advertising techniques to sell his
cars. More and more firms realised the potential of advertisements for increasing
sales and profits. Although magazines and newspapers remained the most important
,outlets, radio and cinema provided a range of new opportunities for advertisers. This
coupled with renewed confidence means people had confidence in the American
economy and were prepared to buy American goods. In comparison to the past
where people had been encouraged to save and be thrifty, they were encouraged to
spend in the 1920s.
Thirdly, it promoted road building and travel, and there was a knock-on effect on the
leisure industry: hotels and restaurants were built, opened up the suburbs and more
people were now able to use the car to travel further to their place of work. Farmers
could also get to local towns to sell the produce. Construction industry also grew
rapidly because of demand for building, factories and houses in the suburbs. The
development of new materials enabled the construction of new, taller buildings, and
more and more new roads were needed as car sales rose.
Besides, the increased growth stimulated the development of electrical goods and
electricity. Electric usage had developed slowly before the war but grew rapidly in the
1920s. By 1929 most homes in US cities had electricity. This promoted industrial
growth, as electricity provided a far more flexible and efficient form of power for
factories. Moreover, it encouraged the development of a whole range of electrical
goods such as vacuum cleaners, radios and washing machines. New retail industry
grew such as department stores as more people bought consumer goods, especially
isabelle
electrical appliances. New supermarkets opened as the people began to spend
more, helped by the availability of easy credits.
Urbanisation: The growth of industries led to urbanisation as people moved from
rural areas to cities in search of employment opportunities in factories and
manufacturing plants. This shift in population demographics transformed the social
and cultural fabric of urban centres, leading to the development of vibrant,
cosmopolitan communities.
Mass marketing
Mass marketing was important to the economic boom in the 1920s because it
stimulated the economy. In fact, the mass marketing of cars can be said to kick start
the economic boom during that time. Previously, consumer goods such as cars, were
produced on a small scale and sold at a high price. Mass marketing allowed
companies such as the Ford Motor Company to sell their cars at a low price of only
about $200, making them affordable to ordinary people. This brought a great
demand for goods such as cars. With greater demands, producers then increased
production, and in order to increase production, more labour was needed; this
created jobs for more people and gave the citizens working in the new industry a
better income. People then used their newfound prosperity and bought products from
other industries, increasing the overall demand for consumer goods in America.
, Mass marketing played a crucial role in boosting the US economy during the 1920s,
as the sophisticated marketing techniques used allowed consumers to buy products
from their own homes. Mail order companies were introduced during this time, which
allowed consumers to buy from weekly catalogues that were mailed to their uses.
This allowed a smooth transaction between the seller and buyer without barriers like
transportation. During the same period, the motorcar industry was booming, leading
to the building of billboards along roads and highways. The enormous sales of radios
also allowed businesses to devise clever commercials to entice the public into
buying their product. Lastly, the establishment of chain stores like JC Penny had a
psychological influence on the public. These chain stores served as a constant
reminder to people of what they were missing out on, hoping that people would buy
into their brand.
Mass marketing persuaded consumers to purchase which indirectly contributed to
the boom in America.
Hire purchase
In the 1920s, banks agreed to give hire purchases to customers who could not afford
to pay for expensive products outright. This meant that people had to pay monthly
instalments to the bank. Since the cost of living was falling and wages were rising,
this seemed like a sensible way to purchase goods for many people. As confidence
isabelle
in the economy grew, there were fewer risks for banks to lend money to people to
buy consumer goods. In the 1920s, banks were willing to loan up to 90% of the price
of consumer goods. Due to the hiring purchase, people were able to buy more
goods. Therefore, mass consumption occurred. In effect, businesses began to use
assembly-line production to carry out mass production; this created a cycle that
aided the economic boom in the US.
The extension of the line of credit encouraged Americans to spend and consume
more than before. In other words, the availability of hire purchases increased the
buying power of middle- and lower-class workers since they could buy something by
paying for it on a monthly basis. As a result, most Americans could afford expensive
goods and more new goods, which led to more products being introduced to the
market. The increasing consumption of Americans stimulated the economy and
increased the amount of industry, contributing to the rapid growth of America.
Republican policies
[laissez-faire] The isolationism practised by America was further coupled with a less
centralised laissez-faire economy, limiting the role of government in the economy.
This concept of rugged individualism greatly contributed to the growth of the US
economy as it gave businesses more space and autonomy from government’s rules
and regulations that would make business activities harder and more difficult to
Depth Study: America
isabelle
,Factors leading to the economic boom in the 1920s
Industrial strength
The USA had the ability to produce the goods efficiently with all the factors of
production and knowledge of producing outputs at the lowest cost. It was a vast
country having rich natural resources allowing them to lead in production, growing in
industrialization, and growing agricultural power. Having rich natural resources
allowed the country to self-sustain without the need to import from other countries,
allowed them to mass produce outputs and lead in produce. Most of its growing
population lived in towns and cities, working in industry and commerce. They
became an important market for the country, forming mass consumption. The dense
population in towns and cities also provided a strong and large workforce for the
production, contributing to the mass production.
There was also continuous immigration from Europe to the USA in the years before
the War. This provided a plentiful supply of cheap labour. These resources provided
the foundation for US economic growth.
With the industrial strength, industries were increasingly skilled and professional,
growing fast into new industries, and they were selling more and more of their
isabelle
products. They were also selling to other countries, creating surplus and economic
growth. Industrial strength allowed the USA to develop further into new industries,
mass production and mass consumption. It put the resources and labour force into
good use and is the origin of other causes that led to the boom.
New industries
The car industry played a very important role in the boom of the 1920s, often leading
the way in technological change as well as stimulating the growth of other industries.
Ford introduced a much more efficient method of producing the cars-assembly line.
An electric conveyor belt carried the partly assembled car at a regular speed past
workers who stood in the same spot and did one job such as fitting on the wheels or
doors. Less time wasted, by 1913 the Ford factory in Detroit was producing one car
every three minutes. This greatly benefited the economy; firstly, the car industry used
much steel, wood, petrol, rubber and leather that provided jobs for more than five
million people. By the late 1920s, cars and the car industry were using 90 percent of
the petrol, 80 percent of the rubber produced in the USA.
Secondly, increased incomes mean buying habits were transformed; hire purchase
became a way of life for most Americans because it enabled an average family to
buy a car. Ford was also prepared to use modern advertising techniques to sell his
cars. More and more firms realised the potential of advertisements for increasing
sales and profits. Although magazines and newspapers remained the most important
,outlets, radio and cinema provided a range of new opportunities for advertisers. This
coupled with renewed confidence means people had confidence in the American
economy and were prepared to buy American goods. In comparison to the past
where people had been encouraged to save and be thrifty, they were encouraged to
spend in the 1920s.
Thirdly, it promoted road building and travel, and there was a knock-on effect on the
leisure industry: hotels and restaurants were built, opened up the suburbs and more
people were now able to use the car to travel further to their place of work. Farmers
could also get to local towns to sell the produce. Construction industry also grew
rapidly because of demand for building, factories and houses in the suburbs. The
development of new materials enabled the construction of new, taller buildings, and
more and more new roads were needed as car sales rose.
Besides, the increased growth stimulated the development of electrical goods and
electricity. Electric usage had developed slowly before the war but grew rapidly in the
1920s. By 1929 most homes in US cities had electricity. This promoted industrial
growth, as electricity provided a far more flexible and efficient form of power for
factories. Moreover, it encouraged the development of a whole range of electrical
goods such as vacuum cleaners, radios and washing machines. New retail industry
grew such as department stores as more people bought consumer goods, especially
isabelle
electrical appliances. New supermarkets opened as the people began to spend
more, helped by the availability of easy credits.
Urbanisation: The growth of industries led to urbanisation as people moved from
rural areas to cities in search of employment opportunities in factories and
manufacturing plants. This shift in population demographics transformed the social
and cultural fabric of urban centres, leading to the development of vibrant,
cosmopolitan communities.
Mass marketing
Mass marketing was important to the economic boom in the 1920s because it
stimulated the economy. In fact, the mass marketing of cars can be said to kick start
the economic boom during that time. Previously, consumer goods such as cars, were
produced on a small scale and sold at a high price. Mass marketing allowed
companies such as the Ford Motor Company to sell their cars at a low price of only
about $200, making them affordable to ordinary people. This brought a great
demand for goods such as cars. With greater demands, producers then increased
production, and in order to increase production, more labour was needed; this
created jobs for more people and gave the citizens working in the new industry a
better income. People then used their newfound prosperity and bought products from
other industries, increasing the overall demand for consumer goods in America.
, Mass marketing played a crucial role in boosting the US economy during the 1920s,
as the sophisticated marketing techniques used allowed consumers to buy products
from their own homes. Mail order companies were introduced during this time, which
allowed consumers to buy from weekly catalogues that were mailed to their uses.
This allowed a smooth transaction between the seller and buyer without barriers like
transportation. During the same period, the motorcar industry was booming, leading
to the building of billboards along roads and highways. The enormous sales of radios
also allowed businesses to devise clever commercials to entice the public into
buying their product. Lastly, the establishment of chain stores like JC Penny had a
psychological influence on the public. These chain stores served as a constant
reminder to people of what they were missing out on, hoping that people would buy
into their brand.
Mass marketing persuaded consumers to purchase which indirectly contributed to
the boom in America.
Hire purchase
In the 1920s, banks agreed to give hire purchases to customers who could not afford
to pay for expensive products outright. This meant that people had to pay monthly
instalments to the bank. Since the cost of living was falling and wages were rising,
this seemed like a sensible way to purchase goods for many people. As confidence
isabelle
in the economy grew, there were fewer risks for banks to lend money to people to
buy consumer goods. In the 1920s, banks were willing to loan up to 90% of the price
of consumer goods. Due to the hiring purchase, people were able to buy more
goods. Therefore, mass consumption occurred. In effect, businesses began to use
assembly-line production to carry out mass production; this created a cycle that
aided the economic boom in the US.
The extension of the line of credit encouraged Americans to spend and consume
more than before. In other words, the availability of hire purchases increased the
buying power of middle- and lower-class workers since they could buy something by
paying for it on a monthly basis. As a result, most Americans could afford expensive
goods and more new goods, which led to more products being introduced to the
market. The increasing consumption of Americans stimulated the economy and
increased the amount of industry, contributing to the rapid growth of America.
Republican policies
[laissez-faire] The isolationism practised by America was further coupled with a less
centralised laissez-faire economy, limiting the role of government in the economy.
This concept of rugged individualism greatly contributed to the growth of the US
economy as it gave businesses more space and autonomy from government’s rules
and regulations that would make business activities harder and more difficult to
