Boom and crash, 1920-29

The 1920’s economic boom

·       Brief post-war recession 1920-21

·       UE never rose above 3.7% and inflation never higher than 1% 1922-29

·       Work fewer hours in week – 47 hours 1920 – 44 hours 1929

·       Real wages rose by 14% for industrial workers 

·       Production of industrial goods rose by 50% 1922-29

·       GNP - $104 billion 1929 - $853 million worth radios sold 

Reasons for prosperity

Government policies:

·       3 Republican presidents believed in laissez-faire= little govt intervention, free market with little restrictions (did intervene a bit):

1.       Warren Harding 1921-23

2.       Calvin Coolidge 1923-29 

3.       Herbert Hoover 1929-33

·       High Tariffs:

Fordney-McCumber Act 1922= raised import tariffs – cheaper to buy local produce than abroad

·       Tax reductions:

Federal taxes 1924, 26, 28 = benefit wealthy = Mellon tax cuts $3.5 billion = Coolidge surplus of $677 million 1927

·       Few regulations:

Lack of regulation = fixed prices between companies = company profits = no stopping of child labour = 1920’s 56-hour week wages rarely rose 

Technological advances:

·       Mass production:

Henry Ford = first assembly line 1913 = 50% motor industry by 1924 = prices went down = 1920 1,250,000 a year = 1925 $290

Electricity rise = Westinghouse produced electrical equipment

Production line = Ford = everyone worked around it = no breaks = operatives were robots = Ford dictator = not tolerate trade unions + private police force to maintain order

Increased clothing industry, labour-saving devices = standard clothing sixes WW1 = 

·       Motor vehicle industry:

Argued most dramatic increase = 1920 7.5 million automobiles for pop of 106,000,000 = 1929 27 million cars = 1 for every 5 people 

Big three = Ford = General Motors = Chrysler

65% worked to pay for cars = payed for on credit by 50% people 1929 

1929 motor industry employed 7% of all workers = 9% of all wages 

Detroit 120% increase between 1910 – 1920 

Biggest industry in USA = Tyre manufacture grew 170% city of Akron = stimulated Petro, Rubber, Plate Glass, Nickel, Tin, Hardwood and Copper = impactful

Temporary close of Ford 1927 five months laying off 60,000 workers losing $50 million in wages = contributed to recession of 1927 

·       Road building:

Broke with Laissez-faire

Federal Highway Act 1921 = build 10,000 miles/year by 1929 = did not keep up with growth of traffic = congestion common = 25% -> 50% of roads unfit for use, worn them out 

Growth of Garages, motels, petrol stations, car salerooms = changed USA highway landscape 

New opportunities for industry = easy move to factories = truck registrations – 1919 1 million – 3.5 million by 1929 = 15 billion gallons of petrol used = 4.5 million new cars sold 

·       Electrical devices:

Labour-saving devices = vacuum cleaners = washing machines = 1912 2.4 million electrical goods sold = 1929 160 million good sold 

Rural America without electricity in 20s

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