Unit 2H.1 - The USA, c1920-55: boom, bust and recovery
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PEARSON (PEARSON)
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Edexcel AS/A Level History, Paper 1&2
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PEARSON (PEARSON)
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Unit 2H.1 - The USA, c1920-55: boom, bust and recovery
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NO- HOOVER/POPULAR CULTURE/NEW DEAL/CHANGING STATUS OF BA/kkk
Why was there an economic boom in the 1920s (-29)?
The period 1920-29 was known as the roaring twenties in which the decade saw a period of
economic growth that confirmed the USA as the world’s greatest economy. The contribution
of the developments of big businesses had stimulated the economy as shown by the
Laissez-Faire (but was slightly the main reason because it excluded some ppl and made
situations worse by other countries retaliating). Therefore, the main reason for the economic
boom was the development of mass production. For example, the growth in car production
and ownership was the most obvious sign to most Americans that the US had entered a new
era of indulgence following the grim years of the First World War. This was because it led to
more profits and employment opportunities whilst the development of credit did contribute to
the economic boom by leading to more prosperity but did lead to more of a division between
the rich and the poor.
1) Laissez-faire
- Largely led to an economic boom in the 1920s.
- Successive Republican governments aided the development of big business through
Laissez-faire economic policies. These aimed to lower taxes and reduce government
legislation. For example, in 1922, Congress passed the Fordney-McCumber Tariff
which placed taxes on foreign goods imported into the US, such as, chemical, textiles
and farm products. This led to economic progress and a boom in the US because by
erecting a tariff wall, it increased the profits of the American chemical, dye, steel and
aluminium industries.
- Additionally, taxes on the rich were lowered from 50% to 20% in a series of revenue
acts from 1921-26. These acts also lowered the taxes on property and repealed the
gift tax. Therefore this meant that there was minimum government involvement in the
economy and so Laissez faire worked best for economic growth because it
provides individuals with the greatest incentive to create wealth.
- However, these government policies mainly benefited those in big business
and those with high incomes, meaning the poor were hardly helped at all.
Therefore it is clear that the Republican government policies were significant
in contributing to the economic boom however due to the focus on the higher
classes, they were arguably less influential than the development of mass
production methods. Cucumber tariff done nothing to deal with the problem of
agricultural overproduction which led to a fall in farm product prices and
meant that farmers faced extreme hardship in falling harvests. However
countries counteracted this by raising tariffs on American goods, damaging
the economy and the governments significance is limited due to the focus on
the higher classes. Additionally, attempts to iad black farmers failed through
legislations like McNary-Haugen Bill because the congress was dominated by
Laissez-faire.
The development of mass production methods is a significant factor when explaining the
causes of the 1920s economic boom. An example of a company which benefited greatly is
the Ford Motor Company. With mass production, Ford were producing one car a minute
cheaply and efficiently. This meant that more cars could be purchased as supply met
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