This photo was taken in California by Dorothea Lange during the

Great Depression of the early 1930s. It was taken in a temporary

camp for workers who had come to California to find a job. It is
called ‘Migrant Mother’ and is one of the most famous and widely
used photographs about this period.
1 What impression does this photo give you of the woman?
2 This was a carefully constructed photo – what does the
photographer want you to feel and think and how has she
achieved that?
At the end of the First World War the USA was the richest and most powerful
country in the world. The next two decades were a turbulent time: a BOOM
then a bust; a time of opportunity for some but a time of trauma for others.
In 10A you will look at the booming US economy in the 1920s. You will look
at the causes of this economic boom and also its consequences. Most
important of all, you will investigate which Americans shared in the new
prosperity and what happened to those who did not.
In 10B you will examine the changes that took place in the 1920s,
particularly for women, immigrants and African Americans.
In 10C you will examine the economic disaster that plunged the USA into
crisis – the WALL STREET CRASH of 1929 – and how the Crash led to a deep
economic DEPRESSION.
In 10D you will look at the NEW DEAL: the measures President Roosevelt
used to help the USA recover. You will examine the range of measures taken,
the thinking behind those measures and how people reacted to them. Most of
all you will think hard about whether or not the New Deal should be seen as
a success or not.
Timeline
This timeline shows the period you will be covering in this chapter. Some of
the key dates are filled in already. To help you get a complete picture of the
period make your own much larger version and add other details to it as you
work through the chapter.
10A How far did the US economy boom
in the 1920s?
FOCUS
As you saw in Chapter 1, after the First World War President
Wilson determined that from then on the USA should take a lead in
world affairs. He proposed an international LEAGUE OF NATIONS that
would be like a world parliament that prevented aggression
between countries. As you saw in Chapter 2, Wilson failed in this
attempt. He even failed to get the USA to agree to join the League
at all.
Instead Wilson was defeated and the USA turned its back on
Europe, a policy known as ‘isolationism’. A new president, Warren
Harding, promised a return to ‘normalcy’ by which he meant life as it
had been before the war. Americans turned their energies to what
they did best – making money! Over the next ten years the USA,
already the richest country in the world, became richer still as its
economy boomed.
In 10.1 you will examine the reasons for this boom and also the
extent. You will also see that while some people in America
benefited greatly from the boom there were significant proportions
– possibly even the majority – who did not share in the boom at all.
Focus Points
• On what factors was the economic boom based?
• Why did some industries prosper while others did not?
• Why did agriculture not share in the prosperity?
• Did all Americans benefit from the boom?

What was the boom?

The ‘boom’ is the name given to the dynamic growth of the American
economy in the decade after the First World War.
In the 1920s American businesses grew more quickly than ever before. They
found faster and cheaper ways of making goods than ever before. As
production went up prices came down so ordinary people bought more
household goods than ever before: millions of fridges and cars were sold;
hundreds of millions of nylon stockings.
Many families bought new houses in the suburbs of America’s rapidly
growing cities. And with money to spare they spent more on leisure – so the
music, radio, cinema industries and even sport were booming.
Company profits were booming and confidence was booming too. Business
leaders were prepared to take risks and ordinary people were too. Banks had
money to spare so they invested it in the STOCK MARKET or lent it to ordinary
Americans to do so. The value of stocks and SHARES went up and up.
The Government built more roads than ever before. More homes were
supplied with electricity and phone lines than ever before. There was more
building being done in the boom years of the 1920s than ever before. And, as
if to symbolise the massive confidence of the time, cities built higher
skyscrapers than ever before.
It seemed that everything was going up, up, up!
This may all sound too good to be true – and it was! The whole system came
crashing down with a bang in 1929 but that is another story which you will
investigate on page 325. For now you will focus on the boom years and why
exactly American industry was so successful in the 1920s.
Think!
What was the boom?

1 These cards show nine key features of the 1920s economic

boom. Make your own set of cards – large enough to write
some information on the back.
 2 As you read this chapter write notes on each card to summarise
how this was changing in the 1920s and how it contributed to the
boom.
3 Working on a larger piece of paper, make notes about how
these different features are linked.
NB Keep your cards. They will be useful for Focus Task 10.2 on
page 303. They will also be useful for revision.

Revision Tip
Make sure you can describe at least three aspects of the boom.

Factors behind the economic boom

Industrial strength
The USA was a vast country, rich in natural resources. It had a growing
population (123 million by 1923). Most of this population was living in
towns and cities. They were working in industry and commerce, usually
earning higher wages than in farming. So these new town dwellers became an
important market for the USA’s new industries. Most US companies had no
need to export outside the USA, and most US companies had access to the
raw materials they needed in the USA.
Think!
Why did it benefit American industry to have raw materials,
especially coal, oil and cotton, so easily available within the USA?
FIGURE 1
 The USA’s main centres of population and
main natural resources around 1920.
By the time of the First World War, the USA led the world in most areas of
industry. It had massive steel, coal and textile industries. It was the leading
oil producer. It was foremost in developing new technology such as motor
cars, telephones and electric lighting. In fact, electricity and electrical goods
were a key factor in the USA’s economic boom. Other new industries such as
chemicals were also growing fast. The USA’s new film industry already led
the world.
The managers of these industries were increasingly skilled and professional,
and they were selling more and more of their products not just in the USA but
in Europe, Latin America and the Far East.
American agriculture had become the most efficient and productive in the
world. In 1914, most Americans would have confidently stated that
American agriculture and industry were going from strength to strength.
 Revision Tip
On this page and the next four there are quite a few factors
explaining the boom. Focus on two per page. Make sure you can
explain how the factor contributed to the boom.

The First World War

The Americans tried hard to stay out of the fighting in the First World War.
But throughout the war they lent money to the Allies, and sold arms and
munitions to Britain and France. They sold massive amounts of foodstuffs as
well. This one-way trade gave American industry a real boost. In addition,
while the European powers slugged it out in France, the Americans were
able to take over Europe’s trade around the world. American exports to the
areas controlled by European colonial powers increased during the war.
There were other benefits as well. Before the war Germany had one of the
world’s most successful chemicals industries. The war stopped it in its
tracks. By the end of the war the USA had far outstripped Germany in the
supply of chemical products. Explosives manufacture during the war also
stimulated a range of by-products which became new American industries in
their own right. Plastics and other new materials were produced.
Aircraft technology was improved during the First World War. From 1918
these developments were applied to civilian uses. In 1918 there were
virtually no civilian airlines. By 1930 the new aircraft companies flew
162,000 flights a year.
Historians have called the growth and change at this time the USA’s second
industrial revolution. The war actually helped rather than hindered the
‘revolution’.
When the USA joined the fighting it was not in the war long enough for it to
drain American resources in the way it drained Europe’s. There was a
downturn in the USA when war industries readjusted to peacetime, but it was
only a blip. By 1922 the American economy was growing fast once again.
Factfile
US system of government
• The federal system: The USA’s federal system means that all
the individual states look after their own internal affairs (such as
 education). Questions that concern all of the states (such as
making treaties with other countries) are dealt with by Congress.
• The Constitution: The CONSTITUTION lays out how the
government is supposed to operate and what it is allowed to do.
• The president: He (or she) is the single most important politician
in the USA. He is elected every four years. However, the
Constitution of the USA is designed to stop one individual from
becoming too powerful. Congress and the SUPREME COURT both
act as ‘watchdogs’, checking how the president behaves.
• Congress: Congress is made up of the Senate and the House of
Representatives. Congress and the president run the country.
• The Supreme Court: This is made up of judges, who are usually
very experienced lawyers. Their main task is to make sure that
American governments do not misuse their power or pass unfair
laws. They have the power to say that a law is unconstitutional
(against the Constitution), which usually means that they feel the
law would harm American citizens.
• Parties: There are two main political parties, the REPUBLICANS
and the DEMOCRATS. In the 1920s and 1930s, the Republicans
were stronger in the industrial north of the USA while the
Democrats had more support in the south. On the whole,
Republicans in the 1920s and 1930s preferred government to
stay out of people’s lives if possible. The Democrats were more
prepared to intervene in everyday life.

Republican policies
A third factor behind the boom was the policies of the Republican Party.
From 1920 to 1932 all the US presidents were Republican, and Republicans
also dominated Congress. Here are some of their beliefs.
1 Laissez-faire
Republicans believed that government should interfere as little as
possible in the everyday lives of the people. This attitude is called
‘LAISSEZ-FAIRE’. In their view, the job of the president was to leave
businesspeople alone to do their job. That was where prosperity
came from.
This was closely related to their belief in ‘rugged individualism’.
They admired the way Americans were strong and got on with
solving their own problems.
2 Protective tariffs
The Republicans believed in import TARIFFS which made it expensive
to import foreign goods. For example, in 1922 Harding introduce the
Fordney–McCumber tariff which made imported food expensive in
the USA. These tariffs protected businesses against foreign
COMPETITION and allowed American companies to grow even more
rapidly.
3 Low taxation
The Republicans kept taxation as low as possible. This brought
some benefits to ordinary working people, but it brought even more
to the very wealthy. The Republican thinking was that if people kept
their own money, they would spend it on American goods and
wealthy people would reinvest their money in industries.
4 Powerful trusts
TRUSTS were huge super-corporations, which dominated industry.
Woodrow Wilson and the Democrats had fought against trusts
because they believed it was unhealthy for men such as Carnegie
(steel) and Rockefeller (oil) to have almost complete control of one
vital sector of industry. The Republicans allowed the trusts to do
what they wanted, believing that the ‘captains of industry’ knew
better than politicians did about what was good for the USA.
FIGURE 2
 The growth of the US economy in the 1920s.
New industries, new methods
Through the 1920s new industries and new methods of production were
developed in the USA. The country was able to exploit its vast resources of
raw materials to produce steel, chemicals, glass and machinery. Electricity
was changing America too. Before the First World War industry was still
largely powered by coal. By the 1920s electricity had taken over. In 1918
only a few homes were supplied; by 1929 almost all urban homes had it.
These new industries in turn became the foundation of an enormous boom in
consumer goods. Telephones, radios, vacuum cleaners and washing machines
were mass-produced on a vast scale. MASS PRODUCTION methods meant that
huge amounts of goods could be produced much more cheaply and so more
people could afford them.
Think!
1 How could the Republicans use Figure 2 to justify their policies?
 2 How could critics of Republican policies use Figure 2 to attack
the Republicans?
Things that used to be luxuries were now made cheaper by new inventions
and mass production. For example, silk stockings had once been a luxury
item reserved for the rich. In 1900 only 12,000 pairs had been sold. In the
1920s rayon was invented, which was a cheaper substitute for silk. In 1930,
300 million pairs of stockings were sold to a female population of around
100 million.
Revision Tip
Which factors have you chosen from pages 298–301? Practise
explaining how they caused the boom rather than just describing
them.

The car
The most important of these new booming industries was the motor-car or
automobile industry. The motor car had only been developed in the 1890s.
The first cars were built by blacksmiths and other skilled craftsmen. They
took a long time to make and were very expensive. In 1900 only 4000 cars
were made. Car production was revolutionised by Henry Ford. In 1913 he
set up the world’s first moving PRODUCTION LINE, in a giant shed in Detroit.
Each worker on the line had one or two small jobs to do as the skeleton of
the car moved past him. At the beginning of the line, a skeleton car went in; at
the end of the line was a new car. The most famous of these was the Model T.
More than 15 million were produced between 1908 and 1925. In 1927 they
came off the production line at a rate of one every ten seconds. In 1929, 4.8
million cars were made. In 1925 they cost $290. This was only three months’
wages for an American factory worker.
Think!
Why were mass production techniques so crucial to production and
consumption of goods made by the new industries?
SOURCE 3
 The new roads gave rise to a new truck
industry. In 1919 there were 1 million trucks
in the USA. By 1929 there were 3.5 million.
SOURCE 4
 Ford’s production line in 1913.
By the end of the 1920s the motor industry was the USA’s biggest industry.
As well as employing hundreds of thousands of workers directly, it also kept
workers in other industries in employment. Glass, leather, steel and rubber
were all required to build the new vehicles. Automobiles used up 75 per cent
of US glass production in the 1920s! Petrol was needed to run them. And a
massive army of labourers was busily building roads throughout the country
for these cars to drive on. In fact, road construction was the biggest single
employer in the 1920s.
Owning a car was not just a rich person’s privilege, as it was in Europe.
There was one car to five people in the USA compared with one to 43 in
Britain, and one to 7000 in Russia. The car made it possible for people to
buy a house in the suburbs, which further boosted house building. It also
stimulated the growth of hundreds of other smaller businesses, ranging from
hot-dog stands and advertising billboards to petrol stations and holiday
resorts.
Think!
1 Study the information and sources on this page and make a list
of the ways in which the motor industry changed. Use the
following headings:
• Jobs people did
• Other industries
 • Where people lived
• How people lived
2 Discuss: Was the car industry more important than other factors
in changing America?

Mass consumption
It is no good producing lots of goods if people don’t buy them. Mass
production requires MASS CONSUMPTION. So, the big industries used
sophisticated sales and marketing techniques to get people to buy their goods.
New electrical companies such as Hoover became household names. They
used the latest, most efficient techniques proposed by the ‘Industrial
Efficiency Movement’.
• Mass nationwide advertising had been used for the first time in the USA
during the war to get Americans to support the war effort. Many of the
advertisers who had learned their skills in wartime PROPAGANDA now set
up agencies to sell cars, cigarettes, clothing and other consumer items.
Poster advertisements, radio advertisements and travelling salesmen
encouraged Americans to spend.
• There was a huge growth in the number of MAIL-ORDER companies. People
across America, especially in remote areas, could buy the new consumer
goods from catalogues. In 1928 nearly one-third of Americans bought
goods from Sears, Roebuck and Company catalogue. This greatly
expanded the market for products.
• Even if they did not have the money, people could borrow it easily. Or they
could take advantage of the new ‘Buy now, pay later’ HIRE PURCHASE
schemes. Eight out of ten radios and six out of ten cars were bought on
CREDIT. Before the war, people expected to save up until they could afford
something. Now they could buy on credit.
• A brand-new kind of shop emerged – the chain store – the same shop
selling the same products all across the USA.
This all worked very well as you can see from Figure 5.
FIGURE 5
 Sales of consumer goods, 1915–30. Overall,
the output of American industry doubled in the
1920s.
A state of mind
One thing that runs through all the factors you have looked at so far is an
attitude or a state of mind. Most Americans believed that they had a right to
‘prosperity’. For many it was their main aim in life to have a nice house, a
good job and plenty to eat, and for their home to be filled with the latest
consumer goods. Consuming more and more was seen as part of being
American.
In earlier decades, thrift (being careful with money and saving ‘for a rainy
day’) had been seen as a good quality. In the 1920s this was replaced by a
belief that spending money was a better quality.
There was confidence in the USA in the 1920s. Businesspeople had the
confidence to invest in the new industries, to experiment with new ideas and
to set up businesses and employ people. Ordinary Americans had confidence
to buy goods, sometimes on credit, because they were sure they could pay for
them, or to invest in industry itself by buying shares. Confidence is vital to
any economic boom.
FOCUS TASK 10.1

What factors caused the economic boom?

The diagram on the left shows you the main factors on which the
economic boom in the 1920s was based. Put a copy of the
diagram in the centre of a large piece of paper. Write notes to
summarise how each factor contributed to the boom using pages
298–303.
 Revision Tip
So have you got five or more factors which explain the boom? If
so:
• choose two factors you think were connected and practise
explaining how they were connected
• decide which one you think is the most important (or if you think
the boom cannot be explained that way, say why).

Problems in the farming industry

While many Americans were enjoying the boom, farmers most definitely
were not. Total US farm income dropped from $22 billion in 1919 to just
$13 billion in 1928. There were a number of reasons why farming had such
problems.
• Declining exports: After the war, Europe imported far less food from the
USA. This was partly because Europe was poor, and it was partly a
response to US tariffs which stopped Europe from exporting to the USA
(see page 300).
• New competitors: Farmers were also struggling against competition from
the highly efficient Canadian wheat producers. All of this came at a time
when the population of the USA was actually falling and there were fewer
mouths to feed.
• Over-production: Underlying all these problems was OVER-PRODUCTION.
From 1900 to 1920, while farming was doing well, more and more land
was being farmed. Improved machinery, especially the combine harvester,
and improved fertilisers made US agriculture extremely efficient. The
result was that by 1920 it was producing surpluses of wheat which nobody
wanted.
• Falling prices: Prices plummeted as desperate farmers tried to sell their
produce. In 1921 alone, most farm prices fell by 50 per cent. Hundreds of
rural banks collapsed in the 1920s and there were five times as many farm
bankruptcies as there had been in the 1900s and 1910s.
SOURCE 6
 A cartoon showing the situation faced by
American farmers in the 1920s.
Source Analysis
1 Do you think the cartoonist who drew Source 6 is sympathetic
towards the farmer?
2 What is the cartoonist’s attitude towards the towns and cities?
Not all farmers were affected by these problems. Rich Americans wanted
fresh vegetables and fruit throughout the year. Shipments of lettuce to the
cities, for example, rose from 14,000 crates in 1920 to 52,000 in 1928. But
for most farmers the 1920s were a time of hardship.
This was a serious issue. About half of all Americans lived in rural areas,
mostly working on farms or in businesses that sold goods to farmers.
Problems in farming therefore directly affected more than 60 million
Americans.
Six million rural Americans, mainly farm labourers, were forced off the land
in the 1920s. Many of these were unskilled workers who migrated to the
cities, where there was little demand for their labour. African Americans
were particularly badly hit. They had always done the least skilled jobs in
the rural areas. As they lost their jobs on the farms, three-quarters of a
million of them became unemployed.
Revision Tip
Falling prices, Over-production, New competitors, Declining exports
– take the first letter of each and you have FOND (this is called a
mnemonic). Make sure you can explain why each factor was a
problem for the farming industry.
It is no surprise that farming communities were the fiercest critics of the
‘laissez-faire’ policies of the Republican Party.
FOCUS TASK 10.2
Why did agriculture not share in the prosperity?
Write a 200-word caption explaining the message of Source 6.
Refer to details in the source but also use the information in the
text to explain the details, for example, the reasons why the farmer
might be looking enviously (or angrily) at the factories, or the
events that might have led to his farm being for sale.

Problems in traditional industries

You have already seen how the farmers – a very large group in American
society – did not share in the prosperity of the 1920s. But they were not
alone. Workers in many older industries did not benefit much either.
The coal industry was a big employer but it began to struggle. First, like
farming there was over-production. This reduced the price of coal and
therefore profits. At the same time coal power was losing out to new power
sources like electricity and oil. Although electricity producers used coal to
generate electricity, the new generating technology was highly efficient so it
did not need much coal to produce a lot of energy. Manufacturers were either
switching to electricity or oil, or used more efficient machinery which used
less coal. The same pattern could be seen in homes where improved boilers
gave users the same amount of heat with less coal.
FIGURE 7
 A comparison of the growth of profits and the
growth of average earnings.
Other industries such as leather, textiles and shoe-making also struggled.
They were protected from competition with foreign imports by tariffs.
However, they were not growth markets. They also suffered from
competition from industries which used new man-made materials and were
often mechanised. In the TRADITIONAL INDUSTRIES generally growth was slow
and profits were gradually declining. Workers in these industries lost their
jobs as processes became increasingly mechanised. Skilled workers
struggled to compete against both machinery and cheap labour in the southern
states. Even if workers in these industries did get a pay rise, their wages did
not increase at the same rate as company profits or dividends paid to
shareholders (see Figure 7).
In 1928 there was a strike in the coal industry in North Carolina, where the
male workers were paid only $18 and women $9 for a 70-hour week, at a
time when $48 per week was considered to be the minimum required for a
decent life. In fact, for the majority of Americans wages remained well
below that figure. It has been estimated that 42 per cent of Americans lived
below the poverty line – they did not have the money needed to pay for
essentials such as food, clothing, housing and heating for their families.
FIGURE 8

The distribution of income in 1925.

SOURCE 9
 A hunger march in Washington during the
brief recession which hit some industries in
1921–22.

Revision Tip
Ensure you know an example of industries that were harmed by
each of: electrification; oil; declining sales; declining profits.

Unemployment
What’s more, throughout this period unemployment remained a problem. The
growth in industry in the 1920s did not create many new jobs. Industries
were growing by electrifying or mechanising production. The same number
of people (around 5 per cent) were unemployed at the peak of the boom in
1929 as in 1920. Yet the amount of goods produced had doubled. These
millions of unemployed Americans were not sharing in the boom. They
included many poor whites, but an even greater proportion of African
American and Hispanic people and other members of the USA’s large
immigrant communities.
The plight of the poor was desperate for the individuals concerned. But it
was also damaging to American industry. The boom of the 1920s was a
consumer-led boom, which means that it was led by ordinary families buying
things for their homes. But with so many families too poor to buy such goods,
the demand for them was likely to begin to tail off. However, Republican
policy remained not to interfere, and this included doing nothing about
unemployment or poverty.
FOCUS TASK 10.3
Did all Americans share in the boom?
In 1928 a new Republican president, Herbert Hoover, was elected.
He said:
SOURCE 10
One of the oldest and perhaps the noblest of human activities
[aims] has been the abolition of poverty … we in America today
are nearer to the final triumph over poverty than ever before in
the history of any land.
Herbert Hoover.
Gather evidence from pages 304–306 to contest Hoover’s claim.
Write a paper setting out in detail:
• how badly off some farmers have become since the war
• why farmers are poor and how Republican policies have
contributed to this
• why workers in older industries are suffering and what has
happened to their wages (give an example)
• why immigrant workers and African Americans are not well off.
Try to use specific examples such as Chicago in the 1920s.

Case study: Chicago in the 1920s

Chicago was one of America’s biggest cities. It was the centre of the steel,
meat and clothing industries, which employed many unskilled workers. Such
industries had busy and slack periods. In slack periods the workers would be
‘seasonally unemployed’. Many of these workers were Polish or Italian
immigrants, or African American migrants from the southern United States.
How far did they share in the prosperity of the 1920s?
• Only 3 per cent of semi-skilled workers owned a car. Compare that with
richer areas where 29 per cent owned a car.
• Workers in Chicago didn’t like to buy large items on credit. They preferred
to save for when they might not have a job. Many bought smaller items on
credit, such as radios.
• The poor whites did not use the new chain stores which had revolutionised
shopping in the 1920s. Nearly all of them were in middle-class districts.
Poorer white industrial workers preferred to shop at the local grocer’s
where the owner was more flexible and gave them credit.
Key Question Summary
How far did the US economy boom in the 1920s?
1 The 1920s saw unprecedented growth in mass consumption in
the USA. People bought a vast range of new products which
changed the way people lived their lives.
2 The period saw dynamic business growth and prosperity with the
creation of vast new cities, characterised by skyscrapers, and
new systems of transport to link towns and cities.
3 The boom was encouraged by the policies of the Republican
Party which believed in laissez-faire, low taxes and protective
tariffs.
4 It was also underpinned by the development of new industries
using new materials and innovative production techniques,
especially mass production.
5 The motor car was particularly important, changing the American
way of life and stimulating other industries.
6 Large sections of American society did not benefit to the same
degree from prosperity including farmers and farm labourers –
farming in the 1920s was very depressed through a combination
of over-production and environmental problems.
7 Older industries such as coal or leather suffered because of
competition from new materials such as oil and plastics and
because their methods and machinery became outdated.