America 1919-1941 In this module you will study

How far did the USA achieve prosperity in the 1920s?

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How far did the USA achieve prosperity in the 1920s?

A 'how far' question ALWAYS indicates that there are two sides to the argument.  So, on the one hand you can cite evidence of burgeoning prosperity - on the other hand there is evidence that many did not share in the prosperity.

Source A

We are not internationalists, we are American nationalists.

Theodore Roosevelt, speaking in 1919

Roosevelt was a former President of the US.


Source B

Why Industry boomed [PAT GOT CASH]

a. Population growing rapidly increased demand for consumer goods.

b. Abundant raw materials – esp. coal, iron and oil – allowed cheap production

c. Tariffs – protected American industry from competition


d. Government – the government relaxed regulations and reduced taxes (this is called ‘laissez faire’)

e. Opportunities of New Technology (e.g. electrical goods, radio, film, nylon)

f.  Techniques of production– Ford’s Assembly line method, and Frederick Taylor’s time and motion


g. Cycle of prosperity – increased prosperity increased prosperity.

h. Advertising (e.g. billboards, radio commercials,)

i. Sales methods (e.g. commercial travellers, mail order, chain stores such as Woolworths)

j. Hire Purchase – instalments allowed people to buy now, pay later.


Source C

'The business of America is business.'

'The man who builds a factory, builds a temple.  The man who works there, worships there.'

President Coolidge

Source D

We in America today are nearer to the financial triumph over poverty than ever before in the history of our land. The poor man is vanishing from us. Under the Republican system, our industrial output has increased as never before, and our wages have grown steadily in buying power.

President Hoover, speaking in 1928

During his election campaign, Republicans promised 'a chicken in every pot and a car in every backyard'.


1. The Booming Economy

Between 1922 and 1929 the annual Gross National Product of the USA increased by 40%.   The average income per head increased by 27%.
Highlights of the boom included [CI SUCCESS]:
a. Consumer boom – growth of personal possessions (c.f. Woolworths, hire purchase, commercial travellers).

b. Innovation in production methods, especially in the motor industry (by 1925 Ford were producing a car every 10 seconds); this pushed down prices and made goods more accessible for ordinary people (the ‘Tin Lizzie’ cost $850 in 1910, only $295 in 1920).

Ford Assembly line

c. Synthetics – the invention of bakelite (the first plastic), cellophane and nylon - and chemicals.

d. Upsurge in car ownership – esp. the Ford Model T; 15 million had been produced by 1927, and the number of Americans owning cars rose from 8 to 23 million.

e. Consumer durables/electrical goods – fridges, washing machines, dishwashers, vacuum cleaners, record players.

f. Communications revolution – number of telephone doubled/ number of radios increased from 60,000 to 10 million.


g. Entertainment industry – Hollywood, Charlie Chaplin, the ‘talkies’ and cinemas, jazz clubs and speakeasies.

h. Stock market – Wall Street boomed (a 'bull' market) with many people buying shares to make a profit.   Many new businesses were 'floated' on the stock market.

i.  Skyscrapers, highways and urban development.

2. Poverty and Depression

Not every one shared in the prosperity, however, and there were glaring weaknesses in the American economy in the 1920s.  

However, there is plenty of evidence that all was not well with the American economy in the 1920s, and in 1928 the 'boom' began to slow down. Particular problems included [FLOP CUTS]:

a. Farming - machinery and overproduction led to rapidly falling prices (wheat prices fell from $183 a bushel in 1920 to 38 cents in 1929).   In 1929 average income in of farmers was only 40% of the national average, and many farmers could not afford their mortgage; in 1924, 600,000 farmers went bankrupt.  Note also that rural areas did not have electricity, so most country-dwellers were excluded from the consumer boom.

b.  Low wage earners - e.g. unskilled and casual workers, or the 2 million who were unemployed - could not share in the prosperity.  There were inequalities of wealth; the top 5% earned 33% of the income, while 60% of Americans earned less than $2000, and that 40% were below the poverty line (esp farmers/ Black Americans/ immigrants). 

c. Old Industries - overproduction of coal (which was being replaced by oil and gas) led to mine closure and falling wages.  In 1929 a coal miners wage was barely a third of the national average income.   There were also problems in the textiles industry.

d.  Poor Black Americans - 1 million black farm workers lost their jobs in the 1920s.   Black workers in the towns in the north were the lowest paid; the only work was low-paying, menial jobs.   New York's black Harlem district was segregated and overcrowded, with 250,000 people crammed into an area 50 blocks long and 8 blocks wide.   Many people slept in shifts, going to bed when others went to work.   ‘Rent parties’ were common on Saturday nights, to raise money to pay the landlord on Sunday.

This photo is from the 1930s, but it sums up the position of Black people in the 1920s - they can SEE the prosperity, but they don't SHARE in it.
e. Cartels, trusts and monopolies - ‘fixed the market’ and tried to keep prices high and wages low.  

f.  Unemployment – new technology was throwing more and more people out of work; the number of unemployed stood at 2 million throughout 1920s. 

g. Trade problems - high tariffs were causing other countries to retaliate, as well as reducing the purchasing power of those countries, which made it hard for American companies to export their products abroad.   Farmers, who relied on exporting wheat, were especially hard-hit by this.

h. Stock Exchange – the biggest problem; Wall Street was 'over-heating.   People were buying shares in imaginary companies.  Many bought shares ‘at the margin’ (a person could get a loan of 90% to buy shares) expecting to make enough profit to repay the loan when the shares were resold - brokers’ loans trebled 1926-9.  All this threatened disaster if share prices ever stopped rising.

Source E

In the USA too much wealth had fallen into too few hands, with the result that consumers were unable to buy all the goods produced.  The trouble came to a head mainly because of the easy credit policies of the Federal Reserve Board, which favoured the rich.   Its effects were so profound and so prolonged because the government did not fully understand what was happening or what to do about it.

John A. Garraty, The American Nation (1979)


Source F

In 1929 it was strictly a gambling casino with loaded dice.  I saw shoeshine boys buying 50 000 dollars worth of stock with 500 dollars down payment.   A cigar stock at the time was selling for 114 dollars a share.   The market collapsed.   The 114 dollar stock dropped to two dollars, and the company president jumped out of the window of his Wall Street office.

Studs Terkel, Hard Times

Studs was talking to an interviewer in 1970


Source G

A Black bootblack, 1920

What mood is the photographer trying to create?


FLOP CUTS - can you see any of these problems and weaknesses reflected in the statements in Sources E, F and G?

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