USA 1918-41

Economic Benefits of WW1

• Supplied weapons, food, raw materials to European allies → increased industrial production

• War contracts

• Industries such as steel, oil, manufacturing expanded rapidly

• By 1918 the USA had become the world’s largest creditor

Reasons for 1920s boom

• Mass production techniques allowed goods to be produced quickly and cheaply

• New industries (automobiles, electrical appliances, consumer goods)

• Hire purchase increased demand

• more sophisticated advertising

• stable political climate, pro-business government policies

Mass production & Henry Ford

• introduced assembly line in car production

• sped up production and reduced costs

• made it more affordable for Americans

• paid workers high wages, allowed them to buy the cars they produced

Hire purchase & consumerism

• allowed consumers to buy goods immediately and pay over time

• made expensive items more accessible

→ developed consumerism culture

• advertising and credit worked together to increase spending & demand

→ many still fell into debt, making the economy vulnerable

Stock Market popularity

• more Americans started to invest in shares

• hoped that prices would continue to rise

• buying on the margin allowed investors to purchase shares with borrowed money

• increasing confidence was not based on real economic value

Problems in farming

• farmers had increased production during WW1 to meet demand, taking out loans to buy machinery

• demand fell after war, led to overproduction and falling prices

• mechanisation led to job losses

→ many struggled to repay debts and faced poverty

Decline of older industries

• coal, textiles, steel

• faced competition from newer energy sources and foreign produces

• demand decreased as technologies developed

• workers faced unemployment and low wages

Leisure industry

• increased wages and shorter working hours

• Cinema, Jazz music, Sports

• Radio became key form of entertainment, bringing music, news, and advertisements

Changing position of women

• greater independence (in urban areas)

• THE FLAPPERS - new modern lifestyle with shorter hair, new fashion, more freedom

• More women entered the workforce, particularly office jobs, such as typing

• Many still faced discrimination and lower pay and traditional expectations

• progress were uneven for rural areas

Consumer credit & risk

• consumer credit increased demand for products such as cars, radios, and household appliances

• many accumulated significant debts

• businesses also borrowed heavily to expand production, assuming demand would keep growing

→ unstable economy

Advertising strategies

• advertisements became more widespread

• using newspapers, magazines, billboards, radio

• used persuasive techniques eg celebrity endorsements and emotional appeals

→ encouraged a culture of consumerism

Regional differences in prosperity

• Rural areas and farming regions faced economic hardships

• Traditional industrial regions struggled due to declining industries

Immigration attitudes & policies

• many became increasingly hostile towards immigrants in 1920s (Southern and Eastern europeans)

• often blamed for crime, unemployment, and radical political ideas

• Restriction Laws: emergency Quota Act 1921 & Immigration Act 1924 → limited number of immigrants in USA

Palmer Raids & Red Scare

• After WW1 there was a fear of communism spreading to USA known as ‘the Red Scare’

• strikes and anarchist bombings increased anxiety about revolution

• Attorney General A. Mitchell Palmer ordered raids to arrest suspected radicals and communisms

• thousands were arrested without evidence or fair trials

Nicola Sacco and Bartolomeo Vanzetti case

• They were Italian immigrants and anarchists accused of robbery & murder

• Their trial was controversial, biased against their political beliefs and ethnicity, and had weak evidence

• found guilty and executed in 1927 despite international protests

Attitudes towards Black Americans

• continued to face discrimination and segregation → Jim Crow Laws

• affected education, transport, public facilities

• many migrated to the North in search for jobs & better opportunities → racism still existed in the North with violence and race riots

Ku Klux Klan (KKK)

• grew rapidly in 1920s, with million members in USA

• promoted white supremacy, targeted African Americans, immigrants, Catholics, Jews

• used intimidation, violence, lynching

• gained influence in politics and society

Monkey trial 1925

• conflict between traditional religious values vs modern scientific ideas

• argued whether evolution could be taught in schools

• John Scopes was prosecuted for teaching evolution

→ attracted national attention, highlighted divisions between urban and rural America

Prohibition and Gangsters (1920-33)

• banned production, sale, and transport of alcohol

• aimed to reduce crime and improve morality, but led to illegal activities instead

Impacts of prohibition

• Bootlegging (illegal alcohol trade) became widespread

• Speakeasies (illegal bars)

• Organised crime groups made huge profits → increased violence (e.g Saint Valentine’s day Massacre)

• Gangsters such as Al Capone became powerful, bribed police and officials to avoid prosecution

→ undermining of law and order

The Great Migration

• African Americans in the 1920s migrated to the North to seek jobs and better living conditions

• Segregation and discrimination still existed in northern cities

• House segregation → restricted to certain neighbourhoods that were overcrowded and poorer

• competition for jobs increased racial tensions

Causes of Wall Street Crash

• Many bought shares just to sell them later at a higher price, rather than based on company performance

• confidence was vulnerable, when prices began to fall, confidence collapsed leading to panic selling

Cause 1: Buying on Margin

• buy shares using borrowed money, paying only a small deposit

• increased number of people investing and pushed prices higher

• → if prices fell, investors could not repay loans

• → increased financial risk and accelerated the collapse

Cause 2: Overproduction

• industries produced more goods than consumers could afford to buy → falling prices and reduced profits for businesses

• companies struggled → confidence in the economy weakened, falling share prices

Consequence of the Wall Street Crash: Bank failures

• many banks had invested depositors’ money in the stock market → so when share prices fell, banks lost large amounts of money

• banks failed, customers lost their savings

→ reduced trust in the banking system and limited access to credit

Consequence of the Wall Street Crash: Unemployment

• businesses lost money, forced to cut costs

• many companies reduced production or closed entirely

• millions of workers lost their jobs → unemployment, reduced consumer spending

Consequence of the Wall Street Crash: Homelessness

• unemployed people could not afford rent or mortgages

• families were evicted and forced to live in Hoovervilles

Hoover’s reaction

• President Hoover believed in limited government intervention and self-reliance → he encouraged businesses and charities to provide support (volunteerism)

• some public works projects were introduced to create jobs

• Hoover refused direct financial aid to individuals → this approach was seen as too limited to deal with the scale of the crisis

Impact on Agriculture

• Farmers were already struggling due to overproduction & falling prices, and the Depression worsened this as demand for food fell further

• could not repay loans, faced foreclosure

Impact on Industry

• industrial production declined as demand for goods fell → factories reduced output or closed completely

• mass unemployment

Impact on People’s Lives

• millions lost their jobs, had no income

• families lived in Hoovervilles

• poverty, hunger, poor living conditions

Bonus March 1932

• Thousands of unemployed WW1 veterans marched on Washington D.C demanding early payment of their war bonuses

• set up camps in capital and protested peacefully for financial support

• Hoover ordered the army to remove them → violent clashes, camps destroyed, veterans injured

→ damaged Hoover’s reputation and highlighted desperation

Government vs Voluntary Aid

• Hoover believed charities, local governments, and businesses should provide support rather than direct federal aid

• Voluntary aid was limited and unable to cope with the scale of the crisis

• Public works schemes were insufficient

Regional Variation in Impact

• industrial cities suffered high unemployment from factory closures

• farming areas suffered falling prices, debt, foreclosures

• some regions were hit harder depending on their economic base

Roosevelt’s Aims (3 R’s)

• Relief

• Recovery

• Reform

Relief

Providing IMMEDIATE support for the poor and unemployed

Recovery

Restart economic growth and increase demand

Reform

Prevent future economic crises by regulating banks and industries

The Hundred Days 1933

• A series of laws introduced by Roosevelt during his first 100 days in office

• Rapid government action focused ons stabilising banks, creating jobs, restoring confidence

Alphabet Agencies

• TVA built dams and provided electricity to poorer regions

• AAA raised farm prices by reducing production

• CCC provided jobs for young men in environmental projects

• NIRA regulated the industry, improved wages and conditions

Second New Deal overview 1935

• Roosevelt introduced further reforms focusing on long-term reforms, welfare, and workers’ rights

• The government became more directly involved

WPA - Works Progress Administration

• created millions of jobs through public works projects, e.g., building roads, schools, bridges

• employed a range of workers (artists, writers, musicians)

• reduced unemployment and stimulated demand

Social Security Act 1935

• system of pensions for the elderly

• provided unemployment insurance and support for vulnerable groups

(not all groups were covered, payments were often limited)

Wagner Act 1935

• strengthened workers’ rights and trade unions

• set up NLRB to enforce these rights → improved conditions for many workers but also worried business owners

Rural electrification

• extended electricity to rural areas

• improved living standards, made farming more efficient

• allowed use of modern appliances and technology

(progress was gradual and uneven)

Achievements of the New Deal

• provided relief and jobs for millions of Americans

• improved infrastructure

• restored confidence in banks

• created long-term support systems (e.g., Social Security Act)

• focused more on government responsibility for economy

Shortcomings of the New Deal

• unemployment remained high in 1930s

• African Americans, women, benefited less

• some policies were declared as unconstitutional

• the Depression only fully ended with WW2

Shortcomings of Public Works Projects (WPA, CCC)

Jobs were often temporary, which didn’t solve long-term unemployment

Controversy over Government Spending

• the New Deal significantly increased government spending and involvement in the economy

Supporters: believed it was necessary to provide relief and stimulate recovery

Critics: it increased national debt and expanded government power too far, or even that the New Deal did not go far enough to help the poor

Shortcomings of AAA for farmers

• Tenant farmers and sharecroppers were displaced → benefits varied depending on land ownership and region

Impact on Women

• some women gained employment through New Deal programmes, in clerical and service roles (office work)

• most schemes prioritised male unemployment

• women were paid less and had fewer opportunities

Role of Eleanor Roosevelt

• played a key role in promoting women’s rights and opportunities

• supported women’s employment and civil rights causes

• encouraged Roosevelt to consider the needs of disadvantaged groups

Impact of Minorities

• Discrimination often limited access to the benefits for minority groups

• African Americans and other minorities were frequently excluded or paid less

→ segregation and inequality continued throughout the 1930s, as many New Deal policies did not directly challenge racial segregation

(Local authorities controlled how aid was distributed)

Supreme Court opposition

• they declared several New Deal laws as unconstitutional (including NIRA and AAA)

• judges argued that these laws gave the federal government too much power

→ limited Roosevelt’s ability to implement reforms

Court Packing Plan in 1937

• Roosevelt proposed adding more judges to the Supreme Court, aiming to create a majority that would support New Deal policies

• Critics argued that this threatened the independency of judiciary

→ damaged Roosevelt’s reputation despite later court support for reforms

Republican and business opposition

• they believed the New Deal involved too much government intervention

• argued that it restricted free enterprise and increased regulation

• some feared higher taxes and growing national debt

Political campaigns against the New Deal

• some argued it was inefficient or wasteful, and did not go far enough to solve the Depression

• political debate intensified during the 1930s elections

Public opinion & Media influence → and Roosevelt’s response

• many Americans supported Roosevelt due to his programmes and leadership

• others were influenced by media criticism (newspapers, business groups)

→ Roosevelt used radio broadcasts (FIRESIDE CHATS) to communicate directly to the public

Radical Criticism

• Critics argued that the New Deal didn’t go far enough to help the poor and called for greater redistribution of wealth, stronger government intervention

→ radical pressure helped push Roosevelt towards more reformist policies in the Second New Deal

Huey Long’s “Share Our Wealth”

• Aimed to redistribute income and limit personal fortunes

• promised pensions, jobs, and a guaranteed minimum standard of living

• gained support among poorer Americans, became Roosevelt’s most serious political challengers

→ assassinated in 1935, ending direct threat, though his ideas influenced later reforms

Father Charles Coughlin and Social Justice campaign

• used radio broadcasts to criticise Roosevelt and the New Deal

• he argued that it failed to control banks and support ordinary Americans sufficiently

• he called for more radical economic reform and gained mass following through media influence

→ his popularity declined in the late 1930s as his views became more extreme (limited fundings)

Upton Sinclair and Social criticism

• was a writer who exposed poor working conditions and inequality in American Industry

• the book ’ The Jungle’ exposed dangerous and unsanitary conditions in meatpacking factories

• proposed reforms through his “End of Poverty in California” (EPIC) campaign: argued that the government should do more to support workers and reduce poverty

→ his campaign failed politically, but his ideas reflected wider dissatisfaction and added pressure for reform

Effectiveness of opposition overall

• conservatives, businesses, the Supreme Court, and radical critics all opposed the New Deal

• Roosevelt still remained popular and highly supported through his programmeds

→ opposition influenced and shaped the New Deal but did not prevent its overall success