In Search of the American Dream: The USA c1917-96 - Unit 4: The Changing Quality of life, 1917-80

Post WW1 depression

Following WW1, the American economy experienced a sharp downturn. During the war, demand for agricultural and industrial goods had soared as the USA supplied both its own need and those of war-torn Europe. However, when the war ended demand dropped drastically. Farmers, who had taken out loans to expand their production, now faced lower prices for their crops and struggled to pay off their debts. The situation was made worse by the boll weevil which devastated crops in the South and caused a 34% drop in cotton production by 1921. Industry also suffered as soldiers returned home seeking work, but businesses, facing declining demand were forced to lay off workers. At the same time, major industries such as coal, saw their markets shrink and business switch to oil in electricity. Strikes in 1919 and 1920 further disrupted industry, but many of these failed, leading to further wage cuts and job losses.

Government response to the post WW1 depression

The Republican government, following a policy of laissez faire, refused to intervene significantly to alleviate the crisis. Instead, they introduced tariffs to protect American goods from foreign competition, but this had the unintended effect of making imported goods more expensive for American consumers while reducing foreign demand for American exports. This economic slump set the stage for rapid changes in the 1920s.

The Boom years of the 1920s (Mass production)

The boom was driven by mass production, particularly in the automobile industry, where Henry Ford's assembly line, revolutionized manufacturing. Ford's methods made it possible to produce cars quickly and cheaply, allowing millions of Americans to afford their own vehicles. By 1929, there were over 23 million cars in the USA, compared to just 4.7 million in 1917. The automobile industry had a ripple effect, boosting steel, rubber and oil industries, as well as creating demand for roads, gas stations and motels.

The Boom years of the 1920s (Management techniques)

New management techniques also played a role. Some employers, inspired by the theories of Frederick Taylor, sought to maximize efficiency by breaking tasks into repetitive movements and training workers in the most efficient methods.

The Boom years of the 1920s (Credit)

At the same time, easy credit and hire purchase schemes allowed consumers to buy goods they could not immediately afford, fuelling demand for household appliances, radios and other consumer goods. However, this reliance on credit carried risks, as many families took on depts they would struggle to repay.

The Boom years of the 1920s (Stock market)

The stock market also became a major force in the economy, with millions of Americans investing in shares. Previously, stock trading had been the domain of the wealthy, but the 1920s saw ordinary people buying stocks, often with borrowed money. This speculative buying created a bubble, with stock prices rising rapidly. However, the economy's reliance on speculation and credit was dangerously unstable.

1929 Wall Street Crash

In October 1929, the stock market collapsed. Confidence in the market had begun to waver as stock prices rose to unsustainable levels. When investors panicked and sold off their shares, prices plummeted. Many banks had lent money to investors and when the stock market crashed, they were unable to recover their funds, leading to the failure of over 5,500 banks by 1933. As banks collapsed businesses lost access to credit and could no longer pay their workers, leading to mass unemployment.

How were farm incomes affected by the Great Depression?

Plummeted, falling from $13.9 billion in 1929 to just $7.1 billion in 1933.

How was employment affected by the Great Depression?

Unemployment soared, reaching 25% by 1933 with 13 million people out of work. Those who kept their jobs faced wage cuts, while many lost their homes due to their inability to keep up with the mortgage payments.

What were the consequences of the Great Depression?

Homelessness became widespread, with shantytowns known as "Hoovervilles" appearing. Malnutrition and illness spread, and the suicide rate rose. The depression also had international effects as American banks called in loans made to European nations after WW1. Countries like Germany, which relied on American credit, were plunged into economic crisis, exacerbating political tensions that would later contribute to WW2.

Hoover's response to the Great Depression

Initially resisted direct intervention, believing that the economy would correct itself. He encouraged business leaders to maintain wages and employment and launched public workers programs, such as the construction of the Hoover Dam, but these efforts were too little, too late. By 1932, the situation had worsened to the point that Americans overwhelmingly rejected Hoover in the presidential election, electing FDR who promised a "New Deal" to address the crisis.

Roosevelt's response to the Great Depression

Was fundamentally different from Hoover's. Upon taking office in 1933, he immediately acted to restore confidence in the banking system by closing all banks temporarily and reopening only those deemed stable. He also launched a series of government programs to create jobs and support struggling families. The New Deal introduced policies such as the Agricultural Adjustment Act, which aimed to raise farm prices, by reducing crop production, and the Wagner Act which strengthened the rights of workers to unionise. Large-scale public workers projects, such as the Tennessee Valley Authority provided employment while improving infrastructure.

Wagner Act

Strengthened the rights of workers to unionise.

Recovery from the Great Depression by the 1930s

By the late 1930s, the economy had begun to recover, though unemployment remained high. In 1937, a new economic downturn (sometimes called the Roosevelt Recession) revealed that the economy was still fragile. It was ultimately the outbreaks of WW2 in 1939 that provided the final push toward full recovery, as industries expanded to support the war effort. By 1941, with the USA entering the war, unemployment had fallen dramatically and economic confidence had been restored.

Causes of the boom: Mass production

The introduction of assembly line techniques, particularly in the automobile industry, drastically reduced production costs and consumer goods more affordable. Henry Ford's methods allowed cards to be produced at a fraction of the previous cost, increasing sales and stimulating demand for materials such as steel, rubber and glass. As other industries adopted similar techniques, efficiency improved, wages rose and employment expanded. This widespread industrial growth suggests that mass production was a fundamental driver o economic expansion, though it depended on sustained consumer demand to remain effective.

Causes of the boom: Mass consumerism

Rising incomes and growing confidence in the economy encouraged people to spend more on goods and services. The expansion of national advertising, department stores, and hire purchase agreements made it easier for Americans to afford cars, radios and household appliances. Businesses flourished as demand increased, fuelling further industrial growth. However, much of this consumption was driven by credit, which may have created an illusion of prosperity, rather than a stable foundation for long-term growth.

Causes of the boom: Government policy

Republican administrations in the 1920s promoted a laissez-faire approach, reducing taxes, cutting regulations, and introducing tariffs to protect American industries from foreign competition. This encouraged investment and business expansion, allowing corporations to increase profits and wages. The stock market benefitted from minimal oversight, leading to speculative investment and rapid economic gains. While these policies supported economic confidence and business growth, the lack of financial regulation may have introduced instability that would later be problematic.

Causes of the boom: Technological innovation

Advances in machinery and the increasing use of electricity revolutionised industry, making production faster and more efficient. Mechanisation in agriculture also increased output, lowering food prices and allowing more disposable income to be spent on consumer goods. As homes and factories became electrified, demand for new electrical appliances surged, further boosting industrial production. While innovation played a key role in expanding economic activity, its benefits were not evenly distributed, particularly in rural areas, where many farmers struggled with falling prices.

Causes of the boom: Post-World War 1 Economic policies

The USA emerged from WW1 in a strong economic position, unlike European nations that faced severe financial difficulties. American businesses expanded into global markets, and the country became a major lender to struggling economies. High levels of industrial production and an increase in exports helped fuel the boom. However, the extent to which this prosperity was dependent on external markets and debt financed growth raises questions about how sustainable it truly was.

Causes of the bust: Overproduction

As industries expanded and factories became more efficient, production levels outpaced consumer demand. The automobile, textile and farming sectors produced more goods than people could afford to buy, leading to falling prices and unsold stock. Companies, struggling to maintain profits, began cutting wages and laying off workers, reducing overall purchasing power. This cycle of declining demand and rising unemployment suggests that overproduction played a central role in deepening the economic downturn, particularly in industries that had relies on continuous consumer spending.

Causes of the bust: Stock Market Speculation

The rapid rise in stock prices throughout the 1920s encouraged speculative investment, with many buying shares on margin loans - borrow money to purchase stocks with the expectation of selling them at a higher price. This created an artificially inflated stock market, where share prices no longer reflected the true value of companies. When confidence wavered and investors rushed to sell in October 1929, stock values collapsed, wiping out fortunes overnight. While this event triggered the Wall Street Crash, it was the underlying weaknesses in the financial system that determined the severity of its impact.

Causes of the bust: Bank failures and the Financial system collapse

Many banks had loaned heavily to businesses and individuals without inadequate safeguards, leaving them vulnerable when the stock market crashed. As companies failed and borrowers defaulted, banks struggled to recover their losses, leading to mass closures. People. fearing for their savings, withdrew money in panic, further destabilising the banking system. Without government protection for deposits, confidence in the financial sector collapsed, making it nearly impossible for businesses and individuals to access credit. The breakdown of the banking system suggests that financial instability was not just a symptom of the crash but a major factor in turning a stock market crisis into a full blown economic depression.

Causes of the bust: Falling consumer confidence and unemployment

As businesses struggled and banks failed, unemployment soared, with millions losing their jobs by the early 1930s. Those still employed faced wage cuts, making it harder for them to afford goods and services. With reduced consumer spending, businesses saw further declines in sales, forcing even more closures and layoffs. This downwards spiral meant that even industries that had been previously been strong could not longer sustain growth. The rapid increase in unemployment suggests that the economic downturn was not just a financial crisis but a systemic failure of the wider economy.

Causes of the bust: Global economic consequences

The USA's economic troubles were amplified by international factors. Many European nations, still recovering from WW1, had borrowed heavily from American banks. When US banks failed and called in loans, foreign economies also suffered, leading to a decline in global trade. Additionally, protectionist policies such as the Smoot-Hawley Tariff (1930), which raised taxes on imported goods, triggered retaliatory tariffs from other countries, further reducing demand for American exports. The international scope of the crisis, indicates that while the bust originated in the USA, its effects were felt worldwide, deepening the severity of the Great Depression.

There was full recovery by WW2 (Unemployment)

Unemployment fell significantly from its peak in the early 1930s, with major public works programs under the New Deal creating jobs. By 1941, the US economy was no longer in the depths of the Great Depression. The decrease in unemployment suggests that economic stability had returned to some degree.

There was full recovery by WW2 (Industrial production)

Industrial production increased with major infrastructure projects e.g. highways, public buildings, stimulating the economy. Increased industrial activity indicates that businesses were able to expand again, suggesting a level of economic normalisation.

There was full recovery by WW2 (Banking reforms)

Banking reforms (Emergency Banking Act, Glass-Steagall Act) restored confidence in the financial system, stabilising banks and increasing lending. With a more stable banking system, businesses and individuals could access credit, supporting investment and economic recovery.

There was full recovery by WW2 (Social security)

Social security and welfare programs introduced under the New Deal improved living standards for millions of Americans. The safety net provided by government policies helped alleviate extreme poverty, allowing more people to participate in the economy.

There was full recovery by WW2 (War)

The economy had begun shifting towards wartime production, which further boosted employment and industrial growth. The demand for war-related goods increased production and employment, accelerating economic recovery.

There wasn't full recovery by WW2 (Unemployment)

Despite improvements, unemployment remained high in 1940 at around 14.6%, significantly higher than pre-Depression levels. The persistence of high unemployment suggests that while conditions had improved, many Americans were still struggling economically.

There wasn't full recovery by WW2 (New Deal programs)

Many New Deal programs provided only temporary relief rather than structural economic change. Short term government employment programs did not provide long-term stability, indicating that the recovery was fragile.

There wasn't full recovery by WW2 (Rural areas)

Farmers and rural communities continued to struggle, with low crop prices and high debt burdens persisting into the late 1930s. Rural poverty and agricultural struggles highlight that not all sectors of the economy had recovered equally.

There wasn't full recovery by WW2 (Business)

Private business investment remained cautious, with many industries only beginning to recover as government spending increased for war production. Businesses were still hesitant to take risks, meaning economic confidence had not fully returned.

There wasn't full recovery by WW2 (War)

The economy did not return to full prosperity until after the US entered World War 2 in December 1941. If full recovery only came after the war, it suggests that New Deal policies and economic growth alone were insufficient to fully restore prosperity.

How did WW2 lead to economic growth?

During the war, American industries had ramped up production to supply both the military and allied nations. When the war ended, a massive consumer boom followed, as people who had saved money during the war, were eager to spend on cars, homes and household goods. Between 1945 and 1950, the value of goods produced in the USA jumped from $213 billion to $284 billion. This surge in production helped maintain high levels of employment, as businesses expanded.

What was the role of the federal government in maintaining economic stability post WW2?

The federal government also played a key role in maintaining economic stability. Recognising the lessons of the Great Depression, policymakers took steps to prevent another downturn. The Employment Act of 1946 committed the government to ensuring full employment, while the Federal Reserve carefully controlled the money supply to prevent inflation from spiralling out of control.

Post WW2 labour relation issues

Despite economic growth, tensions remained between workers and employers. As wages lagged behind rising prices, strikes broke out in key industries. In response, President Truman took a hard line against labour unrest. When coal miners went on strike, he ordered the military to take control of the mines. Rail workers faced similar measures, as Truman took over the railways and even threatened to draft striking workers.

The "Fair Deal"

Truman introduced policies to improve workers' living standards. His "Fair Deal" expanded social security, increased the minimum wage, and introduced federal programmes for housing and healthcare. One major initiative was the 1949 National Housing Act, which aimed to clear slums and provide affordable homes for low income families. However, many of these measures faced resistance in Congress, limiting their impact.

What was the baby boom?

One of the defining features of post-war America was the baby boom. Between 1946 and 1964, birth rates soared, reaching a peak of 113 births per 1,000 women in 1947.

What was the impact of the baby boom?

Had profound economic effects. The demand for baby products, toys and food increased, stimulating new industries. As these children grew older more schools and colleges were needed, boosting the education sector. In the longer term, the baby boom generation would shape consumer trends, housing demand and even government policy. Rising wages and economic confidence fuelled a consumer culture. The post-war years saw an explosion in car ownership, suburban expansion and the spread of household appliances such as refrigerators and televisions.

Post WW2 growth of the suburbs

The post-war period also saw a major shift in where Americans lived. With car ownership increasing and new highways being built, millions of people moved to the suburbs. Developers like William Levitt pioneered mass-produced housing, offering affordable homes to middle class families. Levitt's developments, known as "Levittowns" were built quickly and cheaply, providing a model for suburban growth. However, suburbanisation also reinforced racial segregation. Many developers refused to sell homes to African Americans, while banks and real estate agents engaged in "redlining" by denying loans to black families. Cities became increasingly divided along racial and economic lines.

Post WW2 inflation and economic challenges.

Despite overall prosperity, the post war economy was not without problems. One of the biggest issues was inflation. During the war, the government had controlled prices to prevent runaway inflation. However, when these controls were lifted in 1946, prices surged by 25% in two years. The government attempted to balance economic growth with inflation control. Truman's economic policies helped stabilise prices, but inflation remained a recurring problem throughout the 1950s and 1960s. The Federal Reserve managed the money supply carefully, but at times, economic growth led to rising prices.

Economic boom of the 1950s and 60s

By the 1950s, the American economy was booming. The combination of government spending, rising consumer demand, and technological advancements made the USA the world's economic superpower. With communism seen as a major global threat, the government also poured money into military and defence industries, further boosting jobs and production.

Uneven benefits of the 1950s and 1960s economic boom

The benefits were not evenly distributed. While white middle-class families enjoyed rising wages and homeownership, many minority groups and working-class Americans were left behind. Economic inequality persisted, particularly in inner cities where unemployment and poverty remained high.

Decline of the USA's dominance in manufacturing.

By the late 1950s, the country was facing increasing competition from Japan and Europe. While American companies designed new technologies, such as the transistor radio, they often failed to capitalise on them, allowing foreign manufacturers to take the leader.

The 1960s: Growth and Rising Inflation

The 1960s saw continued economic growth, but also growing concerns about inflation and government spending. The Vietnam War placed a huge strain on the federal budget, as did new social welfare programmes such as Medicare and Medicaid. To finance these expenses the government increased the money supply. While this helped maintain economic expansion in the short term, it also contributed to rising inflation. At the same time the USA's global economic position was weakening. The government printed more money to cover expenses, and so confidence in the dollar declined. It led to growing pressure for change.

Bretton Woods system

The system under which the value of the US dollar was tied to gold.

Causes of post war affluence: Wartime Economic Mobilisation

The war effort had driven industrial production to record levels, and after 1945, factories swiftly transitioned to making consumer goods. This shift ensured rapid job creation, as industries already at high capacity adapted to peacetime needs. Returning soldiers found employment in a booming economy, supported by wartime-built infrastructure that allowing businesses to scale up production efficiently.

Causes of post war affluence: Government policies and support

The GI Bill (1944) provided, veterans with access to high education, housing loans and business funding, strengthening the workforce and increasing homeownership. Government-backed mortgages and infrastructure projects, like the Federal-Aid Highway Act (1956), encouraged suburban growth and economic stability, reinforcing long-term prosperity.

Causes of post war affluence: Mass consumerism and credit expansion

Rising wages and confidence in the economy encouraged spending, with businesses promoting convenience and modern lifestyles through advertising. The expansion of shopping malls and department stores, alongside new credit systems, made consumer goods more accessible. While this drove short-term economic growth, it also fostered a reliance on borrowing.

Causes of post war affluence: The Baby Boom

A surge in birth rates in the late 1940s and 1950s demand for housing, consumer goods and services. Families moved to the suburbs, stimulating construction, education and retail industries. A growing population ensured continued economic expansion, as new generations of consumers and workers supported the economy.

Causes of post war affluence: Technological innovation and productivity

Mechanisation and automation boosted industrial efficiency, reducing production costs high maintaining high wages. Widespread electrification made household appliances more accessible, while new forms of advertising, particularly television, reinforced consumer demand. Productivity gains ensured strong economic activity and rising living standards.

Causes of post war affluence: The USA's Global Economic Dominance.

With much of Europe and Japan rebuilding, American industries faced little competition. The USA led global trade, supplying materials and consumer goods to recovering nations, ensuring high industrial output and job security. As the financial centre of the world, American banks and corporations thrived, though long term competition would later challenge this dominance.

Who benefitted from rising wages and job security? (Post-war affluence)

White, middle-class men in manufacturing and professional sectors; unionised workers; returning soldiers benefited from GI Bill employment programs.

Who didn't benefit from rising wages and job security? (Post-war affluence)

Women were pushed out of wartime jobs; Black and minority workers faced job discrimination; rural workers struggled with declining crop prices.

Who benefitted from expansion of home ownership and suburbia? (Post-war affluence)

White families, particularly veterans, gained access to low-interest mortgages; construction workers benefited from suburban expansion.

Who didn't benefit from expansion of home ownership suburbia? (Post-war affluence)

Black and minority families were excluded from homeownership due to redlining; urban communities declined as wealthier residents moved to suburbs.

Who benefitted from growth of consumer culture? (Post-war affluence)

Middle class families enjoyed disposable income and access to consumer goods; businesses thrived as spending increased; suburban shopping expanded.

Who didn't benefit from growth of consumer culture? (Post-war affluence)

Lower-income groups struggled to afford consumer goods; rural communities had limited access to stores; wage gaps restricted minority participation.

Who benefitted from federal investment in infrastructure and highways? (Post-war affluence)

The Federal-Aid Highway Act created jobs and boosted industries; suburban homeowners gained better urban access; white working-class families benefited.

Who didn't benefit from federal investment in infrastructure and highways? (Post-war affluence)

Minority communities were displaced by highway projects; poor Americans without cars were isolated as public transport declined.

Who benefitted from expansion of higher education? (Post-war affluence)

Veterans used the GI Bill for education, leading to better job opportunities; middle class students accessed higher education; universities expanded.

Who didn't benefit from expansion of higher education? (Post-war affluence)

Black and minority students faced segregation and poor university funding; women were discouraged from higher education; working class individuals lacked opportunities

Who benefitted from the influence of the baby boom and changing family life? (Post-war affluence)

Businesses catering to child-rearing saw enormous growth; middle class families benefited from homeownership and stable social expectations.

Who didn't benefit from the influence of the baby boom and changing family life? (Post-war affluence)

Single mothers and low-income families faced financial struggles; Black and minority families had limited access to quality housing and healthcare; career minded women faced societal restrictions.

Who benefitted from military spending and cold war economy? (Post-war affluence)

The defence industry provided high-paying jobs; cities with military bases saw economic booms; scientists and engineers benefited from funding.

Who didn't benefit from military spending and cold war economy? (Post-war affluence)

Social programs suffered due to military spending; taxpayers bore the cost of Cold War expenses; non defence industries saw economic benefits.

Post WW1 depression - Farming

During the war, farmers were urged to produce more wheat and were given subsidies to do so. Some took out loans to buy farmland and machinery. Mechanisation meant fewer workers were needed so some workers became unemployed. During the war, wheat farmers made a profit, but after the war they were still producing too much and prices fell. Some farmers produced yet more to cover their loans as prices kept falling. Some farmers had to sack workers while others went bankrupt. Farmers who were growing cotton did not escape trouble due to the boll weevil.

Post WW1 depression - Industry

There were many strikes in 1919 and 1920, local and nationwide. Most failed to get better working conditions for the strikers and some caused businesses to fail, increasing unemployment. Meanwhile, many older industries (especially in the north and east) were in decline. For example the coal industry lost out to other fuels, including water power and electricity. Although electricity plants were fuelled by coal this did not make up the overall drop in demand. In 1900, coal had produced almost 90% of energy in the US, by 1930 this had dropped to 60%.

Post WW1 depression - Government reaction

The Republican government of the time believed in lassiez-faire policies so did not try to stop the depression. However, the isolationist tariffs it put on foreign goods led other countries to introduce similar tariffs on US goods and US exports fell. Tariffs pushed Americans to buy more US goods. The government felt that the depression would soon right itself. The economy did adjust and this had a significant impact on government thinking in 1929.

The Boom - Mass production

The mass production technique of breaking manufacturing down into series steps and making one worker responsible one step in process developed before the war. Mass-produced goods produced more quickly and cheaply, so could sold at lower price. Made them more affordable and so manufacturers sold more of them and people bought more goods- especially cars and radios. Mass production had significant knock-on effects. Everything from cars and fridges needed raw materials, outlets to sell them, transportation for deliveries, as well as spare parts and specialists to fit them.

Growth of passenger cars from 1917 to 1929

1917 there were 4,727,468 passenger cars registered in US and by 1929 there were 23,060,421.

The Boom - New management techniques

Some employers, Ford among them, began use 'scientific management' ideas to make production line worker as effective as production line itself. Each task was broken down into series movements and workers trained most effective way to do the task. The system worked best when trained workers stayed at the factory, so scientific management advised paying good wages and creating good working conditions, even benefits for those who stayed long time. these workers benefitted, but only if fitted into system.

The Boom - Federal policies

While government generally avoided intervention in business, it kept some of wartime subsidies to farmers in place and also cut taxes for businesses to encourage 'buying American'

The Boom - Hire purchase and loans

Before the war, borrowing was seen as last resort and only banks and loan companies lent money. In 1920s companies pushed hire purchase (paying company for goods in series of fixed payments) as practical way to buy. companies such as Sears sent out huge catalogues, promising 'easy payments'. as a sense of prosperity rose, more people bought homes and farms on mortgages that banks were more willing to lend. between 1920 and 1929, consumer debt rose from 3.3 billion to 7.6 billion. people not only borrowing, they borrowing more: before 1920 people borrowed 5% of income by 1929 this almost doubled

The Boom - Changing industry

New industries more efficient and used higher level of mechanization. older industries, such as textile manufactured consumer goods, became less important than newer industries that manufactured consumer goods. Many of the new industries, and the goods they produced, ran on electricity. The boom could not really take off until the electricity grid was reaching a significant number of consumers.

Growth of electricity between 1917 and 1930

In 1917 there were 7,889,000 homes and businesses wired for electricity by 1930 there were 24,555,732.

Growth of the stock market in the 1920s

Share trading had previously been something that only banks and wealthy people did. They bought shares for the long term, for the dividends they paid out. But as share prices rose so rapidly people began to realise that it was possible for ordinary people to also make money from shares. This prompted a boom cycle called a bull market. People bought shares, they went up in price and then people sold them. Demand for shares ensured that prices rose because people wanted to be involved. People began to borrow money to buy shares and as they expected to make a profit and could repay the loan. Banks began to use customers' investments to trade in shares.

Warning signs for the Bust

People who could afford consumer goods had bought them and so demand began to fall. However, companies did not cut production enough, so goods piled up in warehouses. By 1927, unemployment was rising and employers cut wages and working hours. The Republican government believed that the economy would fix itself so they continued with lassiez-faire policies, not considering that more people were in debt and the stock market was overheated,

Bull market

This is where share prices rise and people expect this to continue (e.g. during the Boom)

Bear market

This is when the price of shares falls and people expect the fall to continue.

Wall Street Crash events - September 1929

Some investors feeling sare prices were too high, sold and kept the profit. Stock prices began to fall and continued to fall, with more and more investors seling. People began to panic about a crash, and as so many people had invested with credit they rushed to sell. A bear market replaced the bull market.

Wall Street Crash events - October/November 1929

On 29 October, the stock exchange closed. When it reopened, things were calmer but prices continued to fall until 13 November. By this point many small investors had lost everything. Banks that had gambled with their customers' money went bankrupt.

How did natural disasters impact recovery from the Great Depression?

Droughts in the early 1930s made the Great Plains a dust bowl, leading many famers to lose their farms and become migrant workers.

Wagner-Steagall National Housing Act

1937 - Set up the Federal Housing Administration to oversea slum clearance and the building of housing for low-income families.

WW2 Economic Boom - Demand for consumer goods

There was a huge demand for the consumer goods people had done without during the war, making the move from wartime industries to civilian ones easier. Production increased (from $213 billion in goods in 1945 to $284 billion by 1950) which helped keep unemployment low.

WW2 Economic Boom - Business boom

The business boom encouraged employers to expand their workforces and to raise wages, thus encouraging even more spending.

WW2 Economic Boom - Strikes

The government came down hard on strikes for higher wages as prices rose. When coal miners went of strike, President Truman took control of the mines. The rail workers went on strike to support the miners, and so Truman took over the railways. When rail workers walked out (marooning 90,000 passengers and stopping 25,000 goods trucks, many loaded with perishable food), he asked Congress to draft strikers into the army. The strikers backed down and there were very few strikes after this.

WW2 Economic Boom - Baby boom

A post-war "baby boom" meant a growing demand for child-centered goods and foodstuffs (e.g. in 1947, nappy sales were $32 million; in 1957 they were $50 million). In 1940 there were 2,559,000 live births, and in 1955 it was 4,104,000. It stayed at the four million mark until 1965. More babies meant more toddlers and more teenagers to come, creating a need for schools and colleges.

WW2 Economic Boom - Farmers

Even some farmers managed to do well, thanks to continued farm subsidies and the demand for farm produce at home (as consumers spent more on food) and abroad (especially in war torn Europe)

WW2 Economic Boom - "Fair Deal"

Government spending rose steadily throughout the period under the "Fair Deal" policies created by Truman. Immediately after the war, the government provided support for all those leaving military service. This included a leaving payment, unemployment pay for a year, loans to buy a home or business, and medical and healthcare. Through the GI Bill it also provided training or education, an opportunity taken by over 12 million.

1949 National Housing Act

Was part of Truman's "Fair Deal". Introduced slum clearance and building of 810,000 low income housing units

1946 Employment Act

Set a goal of full employment. Also set up a Council of Economic Advisers (CEA) to advise the president on managing the economy. It also said the president had to give a strategy report to a Joint Economic Committee of the House of Representatives and the Senate after each federal budget.

Transistor radios in the USA

Americans designed the first transistor radio, but didn't improve and minaturise it. The Japanese did. US businesses had to buy Japanese parts to assemble in the USA. By 1958, there were 45 million transistor radios in the USA.

Growth of the Sun Belt

There was a shift in industry for the North and East of the country towards the South and West. Much of the shift was due to wartime investment for the war production industry, including aircraft manufacture and military bases. The move was made because land, goods and services were cheaper in the South and West. After the war, the military bases stayed and the new factories began producing peacetime goods. The development of good air conditioning made the area more attractive and more people retired there. This contributed to the decline of inner city communities.

Problems with gold in the 1960s

The amount of gold held by the government kept falling, so the balance between the gold reserves and paper money was increasingly out of balance. This was a significant problem as the 1944 Bretton Woods agreement had made the dollar the currency to be backed by a gold reserve (other currencies were then valued against the dollar).

Stagflation

When business stops expanding and stagnates while inflation continues.

Causes of stagflation in the 1970s

The shift in position of the USA in the world economy, as the USA was overtaken in developing technologies by other countries such as Japan, the UK and Germany. Meanwhile business takes were rising and costs of raw materials were increasing, so businesses had less to invest in improving technology. Productivity was also falling.

Government economic action in the 1970s (Federal spending)

Federal spending was very high, driven up by linking social security payments and some pensions to the Consumer Price Index in 1972 and 1974.

Government economic action in the 1970s (Vietnam war)

The end of the war in Vietnam saved money that would have been spent on the war, but returning soldiers added to the unemployed and the drain on social and medical benefits.