Economic Change in the USA (1917-1941)

Key Terms

Boll Weevil
A beetle that feeds on young cotton plants, the boll weevil began spreading across the USA in the late 1800s, contributing to a significant 34% drop in cotton production by 1921.

Economic Impact (1917-1941)

Post-War Economic Landscape
Following WWI, the US faced a brief depression. War-time encouragement of wheat production and subsequent overproduction led to a price collapse. Mechanised farming reduced labor demand, further hurting farmers, especially cotton growers affected by the boll weevil.

Industrial Decline and Labor Strikes
Strikes in 1919-1920 highlighted worker unrest for better conditions. Many strikes led to business closures, raising unemployment. Traditional industries, particularly coal, experienced decline due to alternative energy sources. Coal's energy supply share dropped from 90% in 1900 to 60% by 1930.

Government Response
Laissez-faire policies emerged as the Republican government avoided intervention during the downturn, leading to decreased exports from retaliatory tariffs. Misbelief in a self-correcting depression contributed to the economic crisis of 1929.

Economic Boom Cycle

Mass Production and Affordability
The economy shifted to a boom cycle through mass production, enabling specialization and reducing production costs. Ford's factories exemplified this; registered passenger cars increased from 4,727,468 in 1917 to 23,060,421 in 1929.

Secondary Economic Effects
Mass production created a need for raw materials and improved transportation, further promoting economic growth.

Financial Trading and Speculation
The 1920s saw rising stock prices, leading to increased public engagement in share trading and a bull market.

Case Study: The Ford Model T
Launched in 1914 at $825, production efficiency saw its price fall to $260 by 1924. Although Ford's daily wage of $5 surpassed the $2.50 average, market saturation and the last production of 15 million units in 1927 showed economic vulnerabilities.

New Management Techniques
Ford and others adopted scientific management principles by Frederick W. Taylor to improve efficiency, enhancing productivity but enforcing strict worker conformity.