There was a brief economic recession at the start of the 1920s, but, as the decade moved on, the economy boomed and America began the age of consumerism - many Americans bought cars, radios, fridges etc. Major cities such as New York and Chicago grew rapidly and the building of skyscrapers like the Empire State Building, which was completed in 1931, seemed to show the self-confidence of American society.

Many Americans wanted to enjoy themselves as much as they could by perhaps listening to the new jazz music, go to the cinema, dance, watch sports eg. baseball and Babe Ruth. The emphasis on having fun was called the Roaring Twenties.

For many Americans, the 1920s was a decade of poverty. Generally, groups such as African-Americans, women and farmers did not enjoy the prosperity of the Roaring Twenties. More than 60 per cent of Americans lived just below the poverty line. Life was particularly hard for African-Americans in the Deep South states where the majority of black people endured a combination of poverty and racism.

1. The changing role of women was a result of the work they did during the war.
2. The number of working women increased by 25 per cent.
3. In 1920, all women were given the right to vote.
4. 'Flappers' smoked in public, danced the new dances, and were sexually liberated.
5. Women wore clothing more convenient for activity and stopped wearing long skirts and corsets.
6. Divorce was made easier and the number of divorces doubled - women were not content just to stay at home and put up with bad husbands.
7. But most women were still housewives and were not as free as their men.

America was in a fortunate position as the First World War ended. The war had not directly damaged American society and it had led to increased demand for American goods. This resulted in the rapid growth of industry and farming. The economy grew even faster when the war ended.

The keys to America's economic boom were technological progress and increased consumer demand. Businesses began to make huge profits.

Industrial production virtually doubled in the 1920s.

Between 1919 and 1920:

• America's gross national product (GNP) grew from $78 billion to $103 billion.
• The number of households with a radio rose from 60,000 to 10 million.
• The number of people filing income tax returns for earnings of more than $1 million a year rose from 65 to 513.
• The number of airline passengers grew from less than 6000 in 1926, to approximately 173,000 in 1929.

The economic boom affected society. Jobs were easy to find and were better paid than before. There was a clear link between prosperity and social change. For example, as middle-class women became better off they enjoyed greater social freedom - they wore make-up, shorter skirts and smoked in public.

Above all, the motor industry (automobiles) grew rapidly. As the cars poured off the production lines there was a need for more rubber to make tyres, glass for windscreens and leather for seats. The man behind the rise of the motor industry was Henry Ford.

Five causes of the boom

1. Isolationism - the republican government under President Harding (1921-3) and President Coolidge (1923-9) kept out of foreign affairs, and limited foreign competition by imposing high import tariffs.
2. Technology - especially in the electrical, chemicals and film industries.
3. Mass production - especially in the automobile industry.
4. Hire purchase - allowed people to purchase new gadgets such as vacuum cleaners, washing machines and refrigerators. Borrowing increased the amount of money available to spend, and, therefore, the demand for goods.
5. Shares - firms learned to raise money for expansion by selling shares on the Stock Exchange - this was to cause problems later.

Henry Ford and the impact of the motor industry

The motor industry led to a boom in other related industries

• Henry Ford developed the assembly line and conveyor belt to speed up motor production.
• Ford's River Rouge plant in Detroit, Michigan became the largest factory in the world.
• Ford produced a standard model, the Model T Ford. A new Model T Ford cost less than $300 in the mid-1920s.
• By 1929, more than 26 million cars were registered in the USA.
• During the 1920s, about $1 billion a year was spent on the construction of a national network of highways.
• The automobile industry also caused other industries such as steel, rubber, leather and paint to grow rapidly.

Industry

It was not all boom for American industries. Traditional industries such as coal and textiles did not prosper. In 1929, when the average monthly income of New York bricklayers might be $320, coalminers were earning only $103 a month. Also, during the 1920s, in response to American import tariffs on their products, many other countries put customs duties on American goods, which reduced American exports.

Agriculture

For many American farmers, life in the 1920s was a constant struggle against poverty. During the First World War, farmers had been encouraged to grow as much food as they could. They continued to do this in the 1920s until they had produced more cotton and wheat than they could sell.

As prices dropped, many farmers lived in unhygienic conditions in tin shacks, without electricity or running water. In 1929, when the average monthly income of a skilled manufacturing worker might be $140, farm labourers were earning only $49 a month.

Social problems

People who were wealthy in America were extremely rich, but few people shared in this prosperity. Only 5 per cent of the American population owned a third of the wealth, while 42 per cent of the population were living below the poverty line.

Racism

Before the First World War, many Americans saw their country as a melting pot in which people of different nationalities, races and religions could live in harmony. The Statue of Liberty symbolised the welcome offered to the huddled masses as they entered America. Yet, there were signs that this mood of tolerance was under attack.

The revival of the Ku Klux Klan was a frightening development. The Klan believed in the superiority of the white race. Its members wore white gowns and pointed hats, and burned large crosses as a symbol of their presence. The revival of the Klan started in the Deep South, but spread to other parts of America.

Extra details

• In the Red Scare of 1919-20, hostility against communists and suspected communists reached fever pitch.
• The Ku Klux Klan, a racist organisation set up in the 19th century was revived by William J Simmons in 1915. The new Klan with its secret passwords and violent attacks caused terror amongst the African American population.
• The Emergency Quota Act of 1921 and the National Origins Act of 1924 made it much more difficult for immigrants to enter the USA.

January 16, 1920 - the 18th Amendment was passed making the manufacture and sale of alcohol illegal. But many people in this time of 'Prohibition' continued to drink and gangsters made enormous amounts of money from supplying illegal liquor.

Prohibition summary

The noble experiment of Prohibition was introduced by the 18th Amendment, which became effective in January 1920.

Here are four reasons why Prohibition was introduced:

1. National mood - when America entered the war in 1917 the national mood also turned against drinking alcohol. The Anti-Saloon League argued that drinking alcohol was damaging American society.
2. Practical - a ban on alcohol would boost supplies of important grains such as barley.
3. Religious - the consumption of alcohol went against God's will.
4. Moral - many agreed that it was wrong for some Americans to enjoy alcohol while the country's young men were at war.

In 1929, however, the Wickersham Commission reported that Prohibition was not working. In February 1933, Congress passed the 21st Amendment, which repealed Prohibition.

Prohibition had failed. Here are six reasons why:

1. There weren't enough Prohibition agents to enforce the law - only 1,500 in 1920.
2. The size of America's boundaries made it hard for these agents to control smuggling by bootleggers.
3. The low salary paid to the agents made it easy to bribe them.
4. Many Americans never gave their support to Prohibition and were willing to drink in speakeasies - bars that claimed to sell soft drinks, but served alcohol behind the scenes.
5. Gangsters such as Al Capone made money from organised crime.
6. Protection rackets, organised crime and gangland murders were more common during Prohibition than when alcohol could be bought legally.

How did Prohibition lead to crime?

• Prohibition created an enormous public demand for illegal alcohol.
• Gang leaders such as Al Capone and Bugs Moran battled for control of Chicago's illegal drinking dens known as speakeasies.
• Capone claimed that he was only a businessman, but between 1927 and 1930 more than 500 gangland murders took place.
• The most infamous incident was the St Valentine's Day massacre in 1929 when Capone's men killed seven members of his rival Moran's gang while Capone lay innocently on a beach in Florida.
• Capone was imprisoned for income-tax evasion and died from syphilis in 1947.
• It has been estimated that during Prohibition, $2,000 million worth of business was transferred from the brewing industry and bars to bootleggers

When the Wall Street stock market crashed in October 1929, the world economy was plunged into the Great Depression. By the winter of 1932, America was in the depths of the greatest economic depression in its history.

The number of unemployed people reached upwards of 13 million. Many people lived in primitive conditions close to famine. One New York family moved into a cave in Central Park. In St Louis, more than 1,000 people lived in shacks made from scrap metal and boxes. There were many similar Hoovervilles all over America. Between 1 and 2 million people travelled the country desperately looking for work. Signs saying 'No Men Wanted' were displayed all over the country.

By the time of the election in November 1932, Hoover's popularity had reached rock bottom. It was not even safe for him to go onto the streets to campaign. After his heavy defeat, Hoover told his friends, "we are at the end of our string... there is nothing more we can do". The American economy did not fully recover until the USA entered the Second World War in December 1941.

Causes of the Depression

1. As early as 1926, there were signs that the boom was under threat - this was seen in the collapse of land prices in Florida.
2. Eventually, there were too many goods being made and not enough people to buy them.
3. Farmers had produced too much food in the 1920s, so prices for their produce became steadily lower.
4. There were too many small banks - these banks did not have enough funds to cope with the sudden rush to take out savings, which happened in the autumn of 1929.
5. Too much speculation on the stock market - the middle class had a lot to lose and they had spent a lot on what amounted to pieces of paper.
6. The Wall Street Crash of October 1929 was a massive psychological blow.
7. America had lent huge sums of money to European countries. When the stock market collapsed, they suddenly recalled those loans. This had a devastating impact on the European economy.
8. The collapse of European banks caused a general world financial crisis.

Effects of the Depression

1. Unemployment - 13 million people were out of work.
2. Industrial production dropped by 45 per cent between 1929 and 1932.
3. House-building fell by 80 per cent between 1929 and 1932.
4. The entire American banking system reached the brink of collapse.
5. From 1929 to 1932, 5,000 banks went out of business.
6. Although many people went hungry, the number of recorded deaths from starvation during the Depression was 110, although many other illnesses and deaths were probably related to a lack of nutrition.

'In Hoover we trusted, now we are busted!' Needless to say, Hoover lost the 1932 election due to widespread poverty and was replaced by the Democratic leader, Franklin D Roosevelt, who aimed to tackle the Depression.

Roosevelt

The Presidential election campaign of November 1932 took place against the backdrop of the most severe economic depression in American history. While Republican President Herbert Hoover was personally blamed for failing to deal with the consequences of the Wall Street Crash of October 1929, the Democratic candidate, Franklin D Roosevelt promised, "A new deal for the American people."

Following a landslide election victory, Roosevelt faced the enormous task of restoring confidence in a shattered economy. He came up with The New Deal.

What did the first New Deal consist of?

Psychological support

1. Roosevelt skilfully used his inaugural address to reassure the American people that "the only thing we have to fear is fear itself - nameless, unreasoning, unjustified terror".
2. Fireside chats - in March 1933, about 60 million Americans gathered around their radios to be told in a warm tone - ""I can assure you that it is safer to keep your money in a reopened bank than under the mattress"".
3. Stabilised the banking system - with the banking system in crisis, the president declared a nationwide bank holiday to allow time for people to regain their nerve. The Emergency Banking Relief Bill brought all banks under federal control. All banks considered solvent were allowed to reopen under licence. Roosevelt had given the banking system much needed time and space to avoid panic.

Practical support

1. The Tennessee Valley Authority (TVA) - responsible for flood control, building dams and constructing new towns.
2. The National Recovery Administration - this agency negotiated with the major industries to create fair prices, wages and working hours.
3. The Agricultural Adjustment Act (AAA) - aimed at reducing farm production and boosting farm prices.
4. The Civilian Conservation Corps (CCC) - offered short-term work to young men on conservation projects.
5. The Public Works Administration (PWA) - constructed schools, hospitals and other public buildings.

2nd new deal.

With the 1936 presidential election on the horizon, the New Deal began to change direction. Some historians have interpreted the change by saying there were two New Deals - the first dealing with the immediate emergency of 1933-34 and the second, which emerged in 1935-1936, offering more radical, reforming policies:

• The Works Progress Administration - this agency employed people to build schools, hospitals and other public buildings.
• The Rural Electrification Administration - this agency aimed to bring electricity to America's farms.
• The National Labor Relations Act (Wagner Act) - this act aimed to improve relations between workers and employers, especially as 1934 had seen a series of violent industrial disputes.

Critics of the New Deal

1. Conservative opponents said Roosevelt had spent too much government money.
2. The wealthy businessmen behind the American Liberty League argued that by increasing taxation and encouraging the development of the trade union movement, Roosevelt had betrayed his own class (Roosevelt was from a very wealthy family).
3. Many ordinary people began writing letters saying things like this one from a man in California - "you are multi-millionaires, what do you care for the masses of the people?".
4. Huey Long - the Governor of Louisiana, known as The Kingfish, launched the Share our Wealth campaign in which personal fortunes of more than $3 million would be redistributed to ordinary citizens.
5. Father Charles Coughlin - a Canadian priest - broadcast popular sermons on the CBS network, promising to nationalise the banks.
6. Dr Francis Townsend planned to boost the economy by raising pensions for the over 60s - in return, they would spend $200 a month to increase demand for consumer goods.