American Isolationism and the Roaring Twenties Economy

Isolationist USA and the Return to Normalcy

In 1917, President Wilson took the USA into World War I. It was a controversial decision. Wilson wanted the USA to take a lead in the League of Nations, but he needed the support of Congress. It was formed by political enemies, which brought him down. Isolationists won the debate.

In 1920, Republican President Warren Harding promised a return to normalcy. Over the next 10 years, the USA became richer as its economy boomed.

The Economic Boom of the 1920s

Foundations of Industrial Strength

The USA was a vast country, rich in natural resources with a growing population. Its home market was large and expanding. The USA was a leading oil producer and saw the rise of new technology, a new film industry, and efficient, productive American agriculture.

The Impact of World War I

World War I provided a massive boost to American industry. The USA:

• Lent money to the Allies.
• Sold arms and munitions to Britain and France.
• Sold massive amounts of foodstuffs.
• Developed successful chemical industries (surpassing Germany).

Republican Economic Policies

From 1920 to 1932, the Presidents were Republican. Their core beliefs included:

• Laissez-faire: The government should interfere as little as possible in people's lives and let businessmen do their jobs.
• Tariffs: To protect businesses against foreign competition. This allowed American companies to grow even more rapidly.
• Low Taxation: This gave benefits to ordinary working people and even more to the very wealthy. If people kept their own money, they would spend it on American goods.
• Trusts: Huge super-corporations dominated industry. They believed that the captains of industry knew better than politicians did.

New Industries and Mass Production Methods

The era saw growth in steel, chemicals, glass, and machinery. Consumer goods like telephones, radios, vacuum cleaners, and washing machines became common. These industries used efficient techniques proposed by the industrial efficiency movement.

Big industries utilized sophisticated sales and marketing techniques, including mass nationwide advertising via posters and radio ads, as well as traveling salesmen. The "buy now, pay later" hire purchase scheme became popular.

The Motor Car Revolution

The motor car industry was revolutionized by Henry Ford, who created the first moving production line. It became the USA's biggest industry, employing hundreds of thousands of workers and supporting the glass, leather, steel, and petrol industries, as well as road-building laborers.

The American State of Mind

Americans believed they had the right to prosperity. Consuming more and more was seen as part of being American. In the 1920s, they believed that spending money led to a better quality of life.

Challenges in the Farming Industry

Despite the boom, the farming sector faced severe problems:

• After the war, Europe imported far less food from the USA.
• Competition increased with highly efficient Canadian wheat producers.
• Overproduction: Prices plummeted, causing rural bankers to collapse, which led to many farm bankruptcies.
• Unemployment rose as farm laborers were forced to leave the land; most were unskilled.