Capitalism & Causes of the Boom (1920s) PDF

Capitalism & Causes of the Boom America in the 1920s  What is Capitalism? https://www.investopedia.com/terms/c/capitalism.asp 3  What is Capitalism? An economic system based on private ownership of the means of production and the crea...

Capitalism & Causes of the Boom America in the 1920s  What is Capitalism? https://www.investopedia.com/terms/c/capitalism.asp 3  What is Capitalism? An economic system based on private ownership of the means of production and the creation of goods and services for profit Central characteristics: private property, capital accumulation, wage labour and competitive markets Free Market Economy The market, not government, determines prices and the distribution of goods and services Arguments for and against Supporters argue that it encourages entrepreneurship and innovation Critics argue that it encourages the exploitation of workers in order to gain more profit 4  Forms of Capitalism Laissez-faire Capitalism Social Market Capitalism No government interference Government has minimal in the economic or business intervention in the economy affairs of individuals Imposes some regulatory No state funded social sanctions on issues such as services e.g. schools, health and provides social hospitals etc. services An ideal rather than an E.g. Australia, Japan, actual economic system Western Europe 5  The Gilded Age 1870-1890 America had become the largest economy in the world after the Civil War Some businessmen, entrepreneurs and industrialists accrued enormous wealth No income or corporate tax to pay Lived wealthy, ostentatious lives Political corruption was rife 6 Gilded Age: Labour & Capital A time of large profits and industry expansion, but also an economic downturn 1870s depression had left millions without jobs and forced to work in factories and sweatshops 60 hour working weeks USA had the highest rate of accidents in the industrialised world Widely held view of Social Darwinism Belief that the gap between the rich and poor was part of the evolutionary order- natural selection Republican party in power for most of period Any move to regulate working hours or conditions was deemed unconstitutional 7  Proof of the Boom “We in America are nearer to the financial triumph over poverty than ever before in the history of our land. The poor house is vanishing from among us”- Herbert Hoover, 1928 Number of millionaires: 1914- 7000 1928- 35000 8  Your Task 1. Complete Questions 1-4 under the section entitled ‘The Gilded Age’ on p.2 of your Questions Booklet. 2. Catch-up on textbook reading. 9 Economic Government System Private Intervention Goods Production Profit Price 10  Causes of The Boom Post-Civil War Railway Expansion Immigrant Labour Reconstruction Technological Developments & Resources Mass Production Second Industrial Revolution The Experience of Credit & Consumer Republican Policies WWI Confidence 11  Expansion of the Railways Civil war prompted industrial development in the north: “second industrial revolution” Government awarded land grants to private investors to build railways Number of railways tripled between 1860 and 1880 New settlements developed around railways Allowed for goods produced in factories to be transported across the nation and overseas How might have the expansion of railways encouraged or caused capitalism? 12  The American Civil War 1861-1865: War between United States and 11 Southern states Result of tensions surrounding the issue of slavery After the election of President Abraham Lincoln Southern states wanted to secede (withdraw) from the country and form the Confederate States of America 620,000 soldiers killed and millions injured Left the Southern states in turmoil Confederates surrendered in 1865 13 Post-Civil War: Reconstruction 1865-1877 The process of rebuilding the south after the Civil War Much of the south had been destroyed e.g. farms and plantations To assist the South in becoming part of the Union President Andrew Johnson wanted to be lenient on the South Congress disagreed and began to pass harsh laws for the South The Black Codes Passed by some southern states Laws preventing African Americans from voting, going to school, owning land etc. Caused conflict between North and South 14 https://www.youtube.com/watch?v=UPvwpYeOJnI 15 The Second Industrial Revolution Civil War stimulated industrial development in the north Soldiers needed guns, uniforms, ammunition, food, transport etc. America’s economy entered a period known as the Second Industrial Revolution after the war 1870-1914 A technological revolution Innovations and inventions changed the way goods were produced, sold and distributed Rich resources and a growing migrant population allowed America to take advantage of these developments 16  Developments in Technology Technological developments meant goods could be produced more cheaply and efficiently Mass-produced consumer goods helped widen the domestic market Bigger domestic market meant factories could produce more products and sell more Electricity: Efficient source of power for new factories as well as the basis of many new products Assembly Line: Introduced by Henry Ford in 1913 Tractors: More efficient method of farming 17 What was the Second Industrial Revolution? Why was it important? 18  Resources USA is a large country rich in natural resources Could sustain its own industrial progress without cutting profits due to a dependence on imports Oil discovered in the 19th Century 19 The Experience of WWI USA made lots of money through the sale of arms and munitions during the war Encouraged the USA to develop new and profitable markets and industries e.g. chemicals & plastics American factories could operate at full capacity during the war, unlike in Europe Overseas markets opened themselves to the USA after the war as their own industries had been ruined 20 Republican Policies Republican Era: 1920-1932 Laissez Faire attitude with minimal government intervention Low taxation Increased purchasing power for individuals Increased investment opportunities for businesses Increased tariffs on goods coming into America 21  22 https://www.youtube.com/watch?v=KP6z7f4kSNE  Tariff Protection Tariff: a government tax on imports or exports Republicans heavily taxed imports Reduced foreign competition by making local products cheaper than imported products 23  Mass Production Products could be produced cheaply through mass production American culture did not inhibit the purchase of massive consumer goods as it did in Britain 24  Credit American loans to other countries during the war brought lots of wealth to banks Banks were eager to lend money to individuals and businesses Due to their wealth, banks we happy to offer credit at low interest rates Easy access to money/credit boosted demand, and therefore, production Created the first mass consumer society 25 Consumer Confidence US Citizens felt confident about America’s economic position Helped to stimulate the economy as people were prepared to borrow money to help fuel the economy 26  Marketing & Media Had a large influence on the boom Technological developments in TV and radio allowed businesses to market their goods to a wider audience and gain more sales Created a mass audience 27 https://online.clickview.com.au/libraries/videos/aed5bd5a-47f2-d144-3ef7-5da1cef10541/capitalism-a-love-story 28