Year 12 revision material – Boom and Bust

Unit 1 Exam – option 7B

• worth 20% of overall A-Level and 40% of AS

• 1917-33

- social and economic history of USA

- no politics apart from where it directly affects people’s lives

- nothing about international politics

• officially the split in terms of what you get marks for is 13% on
source interpretation and 7% on own knowledge

• therefore…you must be very clear about what each question

demands of you – a) JUST SOURCES b) OWN KNOWLEDGE AND
SOURCES

Define the following:-

Sedition Act Share dividends

Flapper Hire-purchase
John Torrio Hoovervilles
Tin Lizzie Temperance
Laissez-faire 18th Amendment
Moonshine ACLU
‘melting-pot’ WASPs
Quota Act Palmer Raids
19th Amendment Normalcy
Bonus Marchers Kramer
Federal spending Nickelodeon

Key subject knowledge and understanding (from Edexcel syllabus):

 • Boom: the impact of the First World War, Henry Ford and mass
production, consumerism
Candidates should have knowledge and understanding of the reasons for the apparent prosperity of the boom
years in the USA. They should know about the impact Henry Ford had on the automobile industry and on the
USA economy in general, about new business methods consequent upon the growth of huge corporations and
about mass consumerism and easy credit. It is expected that candidates will know how government policies
helped create and perpetuate this boom, in particular the Emergency Tariff Act of 1921 and the Fordney-
McCumber Act of 1922, tax reductions and Coolidge’s general policy of .laissez-faire.. Questions will not be set
on the USA’s involvement in peacemaking and peacekeeping in 1919.20, on the Treaty of Versailles and the
struggle for Senate ratification during this period, or on US foreign policy in the 1920s and early 1930s.
• Prohibition and organised crime
Candidates should understand the reasons why Prohibition was introduced into the USA, and know, in particular,
about the Anti-Saloon League, anti-German feeling and support given by business tycoons like John D.
Rockefeller. They should know about the work of John F Kramer, the first Prohibition Commissioner and about
the difficulties he and his agents faced. The encouragement prohibition gave to mass law-breaking via
speakeasies, moonshine and bootlegging should be understood, as should the links to gangs, gangsters and
organised crime. Knowledge of the activities of John Torrio and Al Capone in Chicago, the St Valentine’s Day
Massacre, corruption within the forces of law and order and the apparent inability of the authorities to control or
contain the situation, is expected. Candidates should also know about the positive attributes of Prohibition.
• Political and social tensions: the Ku Klux Klan, immigration policy,
the Red Scare encompasses not only conflicts arising primarily out of the
reactions of white Anglo-Saxon Protestant US citizens to social change - including
the Scopes trial and the Sacco and Vanzetti case - but also racial tensions and the
women’s suffrage issue
Political and social tensions (the Ku Klux Klan, immigration policy, the Red Scare) relates to conflicts arising out
of the reactions of white Anglo-Saxon Protestant US citizens to social change, to the women’s suffrage issue and
to racial tensions. Candidates should know and understand the reasons for the Red Scare and how it developed in
the USA via, for example, the Palmer Raids. They should understand why Congress passed the Emergency
Immigration Law in 1921 and the Johnson-Reed Immigration Act in 1924, and to the tensions these laws both
reduced and exacerbated. They should understand how the Sacco and Vanzetti case reflected racial tensions.
Knowledge of the ways in which the Ku Klux Klan reflected widespread racism in the USA is expected, as is the
reasons for the Klan.s collapse as a mass organisation in the late 1920s. They should understand how the Scopes
trial reflected the tensions between rural, small town USA and the big cities.

• Bust: the economic and social causes, and the social and political
consequences to 1933, of the Wall Street Crash.
Bust . the economic and social causes, and the social and political consequences to 1933, of the
Wall Street Crash: candidates should understand that the seeds of the Crash lay in the instability
of the boom years of the early and mid-twenties, in particular in the uneven distribution of
income, rural poverty and stock market speculation. Candidates should know about the
immediate causes of the Crash and about why the Crash should have led to the Depression. They
should know about the policies of Hoover and the effect his policies had on relieving the worst effects of the
Depression.

USA – what you need to know (according to the exam board)

impact Henry Ford had on the automobile industry and on the USA economy in general
1903 – founded Ford Motor Company. 1913 – used assembly line (seen in slaughterhouses),
cheaper, more efficient (car took 1.5 hours not 12.5 hours to make). Prices dropped. 8 mill US
cars in 1920, 23 million in 1930. Techniques copied by other companies and industries. Reduced
working day, increased wage, no unions. Car industry=13% US production (1930) and boosted lots
of other industries too.

new business methods consequent upon the growth of huge corporations; mass consumerism and
easy credit
For consumers , hire purchase meant they only needed to find initial deposit, the rest could be
paid in instalments (fine if regular income). Radios (60,000 in 1920, 10 mill by 1929) both an
example of consumerism and a means to more (through advertising). Shares bought on the margin
(cover small % of cost in cash, rest through loans, to be repaid when sell on loans (obviously for
more money!) Banks doing well (getting repayment of war loans from Allies) and keen to lend.

how government policies helped create and perpetuate this boom, especially:-
Emergency Tariff Act of 1921 - temporary, on agricultural products, until F-Mc Act
Fordney-McCumber Act of 1922 – raised import duties on farm products, chemicals, textiles etc.
Tariff Commission set up to recommend changes to these tariffs, up or down, by up to 50%. Shift
to protectionism
tax reductions – eg 1925 Revenue Act, maximum surtax cut from 40% to 20%, gift tax abolished,
estate tax halved
Coolidge’s general policy of laissez-faire – believed in ‘minimal government’, claimed ‘the business
of America is business’. If big business had freedom, within a wall of economic protection,
prosperity would follow.

reasons why Prohibition was introduced into the USA, in particular:-

the Anti-Saloon League – campaigning organisation (nb also Women’s Christian Temperance Union –
effects of alcohol on marriages and children) for ban on alcohol. Members mostly WASPs [don’t
use this acronym in the exam but it’s useful shorthand], church-goers from rural/small town setting –
worried about behaviour and morality in big crime-ridden cities like New York and Chicago
anti-German feeling – after-effects of WW1, many US brewers were of German origin
support given by business tycoons like John D. Rockefeller – both personal and financial support,
not from moral reasons, but because workers would do better if minds free from alchohol
work of John F Kramer, the first Prohibition Commissioner and the difficulties he and his agents
faced
had to enforce, under the Volstead Act, the 18th Amendment, which banned liquor (drink with
0.5%+ alcohol). 1,500 agents appointed, 3,000 by 1930. Badly paid, open to bribery, sometimes
without scientific/industrial expertise needed
encouragement prohibition gave to mass law-breaking via:-
speakeasies – illegal bars
moonshine – homemade alcohol, from corn. 200% proof corn whiskey produced+sold to
bootleggers. Moonshine could cause paralysis, blindness, even death
bootlegging – illegal traffic of alcohol in the USA. Often organised offshore, from outside the
three-mile from the coast limit
Arrests from drunkenness trebled and deaths from alcoholism rose by 600%
links to gangs, gangsters and organised crime, ie:-
activities of John Torrio and Al Capone in Chicago:- Capone was Torrio’s successor. Leaders of
Irish-American gang, with Mafia links, in Chicago. Torrio organised city into gang territories (so
less conflict between gangs), bought mayor [Bill Thompson]’s protection, rigged elections of his
nominees. Lucrative business in bootlegging+speakeasies – made $30 million, retired to Italy in
1925. Capone was very violent, extorting money from city citizens, was involved in speakeasies,
brothels+drug trafficking, also lots of gang warfare. Made $27 million by 1927.
the St Valentine’s Day Massacre:- 14th Feb 1929 – 4 members of Capone’s gang, dressed as
policemen, trapped seven members of another Irish-American gang led by Bugs Moran – who
expected a police search, so raised their hands when told to, and were then shot in the back.
Capone finally convicted for tax evasion, never punished for perhaps 400 murders.
corruption within the forces of law and order and the apparent inability of the authorities to
control or contain the situation
judges and police officials were often in the pay of the gangsters
positive attributes of Prohibition
Growth of soft drinks industry – Coca Cola and Pepsi Cola both expanded

reasons for the Red Scare and how it developed in the USA via, for example, the Palmer Raids
high inflation –after WW1. 1919 - 4million workers on strike. Fears they were led by Communists
(1917 revolution in Russia) attempting to overthrow US system of govt. Assassination attempts on
eg Rockefeller. 6,000 arrests. Known as Palmer Raids after the Attorney General (who hoped to
get nomination as President in 1920). Palmer set up General Intelligence Division (forerunner of
FBI) led by Hoover.

why Congress passed the Emergency Immigration Law in 1921 and the Johnson-Reed Immigration
Act in 1924
Idea of USA as ‘melting pot’ had broken down. 19th+early 20th century- lots of immigrants, who
congregated in their districts in cities. 1910-20 – 6 million immigrants, lots from E Europe,
unskilled – cheap labour. Americans feared they would drive down wages. So – Quota Act 1921 –
3% per year of the foreign-born people of the same nationality who already lived in the USA in
1910. Applied to Italians, Poles and Russian Jews. BUT professionals were allowed in freely.
National Origins/Johnson-Reed Immigration Act 1924 – took this quota down to 2%, also no Asian
immigrants.
tensions these laws both reduced and exacerbated
Immigration fell drastically – problems with existing Chinese and Japanese communities in the US
– clear disrespect for the unskilled

understand how the Sacco and Vanzetti case reflected racial tensions
arrested for the robbery and murder of 2 men, carrying $16,000, in 1920. Common crime, but
accused were known anarchists who had avoided military service+supported strikes. Judge at trial
prejudiced against them because of this, and their Italian origins – had tried Vanzetti for
previous crime. Talked about case and criticised S+V. Executed 1927

ways in which the Ku Klux Klan reflected widespread racism in the USA
KKK refounded in 1915, against Catholics and Jews not just black people. Also anti-evolution. Gave
members a sense of power. Flourished in South. Appealed to many whites afraid of change
reasons for the Klan’s collapse as a mass organisation in the late 1920s
David Stevenson, leader in Indiana, convicted of second-degree murder after a woman he raped
committed suicide. Revelations of financial mismanagement in the KKK in Pennsylvania. Evans,
leader since 1924, tried to turn the Klan into more of a social club – some complained it had gone
soft.

how the Scopes trial reflected the tensions between rural, small town USA and the big cities
1925, Scopes read out a description of evolution to his class, deliberately to provoke a test case
on behalf of the American Civil Liberties Union (shows awareness of publicity – lots of media
attention). ACLU had Darrow, leading lawyer, who humiliated Bryan (champion of fundamentalist
politicians) in cross-examination

understand that the seeds of the Crash lay in the instability of the boom years of the early and
mid-twenties, in particular :-
uneven distribution of income – top 5% Americans earned 1/3rd total personal income. 50%
families earned less than $2000 (ie were below poverty line)
rural poverty – falling agriculture prices after WW1 (due to Prohibition, introduction of synthetic
fibres, and technical advances leading to an increase in farm output). 2/3rds farms operated at
loss? McNary-Haughen Bill passed through Congress but Coolidge vetoed it – would have involved
govt buying up all stock to sell abroad. In 1920s American farmers borrowed $2,000 million in
mortgages
stock market speculation – 1 million active speculators. Buying on the margin – 75% purchase price
of shares could be borrowed.

immediate causes of the Crash

Federal Reserve Board slow to increase interest rates. Decline in housebuilding (by 25% in 1928-
9). Rising unemployment since 1927. Still some thought share prices would go on increasing
forever. Banks started to demand repayment of loans to people buying on the margin – so these
customers had to sell shares, at any price.

why the Crash should have led to the Depression

Banks weren’t part of a national organisation – so when there was a run on the banks to withdraw
deposits, many were forced to close. Businesses therefore couldn’t get loans to tide them over
the difficulties. Workers had no savings to help them. They couldn’t buy consumer goods, leading
to unemployment, which further reduced spending power.

policies of Hoover and why they didn’t work

Hoover believed in voluntarism – ie trying to persuade businesses to take action to deal with the
economic situation without the government passing laws to force them to act. – followed this
approach 1929-32. eg – business leaders cam to White House+promised to keep wages and
employment up. Oct 1930 – Emergency Relief Committee for Employment to coordinate voluntary
organisations. 1931 – persuaded bankers to set up National Credit Corporation to lend money to
smaller banks so they could make loans to businesses. Hoover cut taxes (for some by 2/3rds) and
increased government spending. Allowed Hawley-Smoot tariff (40%, 1930) to pass.

policies of Hoover from 1932

Shift in emphasis to greater involvement – eg 1932 Reconstruction Finance Corporation – could
lend up to $2 billion to help financial institutions – mostly big banks. 1932 – Emergency Relief and
Construction Act – RFC could lend up to $1.5 billion to states to finance public works – but it was
loans not grants.
Bonus Marchers – 20,000 veterans marching in Washington – wanted immediate payment of bonus.
Some squatting in Anacosta Flats. Ordered to be dispersed by troops, with tear gas. Hoover
supported the army (led by MacArthur)’s actions
New advice for 2007 exam – changed papers

General advice
• Use the mark tariffs as a guide to the length and complexity of the answer, and
try to reserve two-thirds of the 60-minute examination for question (b).
• Take time to read the questions carefully and be certain about the precise
requirement of each question.
• Plan answers to the questions; this is especially important for question (b), where
a balanced, reasoned and supported judgement is expected.

Specific advice
(a) When cross-referencing to agree with or challenge a view or attitude, or to
explain a change, or to assess how far a claim is valid:
• accurate comprehension and analysis of the sources is needed
• responses should go beyond simple matching of surface features; they should
consider, as appropriate, inferences that can be made from the sources when
comparisons are made
• comparisons should be supported by reference to brief, specific phrases,
words or ideas in a source; excessive quotation from sources is not
encouraged
• never be tempted to write about the focus of the question from knowledge
that comes from beyond the source; the stem of the question will always
focus on what can be claimed on the basis of the provided material, not what
the candidate knows about that specific issue
• responses should go beyond the content of the sources to consider, from the
information given in the captions, the nature of the sources, their origins and
likely purpose
• the task involves giving weight to evidence by taking into account the
implications of the nature and purpose of a source in order to consider how
much support it can provide for a given statement
• attention should be paid explicitly to ‘how far’ there is support or challenge.

(b) Use of two or three sources and own knowledge to agree or disagree with a
presented view or interpretation. Candidates should:
• focus on the question
• note the relationship between the sources and the statement in the question
• use own knowledge to add depth and range to the points which can be drawn
from the provided sources
• present an argument
• use the required sources and own knowledge to support the argument
• reach a reasoned, supported and balanced judgement; this judgment should
be based on both precise knowledge and appropriately selected evidence
from the sources.