Causes Of The Usa Boom In The 1920's

1686 words - 7 pages

Causes of the USA Boom in the 1920's

In the 1920’s America had a colossal boom in industry, most called
this the ‘Age of Excess’. From 1921 to 1929 the USA gross national
product was increased by over thirty billion dollars. This sudden
change in economy occurred for a number of reasons and helped the USA
gain its current title as a global superpower.

The main cause for the boom in America was WW1. The allies just didn’t
have the resources to produce the weapons needed to continue the war
effort themselves. Therefore they bought the required munitions etc.
off the Americans, so as a result the Americans where being pumped
full of money from the allies. This meant that while the allies fought
the war and were being depleted of their wealth the Americans had a
time of prosperity resulting in the USA finishing WW1 as the richest
country in the world, while the of rest of the world tried to back on
their feet. This meant that there was a lot more money in the US
economy so new technology could be researched before any other country
in the world giving America an overall advantage.

The government also added to the boom by the way they did things. The
Fordney McUmber tariff was introduced in 1922 which increased the
price of foreign goods being sold in America making them more
expensive than American products. This meant that the foreign produce
would be no match for home grown produce which encouraged people to
buy American products keeping the money in the American economy. This
was called 'Protectionism' and ‘Isolationism’. The government also
lowered taxes and introduced the policy of laissez-faire. Lowering
taxes gave the America public more money to spend and the republicans
claimed to always be lowering them this may be why they were in power
for so long. Lowering taxes meant that people had more money to spend
which meant they brought more goods and so keeping the boom in America
going. Laissez-faire meant that the wherever possible the government
refrained from interfering with the industry in the country and so
allowing them to get richer and promote their goods at ever cheaper
prices.

Mass production, pioneered by Henry Ford, brought prices down further
than ever before and created many more jobs. Ford is the ideal example
of how much cheaper goods became from the introduction of mass
production. In 1914 a ford model t cost $850 but by 1926 due to mass
production and the introduction of standardised parts the model t cost
just $295 and ford was still making profits. More jobs were being
created constantly, in roads and in newly available consumer products
such as fridges, radios and vacuum cleaners.

The introduction of advertising on the radio etc. also played a big
par in the boom. The adverts persuaded people to buy the goods such as
fridges etc and so the...

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