An economic boom is when an economy rapidly grows in strength over a short period of time. The economic boom in the 1920’s in the USA was due to numerous factors which were all linked so without the one factor the other factor wouldn’t have contributed to the boom.
The numerous factors which each contributed to the USA’s economic boom in the 1920’s are listed below:
The fact that the USA had a great number of resources such as wood, iron, coal, minerals, oil and land contributed to the boom massively. These had helped the USA become a great industrial power by the beginning of the 20th century and acted as a sound basis for further expansion into the 1920’s. Americas resources were so vital for the economic boom because without them it would simply have not been possible.
Impact of First World War
The first world war was a huge contributing factor to the boom during the war America had supplied Europe with many goods and overtaken European overseas markets too. The USA industry was now the world leader in some areas now such as the chemical industry. The war also bought about technological advancements which were just as necessary in order for an economic boom to occur.
Leading up to the boom plastics like bakelite were developed effectively for household use. Other advancements such as automatic switchboards glass tubing conveyor belts and concrete mixers help modernise existing industries and create new ones. The most important technological advancement was electricity this provided a cheaper more efficient source of energy to power factories and led to the invention of new products such as vacuums and fridges.
New technology meant that goods could be produced much quicker and cheaper. Due to the invention of the production line by Henry ford cars could be made so cheaply that ordinary Americans could afford them, the idea of a production line was applied to new and existing industries especially consumer products.
Companies spent huge amounts on advertising their mass produced goods to a mass market. Sophisticating selling techniques were developed to persuade people to buy products. The expansion of the mail order companies gave consumers in the countryside access to the wide range of goods on offer.
Credit made it possible for people to buy products which they couldn’t afford, the company arranged for the customer to pay by monthly instalments or hire purchase.
Americans confidence was sky high they believed nothing could go wrong which led to them investing in companies and trying out new ideas.
The policies of Republican Presidents
Republican pro business policies encouraged the boom because:
1. They lowered taxes on income and company profits giving the wealthy more money to invest in American industry and buildings and people more money to spend on American goods.
2. They put Tariffs on imported goods making imports more expensive prompting Americans to buy American goods which were cheaper.
3. They didn’t interfere in business or put any controls on financial institutions.
All of these factors fed into the boom. Each and every factor was vital in order for a boom to take place. Once the boom had become however it was self generating. The mass production of cars stimulated the growth of industries that produced parts for cars such as rubber for tyres, glass for windows, metal for the car body oil for petrol and so on. More cars also led to the increased amount of roads being built and maintained, buildings such as service stations had to be built as well and petrol garages to meet ever increasing demand for petrol.
The development of electricity stimulated the growth of new industries making electrical products. New companies created a demand for buildings because offices and large stores needed to be constructed this helped the construction industry hugely. More people were then needed to work for these new companies and the companies paid decent wages to their employees meaning that the workers then had more money to spend on consumer goods increasing the demand ever more.