You are here: Home » History » 1920s America – How Was The Economic Boom Caused?

1920s America – How Was The Economic Boom Caused?

A set of brief notes on how the economic boom was caused in America in the 1920s just before the bust that it experienced.

The boom of the 1920s is one part of America’s history that we just have to remember even now. Here is why the boom even happened in the first place in really brief notes.

World War 1

America joined the war in 1917 which was much later than Britain and France did and as a result, America soon became a leading exporter because Britain and France’s industry was disrupted. America lent Britain and France food and weapons to keep them running in the war. America lent them so much that at the end Britain and France owed them £900 million. America made $175 million from these exports. America replaced Germany as the leader of the chemical industry which would then trigger the growth of many other industries. Unlike Britain, America didn’t need to change its factories like Britain did, because under the Defence of the Realm Act (DORA), Britain had to change most of its factories to ammunition ones because they were running out of weaponry.

Republican Policies

The laissez-faire approach meant that people were free to do what they want and the government wouldn’t interfere so this was a pure example of capitalism in action. The government even introduces low taxes, meaning more money to spend on consumer goods. There were trusts, where companies controlled whole industries so the ‘captains’ of the industries would do a much more efficient job like Carnegie who controlled the steel industry. Tariffs meant that there was less foreign competition so only American goods could flourish because importing would be expensive. The Fordney-McCumber Tariff was a good example of protecting the American industry.

Industrial Strength

America was very self-sufficient with their store of natural resources like coal and iron and when it came to oil, they were the leading producers. This would trigger many other industries too. Good agriculture meant that food was being exported when needed. Apart from this the film industry began to grow as did new technology industries like electricity, cars, telephones etc.

New Industries and Methods

Advertising came in handy after good war propaganda skills. Mass production meant that goods were quicker and cheaper. ‘Hoover’ became a household name and the biggest growth was in radios. In 1920, there were 60,000 radios sold but come 1929, it rose to a whopping 10 million. The number of telephones doubled in 15 years, from 10 million in 1915 to 20 million in 1930. The Ford Motor Car Company exhibited some brilliant new methods the biggest being the production/assembly line. This meant that there was 1 Model T being produced every 10 seconds. Such mass production meant that in America, 1 in 5 owned a car whereas in Britain, 1 in 43 did and in Russia, 1 in 7000 owned one. In 1900, there were only a measly 4000 cars being produced but in 1929, this rose to 4.8 million. The Ford Motor Car meant that other companies were encouraged because of the raw materials used and the cars used about 75% of US glass production. This really proved that the American industry was incredibly strong.

Confidence

The people started to grow more confident in the government and the industry. Payment could now be done in instalments and there were many ‘buy now pay later’ schemes and hire purchase really exhibited some strong success where 1 in 6 cars was bought by hire purchase. Rising wages and low takes meant that people could spend more on goods, encouraging the industries to grow. Better still the prices either stayed the same or dropped. Investing in shares became incredibly common

All these factors contribute in building one of the biggest economic booms in the history of the world and America was the proud host to this. For America, this was a win-win situation in every term such that it really buffed them up to take on any challenge. It could be said that this was where America started rising to a state where it could be deemed as a superpower. If only America knew that this boom could be followed by a bust. But, you’ve got to realise that all these factors that built up the economic boom did make a significant part of the 1920s very special indeed.

12
Liked it
User Comments
  1. Lostash

    On August 24, 2009 at 4:21 pm


    Excellent piece! You really are coming into your own now Atikin!!!

  2. Rosie

    On February 16, 2011 at 10:12 am


    This is the shiz.

  3. DAN MCHARDY

    On July 16, 2011 at 1:39 pm


    you mention that the cars used 75% of the glass production of America, but none of the model T ford’s had glass!

  4. Megg

    On October 18, 2011 at 1:05 pm


    thankyou! i have a history exam tomorrow and we need to mention those exact things (republican policies, new industries new methods, industrial stregnth, ww1 and confindence) and this has helped a lot!

  5. Aladdin

    On November 16, 2011 at 4:29 pm


    this does not tell me about the economic boom of the 1920’s you jerks.

  6. david

    On April 18, 2012 at 10:53 pm


    oook no one cares megg

  7. david

    On April 18, 2012 at 10:54 pm


    oook no one cares megg

  8. Miguel

    On April 18, 2012 at 10:55 pm


    Shut up david and aladdin you guys suck

Post Comment
Powered by Powered by Triond
-->