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Boom Of The American Economy In 1920's

1645 words - 7 pages

Boom of the American Economy in 1920's

The US economy experienced a boom from 1923 for a multitude of
reasons, none of these reasons are solely responsible for the "boom",
however as I hope to explain they did influence the economy in order
to maintain the boom. The plethora of interconnecting factors include
natural resource, the impact of the World War One (1914-1918),
Republican polices, new technologies coupled with methods of finance
and advertising. The most poignant aspect of the boom in 1923-29 was
that it was a sustained boom for 6 years compared to the natural boom
and bust cycle experienced every year.

The United States' wealth of natural resources meant that it was a
self-sustaining economy, in other words the US economy can produce
everything necessary for a viable economy without having to pay for
imported goods or resources. The increasing demands for oil, coal, and
iron by industries such as in the car industry due mainly to the Model
T Ford as the creation of the assembly line meant a multitude of cars
were made in a short space of time. Furthermore, in the early 1920s
agriculture was still an important source of income for the nations
economy as it was still trading with war stricken countries and the
new countries created after the First World War. The wealth of natural
resources meant that all raw materials were made within America. Put
simply those markets, which made raw materials, were in constant and
increase of demand, so jobs were kept and even increased in some of
these areas, these markets meant that a constant source of income for
the nations economy was always needed.

The First World War helped tremendously throughout 1923-29 as
businesses prospered by securing new foreign markets, during the war
the US leant an approximate of $10 billion to the European Allies, and
by the 1920s a further $1billion interest had accumulated. The
increase and the shear scale of US markets meant that there was
another continuous source of income for the US economy. Britain and
France were almost dependant on American help following the war, but
this meant that their markets almost dissolved and so America seized
the opportunity and took control of their markets as well. America
were in control of markets in Asia and Latin America, this led to an
influx of trade and wealth where all the money was coming into
America. The loans from the allies was generally spent on American
goods, so not only were they loaning money to collect interest, but
the money was coming straight back into their economy to industries
such as ammunitions, thus they potential for tax cuts and huge
investments in new industries such as ceramics, chemicals and
plastics. The war had affected America's infrastructure, and as a
result the improvements in communication, transport and the workforce

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