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Why Did The American Economy Experience A Boom In The 1920’s?

1083 words - 4 pages

Daniel Akhmetkhanov 15th September 2014Why did the American economy experience a boom in the 1920's?The American economy experienced a boom due to 5 major reasons. These included America itself, the First World War, new ideas and industries, Republican policies and American state of mind.America's was a large sprawling nation with an ever-growing population. Leading to a big market of goods being produced, furthermore America's size meant that they had all the raw materials needed for producing consumer goods, for example, steel, leather, coal and wood. America did not have to import these goods meaning the profits were massive.The First World War also contributed to America's boom. This was due to the fact that post WW1 the U.S was in a very good position, due to their late arrival in WW1 their damages were minimal, unlike Britain's or Germany's. The U.S loaned out money to countries, like France and Britain, who had to repay their loans with interest meaning the U.S was continuously making money, as well as on the profit of selling equipment.In the 1920's there were several new industries that helped create a boom in America, as the war went on the American Government taught people how to make propaganda, after the war they used these skills to convince people to buy their products. This also contributed to changing America's state of mind. A good example of an industry that helped contribute to the boom was the motor industry. Henry Ford's idea of manufacturing cheap cars that everyday people could afford not only made him rich but also created a 'cycle of prosperity,' which helped people acquire jobs in related industries such as rubber and metal production, petrol production, hotels and road building. His production line took the 'work to the man, and not the man to the work'. Meaning that each person would do the same job to a high standard on the car. People only had to be trained in one aspect of the building of cars, as one might fit the wheels, or the engine or do the bodywork. Standardization also meant that customers had little choice over what color car they wanted, they could have any color they wanted, as long as it was black. This meant that goods could be ordered in bulk and Ford did not have to invest in products that may not be popular to the public.Another factor of the American economy boom was the policies of the Republic party. They followed the idea of 'rugged individualism'; this essentially meant that people should look after themselves. For example, the Laissez Faire, this was a policy that meant governments should not interfere with people's lives. This would mean that people made their own decisions about how to make and spend their money. It would also mean companies could make products and take decisions without having to follow government rules.Finally American state of mind meant people started to believe that they deserved a little luxury. Before the 1920's people American's believed in saving for a rainy day and...

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