Causes for the Economic Boom
- Economic Boom - time of prosperity defined by a rapid growth in the economy during the 1920s
Industrial Strength
What resources did America have?
- America was rich in natural resources
What new technologies did America have?
- It had massive industries such as:
- They were also the leading producer in oil
- Foremost in developing new tech such as:
- Motor cars
- Telephones
- Electrical lighting
What improved effiency and production in America?
- Managers of these industries were:
- Increasingly skilled
- Professional
- Selling more and more of their products around the world
- Time and motion studies looked at ways of making each worker's tasks as efficient and quick as possible
- American agriculture became the most efficent and productive in the world
The First World War
What did America sell in the war?
- Sold weapons and foodstuff to Britain and France
- This gave their industry a boost, additionally took over European trade around the world and some colonies
In which area did America overtake Germany?
- Supply of chemical products as Germany's production stopped during the war
- Plastics and other new materials were produced
Why did America not lose as many resources in the war?
- When the USA joined the fighting it was not in the war long enough
- Therefore they drained less resources than European countries
What do historians call this period?
- The second industrial revolution
Republican Policies
What was the attitude of the government in the 1920s?
- Left businessmen alone, allowing them to do their own thing
- as a result this resulted in prosperity
- This attitude is known as the "Laissez-faire"
What was the government's tax policy?
- Taxed little as possible
- Republicans thought that if people kept their own money, they would spent it on goods
- This would result in money being reinvested into industries
What were trusts?
- Super huge mega-corps which dominated industries
- Allowed to do as they wished as Republicans believed the "captains" of industries knew better than other politicans how to make money
What tariff was introduced?
- Import tariffs which made it expensive to import foreign goods
- In September 1922, the president, Warren Harding introduced the
Fordney-McCumber tariff
Markets for Consumer Goods and Stocks and Shares
What did advertisements do?
- Adverts in newspapers, magazines and radio tried to convince Americans they should "keep up the Joneses" and buy products, e.g., washing machines
Were stock and shares popular?
- Yes, thousands of ordinary people bought them in US businesses
What happened to their prices?
- The Stock Exchange saw a rise in all prices, as for now, it seemed like it only went up