Reasons for the boom in America in the 1920s

Reasons for the boom in America in the 1920s

1. War

   • Positives
     • It increased the demands from Europe for American goods which brought more money into the country and improved trading.
     • Unemployment levels decline from 7.9% to 1.4%.
       • It increased job opportunities for African-Americans in steel mills, munition plants and stockyards.
   • Negatives
     • The overall cost of the war was estimated at $32 billion which outweighed any positives that the war had
     • Taxes rose from 1.5% in 1915 to over 18% in 1918 meaning people had less to spend and they were therefore putting less into the economy

2. Consumption

   • Bruce Barton
     • He was talented in marketing. He had the ability to sell products to people that didn't even need them. He advertised in cinemas and radios which had not been done before as he was aware that people were attending the cinema regularly at this time.

3. Government

   • Calvin Coolidge
     • He used the policy of lassiz-faire which meant he left businesses alone which enabled them to profit and become successful
   • Warren Harding
     • Fordney McCumber pact
       • This placed high tariffs on imported goods which encouraged people to buy domestically produced goods and kept money in the country.
   • Andrew Mellon
     • He was the secretary of the treasury so all economic policies went through him.
     • He reduced taxes and lowered debt which meant people had more to spend on what they wanted instead of paying the government

4. Long term factors

   • Rockerfeller
   • Andrew Carnegie
     • He was successful in the steel industry.
       • Although he would switch his main product to whatever suited the changing market.
       • He was financially successful and was therefore able to invest money into his own business and other businesses. He could pay his workers well who could then have more money to spend and put back into the economy.

5. Production

   • Henry Ford
     • When production ceased in 1928, he had sold 15.5 million cars in the USA.
       • By 1918, half of the world's cars were model Ts
         • Improved trading and brought money into the company
     • Manufacturing system/ assembly line
       • Improved production internationally
     • Employment
       • Made lots of money which he invested in his company to make it bigger which increased job opportunities.
         • He was able to pay high wages at $5 a day which meant his employees had more money to spend and put into the economy

6. Efficiency

   • Fred Taylor
     • He had a management system which involved scientific methods
       • He would scientifically select, train and develop each employee
         • This improved efficiently and business could be run more effectively which increased production levels and in turn sales went up.