Causes of economic prosperity in the 1920s

Causes of economic prosperity in the 1920s

1. INHERITED FACTORS

   • World War One
     • supplied the Allies with food and munitions
       • took over markets previously saturated by exports from other countries
     • became a creditor nation
     • first industrial revolution
     • good healthy workforce
   • technological innovations
     • electricity
       • new forms of advertising
         • radio
         • products more available to the mass market
         • cinema
       • cut costs of manufacture
       • allowed for longer working hours
       • electrical goods
     • Henry Ford
       • mass production
         • assembly line
       • scientific management
         • interchangeable parts manufacture
         • stimulated growth in other industries
       • Model T
       • large profits
         • monopoly

2. REPUBLICAN GOVERNMENT POLICY

   • minimal government
     • laissez faire attitude
     • rugged individualism
   • low taxation for the rich
     • increased marginal propensity to consume
       • more spending power for upper and middle classes
   • high tariffs on foreign imported goods
     • protectionism
     • guaranteed high sales of home goods
       • but prompted retalliation from other nations
   • Highway Act

3. SUPPLY-SIDE FACTORS

   • marketting and the media
     • mass consumption
     • Americans owned 10 million radios by 1929
   • entrepeneurial flair
   • increased production

4. DEMAND-SIDE FACTORS

   • growing number of department stores
   • hire-purchase schemes
     • cheap credit
       • multiplier effect
         • first mass consumer society
     • billboard adveritsing
   • opportunity to invest in the stock market
     • shares bought 'on the margin'
   • consumer confidence
     • spirit of optimism
     • belief that economic progress was unstoppable
     • greatly increased demand