Why was there an economic boom in the 1920s?

Authors Avatar

20.9.03                Frances Wood 11C/11B1

Why was there an economic boom in the 1920s?

There was an economic boom in the 1920s for 5 main reasons. Firstly the growing strength of American Industry meant that the USA was a leading producer of many raw materials. This was partly due to the second main cause of the boom, which was World War 1. This had helped the American Industry to grow, as during World War 1 new markets had opened up to America. Also, after World War 1, America took over as a leading producer as many European industries had suffered greatly because of the war. Government policies meant that businesses could thrive without government interference. World War 1 led to new markets being opened to America. This resulted in America developing new industries and new industrial ideas. These new industries meant that Americans believed that America was the most powerful country in the world. Americans therefore bought consumer goods because it was a sign of America’s prosperity. This led to more and more things being bought which aided the economic boom.

The growing strength of American industry was a big factor in the economic boom. In the twenties, industry took a very big step. It nearly doubled. It was partly due to the fact that the USA was rich in natural resources such as oil, coal and iron, which it could sell to European countries. America’s capacity to produce coal and iron was constantly growing. In the 1920s the USA was the leading producer of oil in the world. America’s agriculture was becoming the most effective and productive in the world. The industrial strength of America is probably the most important cause of the economic boom. It allowed new industries to be developed, leading to mass production. Mass production led to the average American being able to afford many new things that the advertising industry made them want. America’s industrial strength made Americans believe that America was destined to be the most powerful country in the world. Their confidence and ability to do so led to them buying things on credit. This allowed them to have things they couldn’t afford, and pay it off at a later date. It was also due to the fact that the rest of the world wasn’t producing as fast as America, as they were still suffering the after effects of war.

Join now!

The opening up of new markets to America during the First World War was an important cause of the economic boom. America had supplied Europe with many goods during the war and had taken over European overseas markets. The USA provided Great Britain and France with loans to deal with the cost of the First World War. America had also loaned other countries money during the first world war and now that the war was over, the countries were starting to pay America back with interest. This was the main cause of America’s industrial strength, as the banks now ...

This is a preview of the whole essay