• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Is it fair to say that America was "Booming" in the 1920s?

Extracts from this document...


Is it fair to say that America was "Booming" in the 1920s? "We in America are nearer to the financial triumph over poverty than ever before in the history of our land. The poor house is vanishing among us." Herbert Hoover's declaration in 1928 over the level of prosperity that America had gained. However, was America really 'booming - a period of economic growth'? The effects of the war, left most of Europe in debt, and America's main economic problem was for the Europeans to repay loans that they had taken out to finance the First World War. Unfortunately, European countries could not afford to repay the loans and the prohibitive tariffs made it more difficult, as European countries could not export their manufactured goods to the USA in mass quantities, thus being unable to earn the money to repay their loans. To make matters more confusing, the USA had lent money to Germany for them to repay reparations to other European countries through the demands of the Treaty of Versailles. These European countries then used the money from Germany to repay America - therefore America was paying itself. This became more confused through the Dawes and Young Plans which scaled down German reparations, which in turn meant that they repaid less of their American loans and reparations, therefore Europeans were even more unlikely to be able to pay American loans back. This showed that America was actually not prospering economically through loans, as the cycle of international debt meant that in the end they were paying themselves, which doesn't show a boom, as each factor made the cycle more tangled and confusing. ...read more.


People were also able to afford goods such as the vacuum cleaner and the washing machine because of the introduction of easy credit. It was a way of enhancing the massive consumer boom. By 1929, almost $7 billion worth of goods were sold on credit; including 75% of cars and half of major household appliances. This enabled those in the working class to buy goods that they could not otherwise afford. Everyone seemed to be in debt but they didn't seemed to be concerned as it was assumed that everyone's credit must be good and banks and loan companies seemed to be falling over backwards to lend money, with few questions. Easy credit also meant that Americans were able to invest in stocks and shares and the Stock Market Boom was a way for Americans to get rich quick, and many Americans went 'Wall Street Crazy'. Stocks and shares could be bought 'on the margin', on credit with loans from their broker. Increasingly people purchased them not to invest in a company but as a speculation. If the price rose they would sell, making a quick and easy profit. The banks became eager to lend to foreign governments, to businesses and to individuals, with the extension of credit at low rates, increasing the Americans spending power. New technology increased advertisement particularly on radio, which created consumer interest. In 1920, Americans owned 60,000 radios, but by 1929, this had raised to 10 million creating a mass audience open to new forms of communication such as the telephone. ...read more.


Mass production kept products at low prices, and with easy credit schemes, many people bought on credit. However, the view that not everybody shared in the prosperity must be seen, as there were many lower class as well as farmers who didn't share in the boom, and many families were earning below the survival wage. Therefore it can be said that it wasn't fair to say that America was booming, because not everyone was able to share in the boom. The boom seemed to occur because of the government's laid back policies, which meant that people's access to more money was unrestricted, leading to having more power to spend as much as they like and borrow as much as they wanted with low interest rates to pay back as banks were happy to lend out money to anyone. I don't think that it is fair to say that America was truly booming in the 1920s, because of the various factors that contributed to this 'boom'. The government's laid-back policy and the banks eagerness to loan out money to everyone showed that there was indeed an enormous increase in money that could be spent within the economy. However, people increasingly owed money to the bank as well as to stores through their hire-purchase schemes for luxurious goods. Overall, people's debts increased, and this became prominent after the Federal Reserve Board further inflated the currency by creating several more billion dollars. The economic status was worsened when "Black Thursday" came along resulting in everyone selling their shares so that America eventually went into the Great Depression. Kay Lam ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. An Empirical Investigation into the Causes and Effects of Liquidity in Emerging

    This can be examined graphically26: Figure 5.1 As is evident from this figure, the liquidity on the two types of bonds do follow similar cycles, although a time lag appears to exist in the US high-yield spread that is gradually evened out into 2003.

  2. Causes of the Great Depression

    In 1921, the same year that Ford Motor Company reported record assets of more than $345 million, farm prices plummeted, and the price of food fell nearly 72% due to a huge surplus. While the average per capita income in 1929 was $750 a year for all Americans, the average annual income for someone working in agriculture was only $273.

  1. Selecting international modes of entry and expansion

    One strategic factor that is particularly important to Japanese firms that use WOS is their commitment to respond quickly to competitors in foreign markets. Because of the high control possible in wholly-owned subsidiaries, this mode enables firms to act and react more quickly than when using joint ventures.

  2. Economics of European Integration

    or extreme political and economic importance, each of them has different nature and its own industry-specific elements. It goes without saying that every deregulation policy in any network industry is especially developed and adopted to the specific characteristics of the sector.

  1. Describe the main aspects of the economic boom in the 1920's.

    It was unthinkable that a farmer or shop girl might own a car. However, this was just what happened during the next twenty years. Between 1909 and 1928, a staggering fifty million Ford Model Ts were built, and cars came within the reach of common people for the first time ever.

  2. The Quest for Optimal Asset Allocation Strategies in Integrating Europe.

    The study by Moerman (2003) uses approximately the same methodology as Ehling & Ramos (2002), although the scope of his research in terms of sample size (both number of countries and number of observations) is less comprehensive. Moerman addresses the issue of diversification within European capital markets for both short

  1. The American economy boomed in the 1920's. Why did this happen?

    Businesses and the government promoted the American Dream because they wanted people to work hard and to follow the work ethic. The Dream was promoted by propaganda, an example of this propaganda can be seen on an American poster used during this time.

  2. Why did the American economy grow considerably in the 1920s?

    Materials such as glass, steel, chemicals and machinery were now produced relatively easily. This was an important boost for industry because it meant that popular consumer goods such as telephones, radios, vacuum cleaners and washing machines could be efficiently produced and in larger numbers, making them cheaper for the public to buy.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work