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The American economy grew considerably in the 1920s. Explain why.

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Introduction

The American economy grew considerably in the 1920s. Explain why. The sudden growth of the economy in America at this time was also know as the 'boom', and was a huge growth of industries, a reduction in unemployment and an improved standard of living. The aim of politicians at the time was `A car in every garage and a chicken in every pot.' Some of the features were massive increases in the sales of consumer goods such as cars and fridges, more and wider reaching travel, the availability of electricity to most people and the growth of the entertainment industry. This is shown by the increase of car sales from 9 million in 1919 to 26 million in1929, and the 162000 civilian aircraft flights in 1930, when there had been almost none on 1918. There were also new ideas such as catalogue shopping, chain stores and the building of impressive skyscrapers in huge cities such as New York. These huge changes were affected by long and short-term causes. Some of the long-term causes include the natural resources of America, such as oil, coal, iron and excellent farmland. This meant that it did not need to import any raw materials, so the if raw materials were needed they were bought from within America, boosting there industries. ...read more.

Middle

The Democrats had not allowed these because if one person went bankrupt, an entire industry collapsed. However, in the 1920s industries were thriving and this was not a problem. The trusts brought prosperity, so they were left to grow as they wished. The government also lowered income tax, so people's wages grew as the big industries made more money. This meant that they had more money to spend on luxuries. The Republicans stayed in power until 1933, and implemented these policies all the time. Some of the short-term reasons followed on directly from the First World War, while others were as a result of new technologies being developed. One of the biggest developments in industry was the idea of the production line and mass-produced goods. Henry Ford, the head of Ford cars, started this. He open the first ever moving production line, where each worker was given one or two small jobs to do, and by the time the car reached the end of the line it had been transformed from a shell to a finished car ready to sell. Previously, making cars had needed skilled professionals and took a long time, but now cheap, unskilled labour of the immigrants could be used. ...read more.

Conclusion

This system, known as the 'never never' system because it seemed people could never finish paying off the price, made companies a great deal of regular and reliable money. People also used the money lent to them to buy shares in companies, which they hoped would increase in value which they could then sell off at enough profit to pay back the loan with interest and still have money to spare. Before, only professionals had bought and sold shares, but as so many businesses became so successful, many untrained people started to buy them and they were seen as a quick way to easy money. They also put money back into the companies, so they could invest in better technology and more efficient methods of working. It also meant that the money people made on the stock market could be spent on more goods, boosting the economy even further. In conclusion, there were many factors that contributed to the growth in the economy, but two of the most important were the First World War, and the industries the USA took over. The second was the invention of the motor car, leading to mass production and stimulating the growth of many consumer industries that had made little or no money before. These and other, smaller factors all promoted this huge growth in the American economy. Georgie Torbet 10M ...read more.

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