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1920's America enjoyed such a prosperity that it became known as 'an age of excess.'

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Introduction

Bridie Mc Kie 1920's America enjoyed such a prosperity that it became known as 'an age of excess.' Its GNP grew from $74 billion in 1921 to $104.4 billion. The boom was propelled by several factors working together, culminating in the aforementioned prosperity. The American economy was one of few to have benefited economically from World War One, strengthened having monopolized on the demand for arms and goods unable to be produced by countries at war. The Republican government of the time, and the three presidents of the time, Harding, Coolidge and Hoover were all Republicans who supported investment and business. The Republicans believed in less interference from the state, with little or no government regulation in business or a welfare system. They introduced 'protectionism' - lower tax rates and raised tariffs on foreign goods so that they would be unable to succeed in competition with American business. In the twenties jobs, profits, wages and the standard of living saw a substantial increase. These elements developed a cycle of cause and effect and supply and demand. Production growth created more jobs, and because more people had money to spare, they bought the newly produced goods. The surge in need for production meant that more jobs and profits were created. And so they saw the start of mass production and consumerism. For the first time modern technology and conveniences were available en mass, affordable to the middle classes, which meant that techniques such as advertising were developed to target these markets and became very profitable. Conventions in ideals and actions of society. People could finally afford to enjoy their leisure time and these industries also prospered. However there were certain sections of the population that did not share in the benefits of the boom. Six million families had an income below $1000 per annum. Due to Republican policies there was no welfare support provided for these people. ...read more.

Middle

Over production was probably the major reason for the failure of farming businesses, as the polar opposite, to the success of commercial markets, due to mass production. There were huge advances in farming technology at the time, making farming quick and easy. As a result of this mass production, prices dropped to rock bottom. Market was flooded and their produce was worth nothing. The final blow to the farming community was the competition from outside traders. Canada became highly efficient at production, and was trading successfully with Europe. This meant that the US lost the European market. Europe was still in debt to the US as a result of the war, however, Republican parties increased the tariffs sinking Europe deeper into debt. There was no way Europe could buy US products now, so they completely lost that market. There may be no single reason for the loss of farmers during the economic boom, although some probably contributed more than others. Basically a fatal combination of factors meant that whilst farmers were producing more efficiently than ever before, demand sunk to new lows. Instead of stockpiling products to stabilize the market they tried to sell their products as quickly as possible and ended up flooding the market. This meant that more and more farmers were sucked into a cycle of debt, basically the farmer's loss was the polar opposite of the commercial retailer's gain. Perhaps farmers were simply in a vulnerable position, wherein they could not afford to stand alone, and as the business began to fall some intervention would have seemed sensible, but this was of course frowned upon by the Republican party. As the rest of the country enjoyed the prosperity that was spurred on by World War 1, the farmers were still reeling from it. Bridie Mc Kie There was a substantial increase in prosperity for the American economy during the 1920's. ...read more.

Conclusion

A new system of credit spurred on the boom, even when the money was not there to fuel it. People were able to buy goods and then pay for them on a later date. 70% of cars and half of all major appliances were bought on credit enabling people to buy things they otherwise never could have afforded. Of course this landed a great number of people in severe debt, but this was not realised until the Wall Street crash, and before that creditors marveled at their ingenuity. The 1920s was a time built on optimism and money that essentially was not there, and therefore as money obviously eventually leeched the economy collapsed. Credit of course again extended markets for mass marketed goods. Mass production created the most substantial change in economy to the United States. However as mentioned before, this was only possible due to a number of perfectly timed successes and innovations, and the right climate for economic change. The motor industry is the leading strongest example of mass production in the 1920s. Henry Ford's model T car revolutionised the motor industry, provided cheap and attainable cars to the masses. He introduced his moving assembly line in 1914 and the price of the model t came down from $950 to $500. By 1920 Ford produced 1,250,000 cars per year. Mass production created a boom in other countries struggling to keep up with the competition. This created price wars and even cheaper goods. The largest industry in the US, it stimulated others to use mass production resulting in even cheaper goods and greater profit. Becoming self-generating. I think the reason that the economic boom peaked at such a high profit, is because of mass production. Granted, had mass production not have been readily available, the boom still would have most likely occurred, however it would not have been quite so successful or self generating. It was in fact the 'centrifugal force' of the economic boom of the 1920s. ...read more.

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