This was also the most important factor because it triggered all the other causes.
Firstly, confidence helped the good effects of World War 1. America joined the war in 1917 which was much later than Britain and France did and as a result, America soon became a leading exporter because Britain and France’s industry was disrupted. America lent Britain and France food and weapons to keep them running in the war, which gave companies opportunities for new goods. These good would be produced and advertised, and as more and more people were of aware of the consumer good, the consumer demand started to grow more and more. New goods also allowed new technology to be developed, leading to new companies, investments, mass production and confidence which were a contribute factor for the economy in growing although all factors played a vital part to make the American economy grow almost every second.
Secondly, confidence led to new government policies being introduced or improved. Confidence was crucial because more and more methods were being tried out to cancel out any foreign competition. The laissez-faire approach meant that people were free to do what they want and the government wouldn’t interfere so this was a pure example of capitalism in action. The government even introduced low taxes, meaning more money could be spent on consumer goods. There were trusts, where companies controlled whole industries so the bosses of the industries would do a much more efficient job like Henry Ford who controlled the Ford and virtually most of the motoring industry. Tariffs meant that there was less foreign competition so only American goods could flourish because importing would be expensive. The Tariff was a good example of protecting the American industry.
Finally, Confidence led to advertising, good propaganda skills and the success of new industries. Mass production meant that goods were quicker and cheaper. ‘Hoover’ became a household name and the biggest growth was in radios. In 1920, there were 60,000 radios sold but come 1929; it rose to a staggering 10 million. The number of telephones doubled in 15 years, from 10 million in 1915 to 20 million in 1930. The Ford Motor Car Company exhibited some brilliant new methods the biggest being the production/assembly line. This meant that there was 1 Model T being produced every 10 seconds. Such mass production meant that in America, 1 in 5 owned a car whereas in Britain, 1 in 43 did and in Russia, 1 in 7000 owned one. In 1900, there were only a measly 4000 cars being produced but in 1929, this rose to 4.8 million. The Ford Motor Car meant that other companies were encouraged because of the raw materials used and the cars used a massive amount in raw materials and natural resources such as iron and steel which were extremely important in the motoring industry. Altogether this really proved that the American industry was incredibly strong.
The boom of the 1920s is one part of America’s history that we just have to remember even now. It led and showed the World in how the Economy of a country could boom in a short amount of time.