The high level of production in the car industry increases demand for materials such as steel, glass and rubber. Therefore these industries also prospered during the economic boom. New techniques brought in mass production, For example, Henry Ford had pioneered mass production in the car industry by introducing an assembly line before the war.
The increase in industrial production meant that more workers were needed. Thus the unemployment rate reduced during this period. The unemployment rate in 1921 was 11.9% but moved down to 3.2% in 1929 and reaching the lowest rate in 1926 at 1.9%. Looking at it theoretically, more jobs means more and higher wages. When people receive higher wages, they could buy more consumer goods such as electrical goods and services.
The technological advance in the 1920s was miraculous and mechanisation in the factories increased production and supply. Before the 1920s electricity was very rare however through technological advances electrical goods such as vacuum cleaners, washing machines, light bulbs, radios and much more goods were introduced into peoples’ lives. This was done through advertising. The mass marketing led to an increase in domestic demand thus the demand pushed the producers to supply more.
Other examples of the American economic boom in the 1920s is just the sheer number of millionaires. In 1914, there were 7000 millionaires but over a period of 14 years, in 1938 the number increased to 35,000.
Another factor, which caused the economic boom may be the impact of the first world war. America had supplied Europe with many goods during the war and had taken over European overseas markets. The chemical industry illustrates this very clearly. USA had over taken Germany’s position as World’s leading industry of chemicals like fertilisers and dyes.
The Republican presidents and policies may have contributed by a considerable amount to US’ economy in the 1920s. They enabled large sums of money to be invested and lowered tax rates and peoples’ profits increased. The increase in profits and stock market meant dividends to shareholders increased also. In 1929 the percentage increase of dividends compared with 1920 was 170%.
I must also mentions that the Americans began to buy in credit. This also increased demand and if there is an increase in demand there must be an increase in supply and production, which leads to more jobs and less unemployment. This then follows through to more profits and wages. More profits and wages increased demand again for goods. Thus the cycle of the economy had begun in the 1920s.
As many peoples’ wages increase their lifestyles changed; they had more money to spend in the leisure industry. The 1920s is known as the ‘Jazz age’ because black peoples’ music had dominated all music at this time and people were going to dance halls, stage musicals and popular music concerts. Cinemas and spectator sports became more common in one’s life and Hollywood became the capital of the world for film-making. These leisure industries were widely spread through advertising with posters, the press, magazines and the radio. Moreover others criticised this period for it was a corrupting influence linked to sexual excess.
The economic growth of the American Industry was accelerating in the 1920s nevertheless, I must mention that not everyone benefited from the American economic boom. Farmers, black people, immigrants and people who worked in old industries came out worse rather than benefit from the boom. Nonetheless, the overall impact of the American economic boom in the 1920s was a factor that introduced American people into a whole new world of a developing nation.
