Electricity was the base for all of these changes. It provided a cheap and more efficient source of power for the factories to use. It led to the production of new consumer goods such as fridge – freezers, vacuum cleaners and radios. Without the technological changes that took place during the 1920’s in America, the other factors that contributed would have either not happened at all or would have made little difference to the economy of the USA.
Other important factors that helped to bring about the boom were the impact of the First World War; confidence; credit and resources.
The impact of WW1 – the USA had come out of the war well. It had supplied Europe with many goods during the war and had taken over European overseas markets, in some areas; US industry was now the world, for examples, chemicals. The war hastened technological change which the US industry seized.
Confidence – confidence amongst Americans was sky – high. This meant confidence to buy goods, invest in companies and to try out new ideas. Confidence is a vital ingredient in any economic boom.
Credit – the growth of credit made it much easier for people to buy goods even though they did not have enough cash to pay for them on the spot. Firms arranged for customers to pay by instalments or hire purchase.
Resources – the USA had a great store of natural resources such as wood; iron; coal; minerals; oil and land. These had helped America to become a great industrial power by the beginning of the twentieth century, and provided a sound basis for further expansion in the 1920’s.
Factors that contributed to the boom were the mass production; mass marketing and policies of republican presidents.
Mass Production – new techniques meant that goods could be produced much more cheaply on a large scale. Henry Ford had pioneered mass – production in the car industry by introducing an assembly line before the war. He made cars so cheaply that thousands of ordinary Americans could afford them. In the 1920’s his ideas were applied throughout industry, particularly to the new consumer products.
Mass marketing – mass produced goods have to be sold to a mass market; if enough people do not know about or buy the goods, the system will collapse. So companies spent huge amounts on advertising. This new industry developed sophisticated techniques to persuade people to buy. The expansion of the mail – order companies gave consumers in the countryside access to the wide range of goods on offer.
Policies of Republican Presidents – republican pro – business policies encouraged the boom:
- lowered taxes on income and company profits so the wealthy had more money to invest in industry and buildings;
- they put tariffs on imported goods – helping American producers;
- they didn’t interfere in business or put any controls on financial institutions.
