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Why Was There an Economic Boom In the U.S.A. in the 1920's?

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BY: URSALAN KHAN HISTORY COURSWORK: WHY WAS THERE AN ECONOMIC BOOM IN THE U.S.A IN THE 1920'S? In the 1920's the American economy enjoyed a period of "boom". This was a time of economic prosperity; people were spending more and earning more. One main reason for the boom was the Ford car company, the y were producing automobiles in America at a mass rate. Making cars at a mass rate would mean the company would be making a lot of cars and quickly. The company was successful, people were buying their product and the company was making profit and helping the economy to grow. When making their cars by mass production they would require a lot of workers, this would mean there would be a lot of jobs available and more people would be earning and less people would be unemployed. The people earning the money could then buy goods such as the cars and so companies would make more profit and so it would help the boom. ...read more.


Banks cut interest rates meaning people would rather spend their money and not save it. There would be little point in saving, as you would not get much interest. Because people would spend their money businesses would be selling more and to keep up with the demand they would employ more people and this would help the American boom. Hire purchase was introduced into America. This would mean people could buy goods even if they didn't have enough money. This would mean demand would stay high and companies would not have to stop making things, people could buy products and pay later and so mass production could continue. Advertising of products also increased. This would mean people would be more interested in buying products. Advertising persuades people to buy goods they didn't even know they wanted. This meant advertising was creating demand and helping the boom. The government also played a big part in the boom. They lowered taxes which meant companies could make more products because they would make more profit. ...read more.


This helped because it also made other industries successful, such as the oil industry and iron industries. But a reason why the Ford car company was successful was because banks lowered interest rates. If these stayed high people would not buy cars, they would rather save the money. Most money was coming back to the American industry because of the government. If they did not increase tariffs on foreign goods; not as much money would come back to the American economy as people would also buy foreign goods. I think the most vital factor of the American boom was World War 1 because it got the boom going. Without World War 1 America would have competition with European countries to sell goods and the Ford company might have set up in a more better location in a different country. World War 1 got American goods recognised throughout the world and people bought them. But it is difficult to say that there was one main reason for the American boom because they are all linked so closely and because one lead to another and they all contributed highly to the boom. ...read more.

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