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Why was there an economic boom in the USA during the 1920s?

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Introduction

Why was there an economic boom in the USA during the 1920s? In the 1920s, the United States of America enjoyed great economic success. Growth in many areas, including technology and productions methods contributed to this. During the First World War, a significant labour shortage, combined with the need for increased production, necessitated new, more efficient methods of production. Old industries, such as petroleum and steel, were stimulated, and there were also a host of new industries, such as plastic and rayon. One measure of these accelerated technological changes is the money spent on new machinery for industry. In 1915 the total annual expenditure was $600 million, which grew to $2.5 billion by 1918. Taylorism, which is the scientific management of business, involved the use of mathematical formulae for the assignment and organisation of labour to tasks, the streamlining of tasks, and consequent increases in production. In the 1920s, American industries implemented scientific management on a huge scale, pouring millions of dollars into industrial research such as time and motion studies, but also including entirely new production methods and scientific marketing. Changes in the nature of typical factory workers also contributed to the economic boom. ...read more.

Middle

Henry Ford, founder of Ford Motor Company, pioneered "mass-production" in the car industry before the war. In the boom, this technique grew, and this meant that more goods were affordable for ordinary Americans. Due to technologic advances, new production techniques, and changes in the nature of factory workers, goods were cheaper to buy, and more people had more money to spend on them. This caused great confidence in spending, and is a major factor in the economic boom. There was a wide variety of goods on which to spend money too. The radio is a product and service that expanded during the boom. The first commercial radio station opened in the 1920s in Pittsburgh and the first public radio station was right here in Madison. By 1922, 3 million American households had radios, and by 1929, purchases of receivers had increased by 2,500%, giving the industry annual sales of $850 million. The film industry was only a small growing industry before World War I, but it took off in the 1920s, becoming one of the ten largest industries in the U.S. In 1922, theatres sold 40 million tickets a week; by 1929, that number had grown to 100 million a week. ...read more.

Conclusion

Andrew Mellon was Secretary of the Treasury 1921-1932. In response to his demands, Congress repealed the excess profits tax and reduced the rates for corporate and personal income taxes. Mellon provided business leaders with a list of tax loopholes which were drawn up, at Mellon's request, by the IRS. Another way was the Federal Trade Commission (FTC). The FTC had been created to regulate big business and to look into unfair trade practices, but did less and less of this in the 1920s. The last way was Herbert Hoover, who first as Secretary of Commerce and then as President encouraged price-fixing, and believed that the government was responsible for helping businesses profit. All these factors on there own would have made a difference, but together, they made a huge impact on the American economy, and the way of life for millions of Americans. There were some major ones, such as the car, which helped boost many other industries, but without the First World War, less money would have been spent on technology, so maybe the advancements in the automobile industry would not have happened. This is just one example of why this boom was a result of many factors, and due to the number of different factors, it was so big. ...read more.

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