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

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Why was there an economic boom in the USA in the 1920s? Several factors in the USA in the 1920s caused an economic boom to occur. For example, the USA had many natural resources with which to develop products, whilst financially it had benefited from World War I because of exports to Europe. Confidence allowed prosperity to flourish in the USA and thus allowed an economic boom. Those without the funds to buy goods could rely on credit to be able to pay off the loans eventually. The new methods of mass producing products stimulated the growth of other industries, manufacturing goods with which to make the products e.g. rubber industries prospered due to higher demand for tyres, from cars. It also increased consumption of petrol, and petrol stations with which to fuel cars, allowing an economic boom. New methods of production allowed goods to be made far more efficiently and cheaply on a larger scale. Many pioneers, such as Henry Ford, allowed mass production in the car industry by introducing an assembly line before the war. Cars were so cheap later on in the 1920s, that most Americans could afford them. This meant that the USA did not have to make cars individually at expensive costs in a long time. ...read more.


There had been no fighting on American soil and had benefited greatly by supplying Europe with many goods and by doing so had taken over European overseas markets. The USA had now come out on top of the other countries, taking over Germany in many industries; due to the impact of the Treaty of Versailles e.g. the USA was now the number one producer of chemicals. This allowed the USA to claim the loans owed from European countries after the war. The USA did not suffer very many losses during WWI, the only products being shipped over to Europe were excess food supplies, made using new farming methods. It also hastened technological change, which US industry benefited from. Perhaps the main reason why the impact of the First World War was so successful was because of the USA's natural resources at its disposal. The USA was blessed with many oil fields, due to the country's geography, as well as coal, iron and wood. Oil and coal could be used as fuel for factories, whilst wood was used in the construction business. This meant the USA did not have to imports its resources, allowing and economic boom. ...read more.


This meant that Americans did not want to buy overseas goods - even without the tariff they were still very expensive - Europeans were still trying to recover from the war, thus increasing prices of goods, especially in Germany, hit badly by the Treaty of Versailles and Hyperinflation of 1923/1924. This allowed industries to flourish from Americans' money, allowing mass-production and mass-marketing to occur. In conclusion, I think the most important cause of the economic boom was the introduction of the use of credit. This was because Americans could see any product at all accessible through the use of credit. This allowed the growth of industries because Americans bought whatever they wanted, without fear of debt, allowing less caution towards buying expensive goods. Demand rose because of credit, and so did supply, as now all goods were accessible to everyone, even if most could not afford it. The policy of isolationism also allowed the USA economy to prosper, as Americans did not really want to buy overseas goods. However, without new methods of mass-production and technological change, the USA would never have developed products quickly enough for people to develop confidence and use credit, as if there is low supply the good is more expensive. All the factors combined in the end to allow an economic boom, and with the policy of isolationism and the use of credit, the wealth became self-generating. ...read more.

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