The confidence of the American people played a major role in the economy of the 1920s. The confidence in the economy gave many people the opportunity to do things they could never have been able to do. Buying on the margin was one of these opportunities, without it ordinary people could never have afforded shares in companies. Loans were another part of the confidence in the economy. Banks gave loans to anyone who asked. This gave people who were not rich the chance to buy almost whatever they wanted.
The Florida land boom was also an aspect of the boom in the 1920s. At the start of the 20s, land in Florida was very cheep. This meant that many people wanted to buy land there. However, as the demand for land increased so did the prices. This meant that only rich people could afford to buy land there. This was all fine until a hurricane hit Florida towards the end of the 1920s and many homes were destroyed. This ruined the lives of many people who had saved for years to buy a house in Florida.
Mass production also helped the economy in America at this time. Companies like Ford made their goods on a production line. This eliminated the need for skilled workers and maximised the amount of goods that could be made for the least amount of money. This lowered the cost of goods, in the case of Ford it lowered the cost of cars. This was especially true for the Ford Model T that was nicknamed the tin Lizzy. Ford lowered the price of the average car from $850 to $250. Ford paid his workers $5 a day, which was quite high for unskilled workers to be paid in the 1920s. Ford knew that the more people who had money the more people would buy his goods. It is just a shame that not all employers thought like that.
Advertising was also a part of the economy in the 1920s. Advertising gave companies the chance to reach a wider audience and reach out the majority of people. This coupled with Hire purchase, a loan enabling people to buy goods, gave people the chance to buy more consumer items than ever before. This was helped, of course, buy the falling costs of goods due to Mass production on a production line.
The role of government at this time was another aspect of the boom. The three presidents during the boom; Harding; Coolidge; and Hoover all believe that the business of America should not be interfered with. Coolidge actually said, “The business of America is business.” This meant that it should be left to its own devises. This enabled many employers to continue unfair trading practices to make more money. This helped the economic boom at first.
The economic boom was fantastic in the 1920s but the many faults in the boom made the 1930s the worst period in American history. Although the boom supposedly helped everyone in America many people such as black people, industrial workers and immigrants did not share in the boom. This created an uneven spread of wealth and was one of the faults of the 1920s. There were three other problems in the boom. Over production, so much had been made in the 1920s that America was running out of customers and could not go abroad because of the tariffs they had set up themselves. Speculation in the shares was the second problem. The government policy, which had worked so well in the 1920s, was the third problem. This policy would not allow the government to buy shares and raise the population’s confidence in them when the prices started to dip.
Daniel Cooper 11T
