The First World War provided many advantages for the USA. Although they tried to stay out of the First World War, they lent money to the allies and sold arms and munitions to Britain and France throughout. They sold massive amounts of foodstuffs in Europe. This one-way trade gave American industry a real boost. It was given an even bigger boost due to the fact that whilst the European powers slugged it out in France, the Americans were able to take over Europe’s trade around the world. American exports to the areas controlled by European colonial powers increasing during the war. There were also many benefits. Before the war Germany had one of the words most successful chemical industries, but the war stopped this, instead by the end of the war the USA had far cut stripped Germany in the supply of chemical products. Explosives manufacture during the war also stimulated a range of by-products which became new American industries in their own rights. Plastics and many other materials were produced. What also helped was the fact that since the USA joined the war very late, it was not in the war long enough for it to drain the Americans resources in the way it had drained Europe’s. Although there was a down strain due to the fact that the war had ended but this was only a blip. By 1922 the American economy was going quickly once again. The activity of America during the First World War allowed them to take advantage of the situation and allowed them to gain alot of money.
The third factor behind the boom was the policies of the Republican Party, from 1920 to 1932 all of the US presidents were Republican, and the Republicans dominated congress. They had 4 beliefs in total which helped them to secure a good partnership with the American society. Their first belief was ‘’Laisses – Faire’’, this meant that the Republicans believed that the government shouldn’t really interfere with the everyday lives of American people. Their second belief was ‘’Tariffs’’, tariffs was a tax charge which was charged on people for importing foreign goods, this was very expensive, the tariffs also protected US businesses against foreign competition and allowed American companies to grow rapidly. Their third belief was ‘’Low Taxation’’, the Republicans believed in keeping tax’s as low as possible in order to bring benefits to ordinary working people, this meant that the American people became wealthy. The Republicans believed that if people kept their own money, they would spend it on American goods and wealthy people would re-invest their money in American industries. The fourth and final belief was ‘’Trusts’’, trusts where large super-corporations, which dominated industry. This meant that trusts could have total control over a certain part of industry such as steel. The Republicans allowed the trusts to do what they wanted, believing that the ‘captains of industry’ knew better than politicians did what was good for the USA. Due to the fact the Republicans made these policies life for Americans was made better.
Through the 1920’s ‘’new industries and new methods’’ of production were developed in the USA, this allowed them to exploit its vast resources of raw materials to produce steel, chemicals, glass and machinery. The products became the foundation of an enormous boom in consumer goods. Products such as Telephones, radios, vacuum cleaners and washing machines were produced mass-produced on a vast scale, making them cheaper so more people could buy them. New electrical companies such as Hoover became household names, they used the latest, most efficient techniques proposed by the ‘Industrial Efficiency Movement’. At the same time many big industries used sales and marketing techniques to get people to buy their goods. Mass advertising over different states in America had been used in the First World War to get Americans to enlist in the American army. Many of the advertisers who had learned their skills in war time propaganda now set up agencies to sell cars, cigarettes, clothing and other consumer items. Poster advertisements, radio advertisements and travelling salesmen encouraged Americans to spend. There were many schemes such as ‘Buy now, pay later’ which people took advantage of. So consumer goods where booming in their masses. The most important of these new booming industries was the motor-car industry. The motor car had only been developed in the 1890’s. Car production was revolutionised by Henry Ford. In 1912 he set up the first moving production line in the world in a giant shed in Detroit. More than 15 million were produced between 1908 and 1925. In 1927 they came off the production line at a rate of one every ten seconds. In 1929, 4.8 million cars were made. By the end of the 1920’s the motor industry was the USA’s biggest industry. Finally because of this the home market prospered through the 1920’s.
Agriculture during the 1920’s didn’t share in the economy boom. Total US farm income dropped from $22 billion to just $13 billion in 1928. There were many reasons behind these problems. Firstly after the war Europe imported far less from the USA. Farmers were also struggling against competition from highly efficient Canadian wheat producers, all of this came at a time when population of the USA was actually falling there were fewer mouths to feed. But the major problem was over-production. From 1900 to 1920, while farming was doing well more and more land was being farmed, but improved machinery and combined with improved fertilisers made US farming extremely efficient. The result was that by 1920 it was producing big amounts of wheat which nobody wanted. In the 9120’s the average US farmer was each year growing enough to feed his family ,but, prices dropped as desperate farmers tried to sell their produce. In 1921, prices fell by 50%, hundreds of rural banks collapsed in the 1920’s and there were five times as many bankruptcies. But not all farmers were affected by these problems, rich Americans wanted fresh vegetables and fruit through the year. Shipments of lettuce to the cities rose very quickly. But this was a serious issue, about half of all Americans lived in rural areas, mostly working on farms or businesses that sold goods to farmers. Problems in farming therefore directly affected more than 60 million Americans. Up to 6 million rural Americans, mainly farm labourers were forced off the land in the 1920’s but, many of these were unskilled workers who migrated to the cities, where there was little demand for their labour. America’s black population was particularly badly hit due to the fact that they had always done the least skilled jobs in rural areas. As they lost their jobs on the farms three-quarters of a million of them became unemployed.
During the ‘’roaring 20’s’’ not all industries got their share of prosperity during this time. For example, workers in many older industries, such as coal, leather and textiles did not benefit. Coal suffered from competition from new industries such as oil and electricity. Leather and textiles were protected from foreign competition, but not from domestic competition. They suffered new competition not domestic competition. They suffered from the development of new man-made materials, they also struggled to compete with cheap labour in the southern states because of this there was alot of poverty which caused workers to go on a strike. Also through this period unemployment remained a problem. The growth in industry in the 1920’s did not create many new jobs. Industries were growing by electrifying or mechanising production. The same number of people was unemployed at the peak of the boom in 1929 as in 1920. Yet the amount of goods had doubled. These millions of unemployed were not sharing in the boom. This contained a greater proportion of blacks and Hispanic people compared to whites. This showed that the boom of the 1920’s was a consumer led boom due to the fact that families where buying things for their homes.
In conclusion although the USA was experiencing an economy boom during the 1920’s, not all Americans got their fair share of prosperity. For example farmers where over producing food which meant that it became wasteful and was a waste of money, which led to a big rise in unemployment. Also alot of industries where in competition with each other such as textile industries, they couldn’t compete with the man-made materials. The home market during the 1920’s received big incomes because families where buying these things for their homes. Finally many factors helped contribute to the USA’s economy boom in the 1920’s,the boom was also referred to an ‘consumer led boom’.