An example of a newly formed industry in the East was the motor car industry. The car industry was one of the first to use the method of mass production. One of its pioneers, Henry Ford had a dream of producing a car for the ordinary man and his family. Ford soon lived this dream, by manufacturing the first Model T in 1911 by the process of mass production. By 1920, Ford was able to reduce his prices due to mass production, by $905 – a Model T or ‘Tin Lizzie’ as it was nicknamed, now cost only $295. Cheap labour from an influx in immigrants helped the idea of mass production and the increase in factories and new industry.
It was not only the car industry that expanded during the 1920s. With the help of the motor car industry, other industries started to grow, including the steel, rubber, glass, leather and oil industry. The construction industry grew due to the increase in traffic on the roads. Other consumer goods used the idea of mass production, causing a ‘boom’ in the economy; radio sets, telephones, refrigerators, vacuum cleaners, washing machines and ovens were all being rapidly manufactured to serve the needs of the public. These new goods were ‘attractive’ to the Americans, resulting in sales rocketing. The ability to buy these goods, was greatly helped by the introduction of credit facilities – hire purchase. This allowed people who could not afford the whole cost of the product to obtain it by paying for it in instalments over a certain period of time. Mail order also increased the market for goods into the more remote areas of America. Also, throughout the 1920s there was a great feeling of consumer confidence among the American people. Consumer spending was rocketing, and the stock-market was ‘booming’ as share prices increased. Advertisements on the radio, in magazines, newspapers, cinemas and billboards convinced the public to spend more, and ‘keep up with the Jones’ (buy the products that every American had).
This rapid growth created a ‘cycle of prosperity’. The increased production of goods created an increase in jobs. As prices fell, and people had more money to spend, there was an increased demand for goods resulting in greater production needs. The cycle of prosperity:
Increased demand for consumer goods
More money to spend Increased production
on goods
Increased Employment
Government policies helped to maintain the ‘boom’. The policy of isolation made sure that foreign goods would not be able to compete with home-produced goods on the US market – there was no need for an external market. A tariff (or tax) was placed on foreign goods imported to America, making them more expensive and no so appealing to the American public. This ‘protected’ American industry. Also, the Republican government at the time, encouraged the growth of business by a policy of ‘laissez faire’ (non-interference). The government did not place any controls on industry or financial institutions and also lowered taxes on people’s incomes and company profits. This resulted in an increase in money for companies to invest in new factories etc and for people to spend on consumer goods. The American economy was growing from strength to strength; America was much richer and happier.
However, as mentioned earlier, not all Americans shared this prosperity. Everyone did not share the new wealth in the USA, as many were still living in poverty. Farmers had a hard time, as there was a constant surplus of food. Although farming was ‘booming’, with the help of new machinery such as tractors and combine harvesters, the surplus created price drops and lower incomes. Not all industries benefited from the ‘boom’, including the coal industry. New forms of power were introduced – oil, gas and electricity became more widely used and the overproduction of coal led to wage cuts and loss of jobs. Another group of people who were also not so prosperous, were immigrants and black people.
In conclusion, I can safely summarise that the USA did go through a great ‘boom’ period during the 1920s. The table below sums up the ‘boom period’ very well and shows to what extent things changed during the 1920s:
The ‘boom period’ was suddenly brought to a sharp end in 1929, as America fell into depression and the Wall Street Crash occurred. During the 1920s the American economy appeared to be strong, healthy, prosperous and no doubt ‘booming’, but there was some serious weaknesses which would bring the change from prosperity to depression – there were the long-term causes of the Depression.
