Were the policies of the Republican Governments of the 1920s the most important reason for the boom in the USA?

by kartikayguptalivecouk (student)

were the policies of the republican governments of the 1920’s the most important reason for the economic boom in the usa?

The Republican government’s policies were a major contributing factor to the economic boom because of the fact that they led to an increase in businesses and people willing to go and get jobs. However, this was not the most important reason as it was the post- World War I (WWI) situation of USA which led to the economic boom in the 1920’s. It led to USA dominating world trade and became a leading superpower. Consumerism was very important in the economic boom it led to people buying loads of materials and technology. This contributed greatly to the US economy but, it was fuelled by credit given by banks and confidence as this led consumers to believe that the boom will last forever and that they could buy what they wanted and pay for it later.

Firstly, the Republic government had implemented many policies which all led to changes into government intervention. The first policy that the republican government believed in was the policy of “Laissez Faire”. The policy meant that government did not interfere a lot with businesses because they kept the corporate tax low meaning that the businesses got to keep l lot more of their revenue. This led to the boom as more businesses opened because it was more profitable and this in turn led to more wealth for the government. Another government policy was that “Rugged Individualism” and this was the belief that people worked hard to earn money hence they should keep most of it and this was implemented by keeping the income tax low. This led to an economic boom as more people came out of retirement to work as they kept more of the money. The government did have a period of interference in 1924 when they implemented the Fordney McCumber Act and this meant that there were tariffs implemented on US imports. This made them much more expensive hence people opted to buy domestic products; keeping the wealth within USA and them not having to spend more money for high import demands. Even though, these policies led to the increase in domestic sales, growth in the employed and businesses it was not the most important reason as USA’s position after WWI led them to have such policies and dominate the world trade.

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The most important reason was the position of USA after WWI. During the war USA had taken very little war damage due to the war no being fought in USA; while major European nations like France, Belgium and UK were repairing and rebuilding, USA was upgrading and using the “mass production ready” factories to build things for the world to buy. Moreover, USA lent out money to the nations during the war ($9.7 million) and after the war USA made a lot of money through interest contributing to the economic boom. Additionally, the recovering nations bought much needed supplies from USA such as food and water leading to a much larger income for the USA. Also, the recovering nations could not maintain their trade routes which allowed USA to take over major European trade routes and hence gain access to a much wider global market and dominate world trade hence leading to the boom. By 1920 most US exports had tripled than before the war. This strong position of the USA meant that consumer confidence grew in the USA and more people felt that the boom would last forever and hence they could spend as much as they like.

Therefore, the increase in the consumer confidence meant that more people were willing to spend money because of the fact that they believed that they could pay it off later because they will maintain their income and revenue. This led to the people willing to invest money in America, American goods and companies because they had a greater trust and faith in the US economy. This led people to believe that prosperity was not a privilege but a right. This meant that everyone wanted to be very rich even though they may have come from a poor background. The confidence could also be seen by the fact that banks were much more lenient in lending more money to people as they felt that they would get the return and buying on the margin became much more popular. People were starting to borrow and get money which they never had and or could have repaid. The government idea in 1920 was “spend, spend, spend” while before it was to save the money for a rainy day or something you really want but now people just borrowed and bought the thing as they wanted it right away. This led to the boom as there was a lot more spending in the USA so it meant that the US government had a lot of money. This led to the increase in consumerism because of the fact that people had a lot more money due to borrowing and hence they spent it all.

Finally, consumerism is another important reason that lead to the economic boom in the 1920’s because of the fact that it led to people buying lots of goods such as cars, fridges, radios etc. This is due to goods being produced at a much greater rate because of mass production introduced by Henry Ford. This method was used by all other industries; increasing their productivity so that they could reduce costs. This led to a huge consumer boom because a greater proportion of the population was able to afford these standardized goods as they were no longer a luxury hence there was greater spending by the US population contributing greatly to the boom. Also, the consumers had a great amount of confidence in the country and this meant that they spent all of their savings and bonds to get new goods as they believed that it would save them a lot of time as shown by the adverts. This contributed to the boom as the government was able to get a lot of money through indirect taxes and the businesses became much wealthier therefore increasing the overall wealth of US.

Overall, the policies of the Republican government were an important reason for the economic boom as they encouraged more businesses and businessmen to set up in the US. However, it was not the most important reason as the fact the US was in such a good position after WWI to dominate world trade and be wealthy meant that the boom was inevitable. Consumerism and confidence go hand in hand as they both contributed to the boom and to each other however it was not as significant as the WWI

Were the policies of the Republican Governments of the 1920s the most important reason for the boom in the USA?

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