Why was there a boom in the USA in the 1920's?

An important factor of the American boom in the 1920’s was America’s natural resources. America was full of resources like oil and coal. If these resources had to be imported to the USA, it would’ve cost more money.

Another reason for the boom was the policy of the Republican Party. When the Republicans came to power they introduced tariffs, this made it expensive to buy foreign goods. The tariffs protected US businesses from competition. The Republicans kept tariffs as low as possible because of this everybody had more money and they would buy American goods (because they were cheaper) or invest it in the American companies. More Americans also invested money to buy shares in companies as they had more money. With these policies came confidence. Because people were confident they weren’t worried about investing in businesses because they were confident about getting it back.

Another contribution to the boom was the new technologies in America. Americans loved new products such as the cars and fridges. And because of these products loads more jobs were jobs were produced. Another important factor which allowed new industries to develop was electricity. Many new products such as toasters, refrigerators and washing machines ran on electricity.

Another reason for the boom was the introduction of hire-purchase. Although many people were receiving better wages people still needed money to buy expensive goods. Hire-purchase was when banks and businesses lent people money and let them pay it back slowly over a certain period of time. Credit meant that people were buying more and paying more for it, this meant more money was going into the economy.

Another factor for the boom was mass production and motor cars. Mass production methods were started by Henry Ford, it made the goods cheaper to make. The advantage was work was completed quickly. The car production was a big contribution to the boom. Motor cars seriously affected the boom because thousands of jobs were being produced. Not only were jobs being created to make the cars but there were thousands of jobs created for other companies such as, gas stations and roadside diners.

        All the causes of the boom can be linked together in the Cycle of Prosperity. This is where more people have more money and because of advertising they spend it on goods. People also had more money because of the low taxes. Then more goods need to be made and this was done by mass production. Mass production was only able to occur because they had the right materials readily available, this was because of America’s natural resources. The cycle then starts all over again. This was because it was a cycle that kept buying and selling which meant the economy kept booming.