Causes of the Boom in the USA during the 1920s

A brief mindmap outlining the main causes of the Boom during the 1920s in the USA.

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  • Causes of the Boom in the USA during the 1920s
    • New Business Methods
      • Introduction of Management Science
      • Growing corporations and numbers of mergers increased profits
        • by 1929, the biggest 200 corporations had 20% of the USA's wealth
      • Cartels and holding companies were used to price-fix
      • Advertising and salesmanship created new ways of promoting goods
    • Influence in Foreign Economics
      • High levels of investment in Europe
      • Businesses expanded to other countries in order to have access to base materials
      • Private investment in foreign countries rose to $17200 million by 1930
      • Helped the Soviet Five Year Plans - Stalin was dependent on US exports
      • Large export industry; motor exports to Canada destroyed the native companies
    • Technical Advances
      • Federal Highway Act (1921) - 10000 miles of roads built per year during the decade
      • Electrical consumer goods - 160 million sold in 1929
      • Ford began using methods of mass production such as the assembly line
        • This reduced costs, but ensured that production was always higher than consumption
    • Government Policies
      • Tax reductions totalled $3.5 billion during the decade- but the government operated on a surplus
      • Fewer business regulations
      • Free Market - a system that allows the country to run itself with minimal government interference
      • Laissez-faire
      • Fordney-McCumber Act (1922) raised tariffs on all imports
      • Isolationism
    • First World War
      • Increase in trade to Europe
      • Corporate profits tripled during the war
      • Farm profits rose by 25%
      • Wages rose, women & African-Americans got jobs
      • More capital avaliable for investment
    • Easy Credit
      • Few questions were asked when applying for credit
      • Men earning $35 per week were paying that amount per month for their car
      • By 1929, nearly $7 billion worth of goods were sold on credit including 75% of cars and 50% of major household appliances


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