Why did the USA 'boom' in the 1920s

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  • Why did the USA 'boom' in the 1920s?
    • The Great War
      • Loans repaid to USA by GB and France
      • No war damage, so industry could convert to peace
      • Few war casualties (16,000 living), plenty of workers
    • Economies of scale/mass production
      • USA producing huge amounts on production line, it lowered costs
      • FORD produced masses of 'Model T' or 'Tin Lizzie'
        • By 1928, there was 1 car to every 4.5 Americans
      • The mass of cars had a 'knock on' effect to industry, steel, rubber, glass
    • Raw Materials
      • Buying oil in the US, Louisiana, Oklhoma cheaper than buying from other countries
      • Cheap food produced in Prairies, consumers had money for consumer goods
      • Consumer goods could buy cars, radios, fridges etc
    • Large numbers of immigrants
      • Immigrants came to USA from Eastern Europe and Western Europe
      • Immigrants were willing to work for low wages, industry cost stays down
    • Advertising/ mail order catalogues
      • Consumers encouraged to spend money and 'Keep Up with the Jones'
      • Department stores had catalogues
      • Made consumer goods made more attractive e.g. washing machines radios, cameras
      • Consumer goods were advertised on posters, newspapers, radio etc.
    • Credit
      • Many encouraged to buy on credit e.g. paid off in instalments
        • Values of US companies pushed up
      • Stockbrokers would accept a 10% deposit, called a margin
        • If a nurse, invested with $100 savings, could buy $1000 dollars worth of shares 'on the margin'
          • Woolworths started a share of c251 in March 1928 and it increased to c251
    • Government policy on taxation and industry
      • Republicans controlled the White House and Congress in 1920s
      • Harding (1920-3); Coolidge (1923-9); Hoover (1929-33) believed in 'LAISSEZ FAIRE' approach to the economy
        • The government would not interfere with the economy
      • Taxes and firms were kept low on Americans, people had money, spend on consumer goods
        • Wealthy re-invest profits in industry
    • Protectionism
      • Republicans put taxes on important foreign goods, encouraging people to 'Buy American'
      • Other countries put taxes on their goods, huge surplus of goods that they could not consume
        • Surpluses could not be sold abroad
        • This is because America put tariffs on foreign goods, American businessmen found it hard to sell goods abroad


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