Why was there an economic boom?

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  • Created by: Heather
  • Created on: 08-03-14 16:53
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  • Why was there an economic boom?
    • World War One
      • They lent money to the allies, sold arms and munitions and food,
      • It was a one-way trade so boosted the economy,
      • While the European powers were fighting, America could take over their trade around the world as well as European controlled exports
      • Before the war, Germany had the biggest chemical industry but at the end, American had taken this over,
        • America supplied chemical products such as fertilisers and dyes,
      • America was not in the war long enough for it to drain its resources like Europe,
    • Republican Policies,
      • 'Laissez-faire'- This is where the Gov. leaves the economy and business to regulate itself so prosperity came,
      • Tariffs protected American industry from foreign competition and allowed them to grow rapidly
      • Low taxation which gives the people more money to spend on American goods so boosts the economy,
      • Trusts- Mega companies which are controlled by one person or one family were encouraged as they believed trusts would run  the economy well,
    • Mass Production and the motor industry
      • Henry Ford created the production line in 1914 for his model T-ford car,
        • Cars had taken 14 hours to make but now only took 93 minutes
        • By 1927, one car was produced every 10 seconds,
        • In 1900, 4,000 cars were made but in 1920, over 1 million cars were made,
        • Cars cost 3 weeks wages so were affordable. In 1911, a car cost $850 and in 1920 cost $295
      • 4 million people were employed in the Motor Industry,
      • There was one car for every 5 people in American
      • Industries related to the car industry boomed like glass, steel, rubber and oil,
      • Other industries that did well were telephones, radios, canned food, refrigerators, ovens, vacuum cleaners, artificial textiles industry etc,
    • Hire Purchase and advertising,
      • Hire purchasing- When you put in a deposit to buy a product which you cannot afford to buy outright,
        • You pay a fixed amount each month until the product is paid for- known as paying in instalments,
        • This boosted the economy as more people could afford to buy products so more people did buy so increased production and jobs,
      • Advertising boomed- On billboards, in mail order, catalogue, cinema, radio which encourages people to spend money so boosts economy,
      • They were urged to live the American dream and to 'keep up with the Joanses' so keep up the competition with neighbours,


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