The economic boom of the 1920s

HideShow resource information
Preview of The economic boom of the 1920s

First 306 words of the document:

The Reasons for the Economic Boom of
The 1920s
Easy Credit
This consumer boom was greatly aided by the availability of hire purchase - the ability to
buy goods on credit
Because times were good, people were not worried about having to keep up
Shoppers were able to buy big ticket consumer items on time payment, for
o Cars o Vacuum cleaners
o Fridges o Furniture
o Washing machines o Radios
o Pianos
Previously, these expensive items were only affordable by the wealthy
Advertising targeted at stay-at-home mothers was designed to persuade them
that instant gratification through instalment plan purchases was the new ideal
Once one manufacturer or retailer offered instalment purchases the competition were
forced to follow suit
About half of all instalment debt was for automobiles
Many items were sold by partial payment;
o It was estimated that 75% of all automobiles
o 85 or 90% of all furniture
o 80% of all phonography
o 75% of washing-machines
o 65% of vacuum cleaners
o 25% of all jewellery
Easy credit or un-restricted margin trading certainly led to the market crash in 1929
Too many investors had invested too much on margin
When the market corrected all the accounts were called in
People had to sell their stocks quickly and at a loss to cover their margin accounts
People in the 1920's were living easy, not worrying about money because no one ever
imagined the stock market would do anything but go up
They saw their investment portfolios going up
so they lived the high life
Then invested more on margin because the mentality was that the stock market
could not possibly go down

Other pages in this set

Page 2

Preview of page 2

Here's a taster:

New Business Methods
New business and production methods along with progressive business philosophies
allowed manufacturers to boost turnover and to make large profits
Which they put back into new factories and wage rises
Department store and service station chains used massive buying power and operating
efficiencies to lower prices while increasing service and choice
Helping wages to go further
Henry Ford used his huge buying power to setup discount grocery stores selling cheap
groceries for his employees
Mass production revolutionised industry, increasing production rates and…read more

Page 3

Preview of page 3

Here's a taster:

Technological and Structural Advances
"Taken together, a series of new methods in manufacturing, labour relations and consumer
sales perfected during and after WWI constituted a virtual second industrial revolution"
~Joshua Freeman in Who Built America (1992)
"Second industrial revolution" centred in Detroit, Michigan
Henry Ford revolutionised car manufacturing, which had been going on since the
He introduced industrial methods that lead to mass production
Making cars cheaper and more readily available to the public
Ford used cheap, unskilled and semi-skilled workers who could learn…read more

Page 4

Preview of page 4

Here's a taster:

Influence in Foreign Economies
World War One
USA had tried to stay out of most of the fighting during the First World War
o But there was a big market in Europe for arms, munitions and food
o And they lent the Allies money
o This one-way trade was hugely useful in boosting American industry
Industry in places such as Britain, France and Germany was in decline
o Exportations had to be stopped
o America took the opportunity to take over their trade
Germany had…read more

Page 5

Preview of page 5

Here's a taster:

Taylor was one of the intellectual leaders of the Efficiency Movementand his ideas,
broadly conceived, were highly influential in the Progressive Era
Samuel Insull
Samuel Insull was a British-born American business magnate whose vast Midwest holding
company empire collapsed in the 1930s
He was an innovator and investor based in Chicago who greatly contributed to creating an
integrated electrical infrastructure in the United States
Everyone thought Edison and Insull were making a big mistake and that generators should
be like furnaces, with one in every…read more

Page 6

Preview of page 6

Here's a taster:

The Continuing Problems in Agriculture
and Parts of the Economy
Why did agriculture not share in the prosperity?
Total US farm income dropped by $9 billion to $13 billion from 1919 to 1928
Less market for food in Europe
They are poor and don't want to import goods from the USA if they have no
market in the USA for their goods due to tariffs
Competition from highly efficient Canadian wheat producers
Population in the US falling
less market at home
More and…read more

Page 7

Preview of page 7

Here's a taster:

Did all Americans benefit from the boom?
Benefited Hindered
Owners of consumer goods Farmers
factories Coal industry
Industry was rising Competition from industries such as oil
causing their profits to and electricity
sky rocket Strikes in the coal industry
Assembly line workers o male workers only paid $18 and
Jobs were available women only $9 each week
Wages roses o $48 dollars a week minimum
Skills not really wage to be able to live a decent
needed life
White people in the cities o 42%…read more

Page 8

Preview of page 8


No comments have yet been made

Similar History resources:

See all History resources »See all resources »