1920s America- Causes of the Economic Boom

• Biggest producer: Henry Ford Motor Company
• 1909: mass production of the Ford T Model, dubbed the Tin Lizzie. 1909 price was $1200, 1928 price was $295. More than 1 million sold.
• Standardised parts made for quick and cheap production line manufacturing. 1 car was made per minute.
• Less workers (so lower labour costs) and cheap parts made for a large profit, so wages increased.

• Mass production worked by breaking down the job along a production line, giving each person the same small job again and again.
• The more cars were made in this way, more jobs were created in other industries. E.g. road makers, glass, steel, rubber, oil...
• Cars led to diners and motels being built, creating jobs.
• People spent their wages on consumer goods like irons and fridges, which were all made on production lines as well.

• Tariffs are the taxes on imported goods
• Avrg. tax was 40%, but the 1922 Fordney-McCumber act made it so foreign goods had 40-400% tarrifs
• This made people buy more home US goods. US appliances were also cheaper due to mass production
• In retaliation European products got cheaper, so the US increased the tariffs. This made life difficult for the poor.

• The 1920 Republican promise for a return to 'Normalcy' helped fuel the boom with 'Lasseiz-fare', meaning 'leave it alone'.
• No controls therefore were put on industry / financial institution so if something happened, people would have huge debt.
• The wealthy had their taxes lowered
• High tariffs

• Thousands of ordinary people bought shares on the stock exchange
• 1921-29: prices rose by 500%
• People borrowed money to buy shares which was unregulated due to 'Lasseiz fare'
• There was a 'bull market', meaning a rise in all prices

• 1. Mass production led to cheaper products
• 2. Spend wages and buy more goods
• 3. More employed to make more goods
• 4. Advertising: more bought
• 5. Hire purchase helped people buy the goods
• 6. More people can afford it

(Then back to 1 and so on)