What caused the 'boom'?

  • Created by: Fiona S
  • Created on: 06-03-15 20:19

Raw Materials

  • Huge amounts of raw materials including oil
  • Huge landmass so lots of space for agriculture
    - Sold lots of food to European countries during WWI
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World War One

  • Neutral for majority of war (until 1917)
  • Made lots of money by selling food and weapons to Europeans countries
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  • Mass production introduced
  • Ford & Assembly line
  • Means that products quicker and cheaper to make
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  • Idea of buying things on credit introduced
  • Meant that buying consumer goods easier for general public
  • Hire Purchase introduced
  • Pay for goods in installments, rather than upfront
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"Keeping-Up" Culture

  • More widespread use of advertisements
  • More people aware of the lateest products
  • People wanted to own the latest items and 'keep-up' with change
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Mail order catalogues

  • Mail order catalogues first appear
  • Meant that even people living in remote locations had access to the latest goods
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Government Policies

  • Republican governments - laid back approach to business
    - Laissez-Faire
  • Tariffs placed on foreign foods
    - Cheaper to buy American goods
  • More money that companies made, more money workers earned and could spend
  • Bigger the company got, more people employed
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The Stock Market

  • Many people in America started to purchase shares on the Stock Market
    - Meant that they owned part of the company - the more money the company made, the more money the share was worth
  • Between 1921-29, shares prices increased by 500%
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The Cycle of Prosperity

1)  E.g. mass production leads to more products being made
2)  Companies can afford t sell their products for less
3)  More people can afford to buy these cheaper products
4)  More products are sold, so more needs to be produced
5)  Companies need more workers to make more products
6)  More people with more jobs means that... (go to point 3)

Steps 3 to 6 repeat which is why it is called the cycle of prosperity.

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