Why was there an Econmic Boom in the US in the 1920's?

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  • Created by: Robyn
  • Created on: 17-02-13 21:25

Govt. Policies: High Tariffs: Fordney - McCumber

  • Legal act passed in 1922
  • The act raised tariffs to cover the difference between domestic and foreign production costs
  • It became cheaper to buy domestic goods in almost all cases
  • Foreign imports became more expensive. Even if they were cheaper to produce.
  • This reduced the level of foreign trade.
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Govt. Policies: High Tariffs: Tax Reductions

  • Federal taxes were reduced significantly in 1924, 1926 and 1928
  • This mainly benefitted the wealthy
  • Mellon handed out Tax reductions of $3.5 billion to industrialists. However, Coolidge's Government still operated on a surplus.
  • The Aim was to reduce national debt
  • But this meant little to those who were still too poor to pay federal tax
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Govt. Policies High Tariffs: Fewer Regulations

  • There were fewer personell to enforce regulations
  • this meant businesess could deal with their affairs as they saw fit.
  • Laws such as Price Fixing were often ignored
  • If the Government did decide to prosecute, offenders usually won on appeal.
  • This Laissez - Faire attitude was a massive contribution to company profits
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Govt. Policies: Foreign Policy

  • President Coolidge avoided intervention in Foreign affairs wherever possible.
  • This helped US investment abroad by removing ill feelings towards the US
  • It also meant investors often favoured profit over more ethical conerns
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Technical Advances

  • The Motor Industry was developed by the Model T Ford: It was sturdy and simple to build, so it was the perfect candidate for mass production.
  • The impact was that new production techniques developed and the car became popular
  • The growth in ownership of the Model T meant money no longer needed to be spent on advertising because it already marketed itself.
  • Growth in electrical goods, i.e. the radio, meant a growth in advertising.
  • Growth in electrical goods such as the vacuum cleaner allowed women who could not afford maids to do their own domestic chores.
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New Business Methods

  • Management science and Taylorism stated that more production work could be done in shorter periods of time than before.
  • This helped the boom because it enabled supply to meet demand.
  • Advertising was used to create this demand because it exploited people's need for a glamorous lifestyle.
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Easy Credit

  • The availability of easy credit fuelled the boom because people could buy things "in good faith" (Buy now, pay later in small installments)
  • This also included loans to buy stock (Call loans)
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