USA economic boom

Causes of the economic boom

1. USA's size and natural wealth

- population 106 million (42 million Britain) - large domestic market for goods + services

- huge coal fields, oil reserves + large quantities of metals e.g. iron important industrial production

- American 'spirit of enterprise' made exploitation of natural resources possible = ideal of rugged individualism created basis for economic advance. 'American Dream' = self-made millionaires such as Henry Ford

- Millions European immigrants = cheap labour + hard work to lay foundations rapid economic advance

2. Government policy

- 1920s decade Republican dominance 

- 1922 = Fordney-McCumber Tariff placed tariffs on foreign goods imported into US e.g. chemicals, textiles, farm products, increased profits chemical, dye industries. Didn't deal with agricultural overproduction

- Andrew Mellon Secretary to Treasury 1921-32 = taxes on rich lowered 50% to 20%. During time in office = handed out $3.5 billion in tax reductions. Also supported public spending reductions. Mellon balanced federal budget + under Coolige, gov. operated on surplus of $677 million 1925

- Federal Trade Commission + Republican-run state gov.s reduced regulations on business. Price-fixing to raise profits often ignored. Little attempts made to regulate working hours/use child labour. Wages kept low.

- Trade unions = during WW1 gov. had protected rights of workers to join + TU membership 4m by end of war. Once gov. controls lifted, many employers involved in 'America Plan' - no-strike agreements + no-union agreements forced on many workers. 1929 - TU membership 1m. 1921-25 US Supreme Court made 4 significant anti-union decisions that restricted TU power.

3. Mass production 

- Technological advances = 1920s virtual second industrial revolution. 

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