Why was there an economic boom in the 1920s?
There were many reasons that caused the economic boom in the 1920s in
USA. This includes the First World War, growing industrial strength, growth
of new industries and the state of mind. These reasons can be classified
into major and minor causes. As some factors are more important than
others.
One of the major causes was the fact that USA is rich in raw material,
which leads to a growing industry. Rich in natural resources meant that
USA did not have to import vast amounts of resources for the basic needs
such as transportation and factories. This advantage was why USA was
exporting all kinds of goods to Europe, Latin America and the Far East.
More and more industries are developing ways of more efficient and
productive ways of producing their product.
Another major cause was the First World War. During this period Europe
had some of the most successful industries in the world. But the war
stopped the growth of these industries. America produced and sold lots of
war related goods and weaponry such
as arms, munitions and
explosives to Britain and France. The war also caused other great
demands such as massive amount of food, plastic and other materials.
This lack
of production and massive demand from former leading
producers made USA one of the world’s leading exporters.
Another major factor was the growth of new industries that lead to the
growth of other by-products. Due to the fact that the country was rich in
natural resources such as oil and steel, USA was able to produce lots of
machinery. The industries have managed
to use these to find ways of
producing more efficiently and productively. New ways of production
have been introduced such as the moving production line that allowed
complicated machines such as cars to be produced in a short time with a
rather low cost. The fact that the number of cars grew from 9 million to 26
million in 1919
o1929 strongly support this point. The rise of the car
industry leads to the growth of other industries such as glass, leather, steel
and rubber (as these materials are required for car production). The roads
construction and the petrol production have an increasing market due to
the rapid growth of car production.
The republican policies were another minor reason that caused the boom.
For example, the tariffs policy is a policy that puts a very high taxation
onto the imported goods. This allows the domestic market of USA to grow
rapidly without foreign competition.
The state of mind also contributed to the reasons of boom. More
American are starting to believe that spending money was a better
quality rather than saving money. The government is also trying to
promote spending rather than saving by having a low taxation.
In conclusion, there are lots of factors that contributed economic boom. I
think that the most important factor of all is the First World War. This is
due to the downfall of European industries created by the war give USA
the opportunity to gain the export market that used to belong to the
European countries. The massive demand created by the war made
America gain lots of profits in export. However the other factors such as
growing industrial strength, republican policies and the growth of new
industries also contributed as to why was there an economic boom in
the 1920s in USA.