Reason for economic boom 1919-1932 Flashcards
1) New business methods
A significant growth in huge corporations that made use of more scientific business methods.
For example, Samuel Insull built up a vast empire based on electrical supply. He eventually controlled as many as 111 companies.
2) Protectionism
Put tariffs on imported goods to limit the competition from foreign imports, which encouraged the purchase of American goods
* because it protected American industry and encouraged Americans home-produced goods.
3) Laissez faire
Low taxes and few regulations
Businessmen were able to chase profits without fear of interference. They were also left alone to make their own decisions.
4) Rugged individualism
A belief in which people achieved success by their own hard work.
5) Technology
Conveyor belt and mass production techniques, which speed up industrial production, improved productivity and led to greater profits.
6) Consumerism
The growth of electric power encouraged a much more widespread use of electrical goods.
Consumption of other energy sources grew. For example, the amount of oil used doubled and gas quadrupled.
7) Advertising
The new mass media, especially the cinema and the radio, brought about a revolution in advertising.
Companies would hire psychologists to design campaigns and target specific groups such as young women. For example, Lucky Strikes
8) Credit
The development of hire purchase whereby goods were paid for in instalments.
Made it much easier for people to buy good even though they did not have enough cash to pay for them immediately .
Impact of the growth in industrial produciton
It required a continuous market.
The common attitude was that it was necessary for people to buy new things frequently. Many believed that they could not manage without the advertised product.
Successful stories of the economic boom in the 1920s
• Car industry
The production of automobiles rose dramatically from 1.9 million in 1920 to 4.5 million in 1929
Impact of the success in the car industry
It provided jobs for more than 5 million people due to the demand in steel and petrol
The car industry transformed buying habits, making hire purchase a way of life for most Americans because it enabled an average family to own a car.
Successful stories of the economic boom in the 1920s
• Road building
1) Motor vehicles created the growth of new service industries such as motels and petrol stations.
2) Provided new opportunities because goods could be move from factories to their markets.
Successful stories of the economic boom in the 1920s
• Stock market
It was a symbol of confidence
The USA began to speculate, even if people did not have enough money to pay the full amount they would make a profit.
