Prosperity in the 1920s
The boom in the 1920s in the USA
Aims of the lesson
By the end of this lesson you will
• Understand what we mean by mass
production
• Evaluate its influence on US industry in
the 1920s
• Understand what we mean by the cycle of
prosperity
• Evaluate the importance of government
action and credit in the boom
Background
• 1920s the USA experienced
an economic boom
• Most but not all shared in it
• Lots of raw materials
• Helped by WW1 – America
benefitted more than any
other country
• Protection also helped the US
economy
Mass production
• Easy idea – huge factories
• Each worker had a specific job – division
on labour
• Products were put together on a
production line – quicker
• Specialisation of parts
• Made products quicker and cheaper to
make
Henry Ford
• First to use mass production
techniques on his cars
• Model T – a car for families
• Tin Lizzy – nickname
• Each one was identical
• 1911 – cost $1200
• 1920 – cost $295
• His ideas spread to other
businesses
Effects and cycle of prosperity
• Helped other industries to grow – steel,
glass, rubber etc
• More roads and petrol stations
• People were buying new gadgets because
they cost less
• Cycle of prosperity – more jobs, more
money, more production, cheaper goods
• Never ending prosperity.
Government policy
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Republican government helped the boom
Laisses faire – non intervention in industry
No controls on businesses
Lower taxes on wages and profits
Gave people more money to spend
Hire purchase – buy now, pay later
Mail order and advertising – put pressure
on people to buy
Confidence
• In the 1920s people began to feel more
confident about the future
• Encouraged people to spend their money
buying shares
• Could be done using credit – buying on
the margin
• Share prices went up year after year
• Seemed like the good times were here to
stay