I
know that America on it’s surface was prosperous during the 1920’s. I know this
because of the physical signs, and the evidence I have found supporting this
concept. Some of the physical signs of the then prosperity are evident today,
like the skyscrapers and Empire State building. There were the inventions of
manufactured fabrics and materials such as Bakelite, artificial silk and
Cellophane. Airlines carried almost half a million passengers a year, which
compared to Europe at the same time, was a massive number of people. In this
essay I will analyse all the reasons behind the economic prosperity in 1920.
World War 1 assisted America’s latter prosperity. Throughout the war
American industry benefited, because countries that couldn’t buy goods from
Europe, did so from America. And along with this Europe bought products from
America, products that they weren’t producing while they were fighting.
Furthermore, during the First World War, American banks lent money to their
European Allies. In the 1920’s, this was being paid back with interest. The war
had also led to advances in technology, such as mechanism and manufactured
materials. Production of Iron Ore, coal, petrol and wheat and exportation of
chemicals, wheat, iron and steal all had increased considerably by the end of
the war. By the end of the war, America had decided to isolate itself from the
problems of Europe, and set itself about making the most profit in business.
This isolationism built up the confidence of the American people.
An
increase in personal wealth, demand and output production all helped America’s
prosperity. Banks were eager to lend money to businesses and individual’s. With
this easy money, and the introduction of hire-purchase schemes, the demand for
products increased. Consumer spending was incredibly high, which is reflected in
the statistic that in 1920 there were 312 department stores, and by 1929 there
were 1395. There was a consumer boom. Business profits rose by 80% during this
period, which in turn raised share dividends by 65%. Also some women had
continued working as they had done through the war. Both of these elements
contributed to giving people again, more money to spend.
However, the
availability of money was not the only reason for increased consumer spending.
New inventions such as vacuum cleaners, refrigerators and washing machines
became available, and advertising over the popular radio encouraged consumers to
spend more on everyday products. Henry Ford had founded the Ford Motor Company
in 1903, and a few years later he introduced Assembly-Line Production. This was
a breakthrough in cheaper mass production. In addition to this, the discovery of
electricity quickened the rate of manufacturing in factories, which increased
output. The result of this new production method and introduction of electricity
was the Model Tin Ford, or ‘Tin Lizzie’. This new production method had
cheapened the cost of cars, which coinciding with this easy money explains why
in 1920, there were 8 million cars on the road, and by 1930 there were 23
million. All these new cars led to increased road construction, more petrol
garages, and more restaurants and hotels’, as America suddenly became much
smaller.
With the discovery of electricity, came a boom in related
industry, which consequently helped lower unemployment. The electricity
discovery directly increased factory production of wires, light bulbs, and
general electrical fittings. Workers in all industry were making a steady
income. Their real wages were going up slightly because they were taxed less and
the cost of living stayed steady. This meant the lower classes had a little more
disposable income.
The American public did not only buy goods and
products. With their credit, hire purchase, dividends, and wages they also
invested on the
Wall Street Stock market
and spent on more entertainment. The
stock market boomed as many Americans bought shares on credit, ‘hoping to make a
quick buck’. As more shares were bought, the businesses expanded, and output
production increased more. More spending in entertainment developed the film
industry. First there were silent movies, and then after 1927 there were
‘talking pictures’.
Skyscrapers, jazz music, cinema, radio, the
‘flapper’s’ and a higher level of economic independence for women were all
positive elements of life in the 1920’s. Generally a less relevant point, but
one that I feel is worth mentioning is that after a small level of economic
prosperity, confidence in the government, economy and in low unemployment grew.
This caused people to be more generous and to expect more. With all the new
inventions, less emphasis was based on practicality and need, and more on want
and preference, consequently general consumer spending for those whom easy money
was available, rose.
There is no doubt that hire purchase; credit,
increased demand and consumer spending on various things and a new ease of
manufacturing had a direct effect on the general prosperity of America.
The Republican government also played an important role in making
economic prosperity in America. They believed in not imposing unnecessary rules
and regulations on businesses, which personally benefited each business because
they could cut corners to make the more profit. In addition to this, in 1922,
the government introduced the Fordney-McCumber tariff, which raised import
duties on foreign goods, which encouraged people to buy home produced goods
instead which added to the increased demand.
Economic prosperity in
America during the 1920’s was due to several contributing factors. The
confidence that America had due to it’s isolationism, successful high levels of
production, and large numbers of profitable businesses after World War 1 lead to
increased confidence. This confidence meant that people would spend their
disposable income on newly invented products and the stock market, which
increased businesses and seemed to secure their jobs more, which again, led to
more confidence and the cycle repeated again. Without the kick-start that World
War 1 gave America, I do not believe it would’ve had such a consumer boom. I
think there would have been a continued level of confidence and economic success
after World War 1, as some countries continued to import from America and the
banks received their money with interest. But, I do not think without the
increase of manufacturing and the invention of Assembly Line production that
there would have been such a boom. On balance without all the factors I have
previously discussed combining, I do not believe there would not have been such
a feeling of economic prosperity.
|
|