The economic boom

• Laissez-faire


  The Republicans believed in a laissez-faire approach to the economy, letting businesses alone as much as possible to make as much profit as they could
• Tariffs


  A type of tax on imports, making goods built and made in the USA cheaper and encouraging people to buy American, boosting American companies
• Low taxes


  Wages increased but taxes stayed low, so workers had more money to spend on American products, increasing sales and boosting profits
• Republican policies helped to make America wealthier during the 1920s
• During the First World War, America had exported weapons and food to Europe which made American companies very rich by 1918
• After the war, there was a depression as businesses contracted and turned to peacetime production. However, by 1923 the economy was booming again boosted by the policies of Republican Presidents
• Company profits increased. But this improved the wages of workers too.
• The people who benefited most in the short term were businessmen.
• People's confidence in the economy improved


  They bought more goods
• During the early 1920s the economy grew because of increased sales of consumer items such as radios, vacuum cleaners and washing machines.
• The people who benefited most in the short term were businessmen.
• Factors driving growth in the 1920s

  • Mass production
  • Tariffs
  • Advertising
  • Consumer goods could be made much cheaper
• Factors driving growth in the 1920s

  • Mass production
  • Tariffs
  • Advertising
  • Consumer goods could be made much cheaper
• Mass production


  Goods were made on a large scale in purpose-built factories using machines rather than skilled workers
• Tariffs


  Tariffs made overseas versions of these products expensive, so people bought American goods
• Advertising

  New advertising techniques encouraged people to spend. Newspapers ran adverts persuading people they needed the latest products
• The increased confidence also encouraged some people to invest in the stock market (by buying shares in a company).
• The real secrets of the 1920s were hire purchase (paying in instalments) and credit (a loan). People didn't have the money at the time to purchase a car or a consumer good, so they used these methods.
• Some people took out loans to buy shares hoping that they would increase in value and bring profit when sold.
• Ford's car
• In 1913, ford created the first production line. Each worker had 1 or 2 jobs, this was a form of mass production.
• In 1927, one car was produced every 10seconds. Costs fell so people could afford to buy the car. Fords most popular car was the model T.
• By the late 1920s the car industry was the biggest employer in the usa.
• By 1929, Ford employed over 100,000 workers. They were paid $5 per day (compared to other factories who only paid $2).
• Not everyone shared the wealth:

  Farmers struggled in the 1920s as demand for food fell.

  Workers in old industries lost their jobs.
• African americans hispanics and immigrant groups were the most likely to be unemployed.

  The laissez faire approach meant they did little to help the poor.