Economic Boom

The Economic Boom of the 1920s

  • The 1920s is often referred to as the Roaring Twenties, showcasing the massive economic growth influenced by consumerism, new technology, and government policies.

Consumerism and Innovations

  • A major player in the boom was the rise of consumerism. Industrial productivity increased due to technological innovations, which resulted in an abundance of affordable goods.
  • Key innovations included improvements in car manufacturing by Henry Ford, such as his introduction of the assembly line, which made cars more affordable and increased consumer desire.
  • The expansion of the electricity grid enabled new technology such as washing machines, refrigerators and radios to be widely used. These new products boosted consumer spending and helped to fuel the economic boom.
  • The 1920s saw the advent of commercial radio broadcasting and the film industry, creating entertainment industries which generated jobs and revenue.

Government Policies

  • The government introduced policies to support business growth. The Republican presidents — Harding, Coolidge, and Hoover — adopted a laissez-faire approach, reducing government involvement in business.
  • Under this approach, the government cut taxes, removed regulations, and refrained from interfering with businesses, creating a conducive environment for companies to grow and prosper.
  • The US adopted a policy of protectionism, raising import tariffs to protect its businesses from foreign competition. This encouraged people to buy American-made goods, further stimulating the economy.

Economic Prosperity and Social Changes

  • The economic boom led to considerable social changes. There was a growing divide between urban and rural America, with the cities epitomising prosperity and modernism.
  • The boom also led to more employment opportunities and wage increases. This amplified consumer spending as more people had the disposable income to spend on new products.
  • This period was also marked by heavy speculation in the stock market. People believed they could become rich quickly by investing in the stock market, which was seemingly on a continuous rise.
  • However, this speculation played a role in ending the boom by leading to the Wall Street Crash in 1929 and the ensuing Great Depression.