The Growth of the USA´s Economy in the 1920s

During the 1920s, the USA had a massive economic boom. With the growth of confidence from people, the vast amount of jobs that were created, with industries growing and the USA becoming leader on the market, those years were most definitely some of the best in American History.  But the question is, were credit and hire purchase the reasons why the US economy grew?

Before the 1920s, people couldn’t afford to buy a car, however, this was going to change. Buying a car was really expensive since they took a long time to make, in a year they would reach to make thousands of them. Henry Ford took over the motor industry by creating a method of making cars faster, in a year they would reach to make millions of them. People could afford to buy them and even if they couldn’t they could borrow the money by taking advantage of the hire purchase schemes, which provided a ton of help. Along these industries a vast amount of jobs were created so people had a major possibility to get one.

 The stock market in the US was an easy way to make money, anyone could buy shares, see their prices grow and sell them later at a higher price. Most of the people who invested on this kind of gambling were the Speculators. They didn’t intend to keep their shares for too long, they sold them as quick as the prices grew. They could buy “margins” which meant they only had to put 10 percent of the cash needed to buy shares and they could borrow the rest. Buying shares became a popular thing to do, since it was a quick and easy way to become rich. As products were massively produced their prices remained low. Confidence was high and banks started give loans to people

Credit and Hire purchase schemes weren’t the only reasons why the economy in the US grew. Within the Republican Policies three of them stood out, Laissez-Faire, Tariffs and Low Taxation. Prosperity came into place with Laissez-Faire, the government was going to interfere as little as possible in the everyday lives of people. Implementing Tariffs as a way to protect businesses from foreign competition and they allowed American companies to grow faster. The republicans kept Taxation as low as possible, being beneficial to both working and wealthy people.

With the arrival of new industries, they started developing a new method for mass-production. They started using the vast amount of resource of raw material that the country had. The production of these products was an enormous factor for the boom of consumer goods. Industries started to grow alongside the US economy, since it was a big country with a dense population and it also was rich in natural resources, so they didn’t need to import raw materials nor did they had the urge to export all their goods. By the time of the First World War they led in most areas of the industry. They had massive steel, coal, and textile industries. They were leaders in the oil production market and they also started developing new technology such as cars, telephones, radios and electric lightning. These products became the foundation of an enormous boom in consumer goods as they were all mass-produced. With the help of marketing, using techniques of propaganda from the war, they were able to advertise their products to the public. And, since most of the American population owned a radio or a television they started advertising them through them.

It can be said that credit and hire purchase were reasons for the economic growth of the US, however they were not the only reasons why. The technical and technological advancements in industries were very important for the country as they became market leaders on the various products they produced. In the other hand, the credits and hire purchase became one of the reasons why the economy in the USA was devastated with the Wall Street Crash.