The period from 1920-29 is often called the ‘Roaring Twenties’ because it was a time of noise, lively action and economic prosperity. Let’s look at some of the factors that made the economy of the 1920s boom.
Winning World War I
The USA had won in World War I which gave way to the nation first tasting the benefits of being a global power. Factory production had risen sharply to accommodate the needs of the war, and the the countries who once bought from Europe moved over to the States, which continued after the war was over. America’s economy grew by 42% in the 1920s. The States produced almost 50% of the World’s output.
Stock Market
The value of the stock market increased by 20% a year. It began rising in 1924 and the number of shares traded doubled to 5 million per day. Stockbrokers began allowing customers to buy stocks “on margin.” Brokers would lend 80%-90% of the price of the stock. Investors only needed to put down 10%-20%. If the stock price went up, they became millionaires.
The Availability of Credit
Credit firms emerged. They arranged for consumers to pay for goods in installment at low interest rates. This led to an increased demand for goods because the majority of Americans could now buy expensive items they previously could not afford. Home appliances were particularly popular, such as vacuum cleaners and waffle irons. The demand for extra goods, in turn, led to more jobs and more consumers.
Technological and Scientific Advances
Technology and science flourished in the 1920s. New industries were developed due to the technological advances which also relayed in the increment of productivity in existing ones. Besides the advancements in conveyer belts, automatic switchboards and concrete mixers, the electricity, car and film industries made headway with the new machineries. The economy also took a new form due to scientific progress.
Mass Production Techniques
With the creation of mass production techniques like assembly line and conveyer belts pioneered by Henry Ford, products could be manufactured more quickly and in greater numbers. The machines operation were low skill which allowed factories to employ large number of amateur workers. This helped simultaneously lower prices of goods as well as increase in employment. This stimulated further the demand for goods, and thus created the consumer boom which led to economic prosperity.
Spread of Electricity Across America
The development of the electricity industry was quite slow before the First World War, but it sped up during the 1920s and was vital for the economic boom of the decade. It facilitated a low-cost, proficient basis of power for industrial units. Eventually, huge numbers of multifaceted machineries could be operated at the same time, which lead to present bulk production practices. Not only did electricity aid the consumers by suppliying the power needed for the mass produced home appliances like vacuum cleaners, fridges, washing machines, etc. it also contributed to the booming entertainment industry by powering new cinemas, speakeasies, and sports stadia.
