Prosperity in the 1920s

Prosperity in the 1920s The boom in the 1920s in the USA

Aims of the lesson By the end of this lesson you will • Understand what we mean by mass production • Evaluate its influence on US industry in the 1920s • Understand what we mean by the cycle of prosperity • Evaluate the importance of government action and credit in the boom

Background • 1920s the USA experienced an economic boom • Most but not all shared in it • Lots of raw materials • Helped by WW1 – America benefitted more than any other country • Protection also helped the US economy

Mass production • Easy idea – huge factories • Each worker had a specific job – division on labour • Products were put together on a production line – quicker • Specialisation of parts • Made products quicker and cheaper to make

Henry Ford • First to use mass production techniques on his cars • Model T – a car for families • Tin Lizzy – nickname • Each one was identical • 1911 – cost $1200 • 1920 – cost $295 • His ideas spread to other businesses

Effects and cycle of prosperity • Helped other industries to grow – steel, glass, rubber etc • More roads and petrol stations • People were buying new gadgets because they cost less • Cycle of prosperity – more jobs, more money, more production, cheaper goods • Never ending prosperity.

Government policy • Republican government helped the boom • Laisses faire – non intervention in industry • No controls on businesses • Lower taxes on wages and profits • Gave people more money to spend • Hire purchase – buy now, pay later • Mail order and advertising – put pressure on people to buy

Confidence • In the 1920s people began to feel more confident about the future • Encouraged people to spend their money buying shares • Could be done using credit – buying on the margin • Share prices went up year after year • Seemed like the good times were here to stay

Prosperity in the 1920s