Why Was There Economic Prosperity in American in the 1920's?

Why was there economic prosperity in American in the 1920's?

I know that America on it's surface was prosperous during the 1920's. I know this because of the physical signs, and the evidence I have found supporting this concept. Some of the physical signs of the then prosperity are evident today, like the skyscrapers and Empire State building. There were the inventions of manufactured fabrics and materials such as Bakelite, artificial silk and Cellophane. Airlines carried almost half a million passengers a year, which compared to Europe at the same time, was a massive number of people. In this essay I will analyse all the reasons behind the economic prosperity in 1920.

World War 1 assisted America's latter prosperity. Throughout the war American industry benefited, because countries that couldn't buy goods from Europe, did so from America. And along with this Europe bought products from America, products that they weren't producing while they were fighting. Furthermore, during the First World War, American banks lent money to their European Allies. In the 1920's, this was being paid back with interest. The war had also led to advances in technology, such as mechanism and manufactured materials. Production of Iron Ore, coal, petrol and wheat and exportation of chemicals, wheat, iron and steal all had increased considerably by the end of the war. By the end of the war, America had decided to isolate itself from the problems of Europe, and set itself about making the most profit in business. This isolationism built up the confidence of the American people.

An increase in personal wealth, demand and output production all helped America's prosperity. Banks were eager to lend money to businesses and individual's. With this easy money, and the introduction of hire-purchase schemes, the demand for products increased. Consumer spending was incredibly high, which is reflected in the statistic that in 1920 there were 312 department stores, and by 1929 there were 1395. There was a consumer boom. Business profits rose by 80% during this period, which in turn raised share dividends by 65%. Also some women had continued working as they had done through the war. Both of these elements contributed to giving people again, more money to spend.

However, the availability of money was not the only reason for increased consumer spending. New inventions such as vacuum cleaners, refrigerators and washing machines became available, and advertising over the popular radio encouraged consumers to spend more on everyday products. Henry Ford had founded the Ford Motor Company in 1903, and a few years later he introduced Assembly-Line Production. This was a breakthrough in cheaper mass production. In addition to this, the discovery of electricity quickened the rate of manufacturing in factories, which increased output. The result of this new production method and introduction of electricity was the Model Tin Ford, or ‘Tin Lizzie'. This new production method had cheapened the cost of cars, which coinciding with this easy money explains why in 1920, there were 8 million cars on the road, and by 1930 there were 23 million. All these new cars led to increased road construction, more petrol garages, and more restaurants and hotels', as America suddenly became much smaller.

With the discovery of electricity, came a boom in related industry, which consequently helped lower unemployment. The electricity discovery directly increased factory production of wires, light bulbs, and general electrical fittings. Workers in all industry were making a steady income. Their real wages were going up slightly because they were taxed less and the cost of living stayed steady. This meant the lower classes had a little more disposable income.

The American public did not only buy goods and products. With their credit, hire purchase, dividends, and wages they also invested on the Wall Street Stock market and spent on more entertainment. The stock market boomed as many Americans bought shares on credit, ‘hoping to make