Causes of the boom years in the 1920s Essay

Causes of the demolish yearsEmployers were working less hours however were being paid more(prenominal). This therefore meant industrial goods produced were also increasing. Americans had more cadence for leisure and more m whizy so electrical labour-saving devices were being introduced becoming afford fitting by umpteen population. Motor cars eased travel to and from work as well as for leisure pursuits. It was the golden geezerhood for cinema and sport attracted vast crowds.Reasons for prosperity government policiesCalvin Coolidge stated the chief art of the American people is pipeline. This was his government policy to let business operate as far as possible, free of regulation. Andrew Mellon and him believed wealthiness filtered down naturally to all classes and to ensure increased living standards for all was to allow the rich to go on make money to invest in industrial development which therefore meant more job opportunities, more wage earners, more consumption etc. this policy was laissez faire but the government intervened to support business in 4 waysHigh tariffsFordney-McCumber Act 1922 raised tariffs to cover difference between house servant and foreign output costsCheaper to spoil goods from USA than abroadTariff level foreign goods more expensive than USA even though produced cheaper in USAForeign trade reduced = domesticated demand for goods highTax reductionsGovernment reduced federal taxes 1924, 1926 and 1928 (benefited wealthy)Mellon handed out tax reductionsCoolidge operated on surplusAim reduced national debt, federal tax cuts = meant little to poor as non able to pay taxesFewer regulationsFederal Trade Commission unable and unwilling to operate effectively causing businesses unhinderedForeign policiesCoolidge avoided involvement in foreign affairs due to budget mooring an recognition that Americans didnt want to see troops getting caught up in foreign disputes. This meant that investors would choose profit ever ove r ethical concernsTechnical advancesTechnical advances in industrial production make increases in quantity and variety of productsMotor vehicle industryThis industry grew dramatically in the 1920s. It was the largest for commodities. previously cars had only been for the wealthy but Ford wanted the ordinary to be able to afford oneEffects of growth in car ownershipFord thought this would strengthen traditional American values but it led toRoad deaths 20,000 per yearBy 1929, motor industry employed 7% of all workers and paid them 9% of all wagesClosure of Ford factor to recession of 1927 dismission of business by companies providing components to Ford real problems in economyRoad buildingBreaking of laissez-faire federal government expend on road building in 1920sFederal avenue Act 1921 responsibility for road building to central government and highways. Construction = 10,000 miles per year by 1929 fountainhead Designer in Bureau of Public Roads 1936 roads built unfit for use because of keep down of trafficMotor vehicles new-fangled service industries e.g. garages, petrol stations etc.Improved transportation = new opportunities for industryElectrical consumer goodsNew technology = large eggshell development of labour saving devices as cheaper to produceSerious over production = problems in economyNew business methodsGrowth of broad corporationsLarge corporations manufacturing business = could invest in and exploit raw materials of USA on vast scaleLarge corporations could dominate industry byOperating cartel (group of companies agreeing to fix output and prices to reduce rival and maximise profits). Although illegal, government accepted which involved exploitation of raw materials, retail outlets etc.Some organisations were able to adapt to holding companies which resulted in firms competing against each otherManagement scienceIncreased size of businesses coordination compound to manage = different management roles by different people in administ rationGrowth of business schoolsManagement science, occupation for upper class = indication harder to start own companyIncreased productionAdvertising and salesmanship CinemaMillions of cinema-goers to copy lifestyle of stars meant potential for advertising was enormousRadioBegan with KDKA station which announce results in 1920 electionsRadios controlled by 2 companies with a vast audienceConstant have to create demandGrowth in industrial production needed a continuous grocery store in order to fuel the boom as people needed to be convinced to buy things frequently. An aspect of a campaign needed to be bought in which would differentiate between ones product and that of the competitors to promote unique selling point. Advertising techniques worked for many consumers.Easy creditMassive consumer boom was financed largely by easy credit facilities1929 $7 billion goods were sold on credit 75% of cars and half of major household appliancesAvailability of credit meant borrowers took on debts which they could not repayInfluence in foreign countriesHigh tariffs were used to protect US markets however the government also encouraged businessmen to develop extensive interests abroad in terms of raw materials that fuelled technological developments. US exported vast amounts of manufacture products.In the 1920s with almost full employment, low inflation, high tariffs keeping foreign goods out of USA, human government policies and a consumer boom the prosperity would go on forever.