The Reasons for American Economic Prosperity in the 1920's

Topics: World War I, Assembly line, World War II Pages: 4 (1091 words) Published: September 21, 2001
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...
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