Economic Boom in the 1920s - Consumerism
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Economic Boom 1920s Facts for kids: Fast Fact Sheet
Fast, fun facts and Frequently Asked Questions (FAQ's)
about the Economic
Boom in America during the 1920s.
What is a Boom?
A boom is a time of financial prosperity,
stock growth and rapid progress. A Boom is
often followed by a Bust indicated by a fall
in production and an increase in
unemployment.
What caused the Economic Boom of the
1920s?
The causes of
the Economic Boom of the 1920s were the
Republican government’s policies of
Isolationism and Protectionism, the Mellon
Plan, the Assembly line and the mass
production of consumer goods such as the
Ford Model T Automobile and luxury labor
saving devices and access to easy credit on
installment plans.
American
Economic Boom 1920s
Facts for kids
The following fact
sheet contains interesting facts and information on the American
Economic Boom in the 1920s for kids.
Facts about
the Economic Boom 1920s for kids
Economic Boom
1920s Fact
1: What is a Boom? Definition: A boom is
a time of financial prosperity, stock growth and rapid
progress. A Boom is often followed by a Bust indicated
by a fall in production and an increase in unemployment.
Economic Boom
1920s Fact 2: Following WW1, America experienced a
massive economic boom bringing an increased demand for
American goods (Consumerism) and rapid industrial
growth. Before World War One, America was in debt to
Europe. After WW1 the situation was reversed and the
former Allies owed America more than $10 billion for the
cost of armaments and food supplies.
Economic Boom
1920s Fact 3: After an initial recession in 1919,
middle class Americans moved to a period of
prosperity. Between 1921 - 1924 the
nation’s gross national product (GNP) jumped 40% from $69 billion
to $93 billion and wages rose by an average of 22%
per person.
Economic Boom
1920s Fact 4: During World War One (1914 - 1918) manufacturing
techniques, efficiency and production increased
through necessity in order to meet the urgent demands of the
war effort.
Economic Boom
1920s Fact 5: The new advances in manufacturing
techniques and technology were transferred from focusing
of the needs of the military to the production of
consumer goods.
Economic Boom
1920s Fact 6:
The advances in technology led to the
age of steel and electricity. Industries switched from coal to
electricity and many homes, especially in the industrialized cities, were
powered by electricity.
Economic Boom
1920s Fact 7:
Access to electricity provided Americans with the power
required to run new labor-saving luxury, devices such
as radios, phonographs, electric razors and irons, refrigerators, washing
machines and vacuum cleaners. Refer to
Inventions in the
1920's and
Industrial Revolution
Inventions
Economic Boom
1920s Fact 8: The factory system and the
efficiencies of the
Assembly Line were
introduced by entrepreneurs and industrialists such as
Henry Ford.
Economic Boom
1920s Fact 9: Mass Production techniques, such as
the introduction of the Assembly Line, enabled massive
quantities of products to be produced quickly, cheaply and efficiently by automated, mechanical processes and reduced consumer costs.
Economic Boom
1920s Fact 10: The
Ford Model T automobiles, mass-produced on moving
assembly lines, increased production and reduced costs
and by 1924 a new Ford Model T could be purchased for
just $260.
Economic Boom
1920s Fact 11: Many ordinary Americans, who were
once "prudent and thrifty", were able to purchase
cars and other luxury goods on easy consumer credit, paying some
money down at first, followed by 1 -5 years of monthly
payments. The new philosophy of the economic boom was
"Live now, Pay later". Refer to Buying by
Margin and
The
Long Bull Market
Economic Boom
1920s Fact 12: The rapid development of the
automobile industry had a positive effect on other
industries due to the need for more rubber to make
tires, more glass for windscreens, more paints and an
increased requirement for leather for car seats. The
rise of the car industry revolutionized transportation
in America and the construction industry also boomed to
meet the requirement for new roads, petrol stations and
motels.
Facts about
the Economic Boom 1920s for kids
Facts
about the Economic Boom 1920s for kids
The following fact
sheet continues with facts about Economic Boom 1920s for kids.
Facts about
Economic Boom 1920s for kids
Economic Boom
1920s Fact
13: Advances in Technology led to a boom
in the chemicals and movie industries. Refer to
Hollywood in the
1920s
Economic Boom
1920s Fact
14: In the movie industry the studios
made epic films such as Ben-Hur (1925) which alone
grossed $5,500,000. By 1929 over 25,000 cinemas had
opened and an average of 100 million Americans went to
the movies on a weekly basis. Audiences of this vast size ignited the
imagination of manufacturers and merchants with products to sell.
The movies became one of the most important advertising mediums of the
1920's.
Economic Boom
1920s Fact
15: The movie stars contributed to the
economic boom in other ways. The Movie stars were
idolized and their fans were eager to follow the new
fashions that were advertised via newspapers and
magazines. The 1920's saw the emergence of the youth
culture and the
age of the Flappers. Young women were influenced,
and wanted to imitate, the glamorous
clothes, fashion and styles of movie stars. Refer to
1920's Fashion for Women
Economic Boom
1920s Fact
16: The movie industry led to a massive
boom in clothing and other items such as cosmetics, hair
dye, mouthwash, deodorants and perfumes. All of these
added to the ever-growing list of new consumer products
manufactured in America.
Economic Boom
1920s Fact
17: Mass advertising: Mass advertising
promoted a massive range of new products in the consumer
society of America and led to the general acceptance of
buying by on credit as a way to finance consumption. 70%
of radios sold in the 1920's were purchased through
credit plans.
Economic Boom
1920s Fact
18: The
Radio
Industry: Annual sales of radio equipment sky-rocketed from $12.2
million in 1921 to $842.5 million in 1929. The latest Jazz music and
other types of popular music of the
Jazz Age was played on the
radio, leading to the booming sales of gramophones and
records. By the end of the 1920s there were
over 100 million radios in use in America - all selling
advertising time.
Economic Boom
1920s Fact
19: The Radio Industry made a massive
contribution to the rise in Advertising, which became
big business in the late 1920's and fueled
Consumerism in
America. In the 1928 election
campaign radio networks sold more than $1 million in
advertising time to the Democratic and Republican
Parties.
Economic Boom
1920s Fact 20: The development of new products and
new industries resulted in more jobs. The profits made
by the businesses also resulted in higher wages. For
example, between 1922 and 1928, the average income on
tax returns of those earning more than $100,000
increased by 15%, and the number of taxpayers in that
group almost quadrupled. During the same period, the
number of taxpayers earning between $10,000 - $100,000
increased 84%, whilst the number reporting income of
less than $10,000 fell.
Economic Boom
1920s Fact
21: The economic boom in the United
States was enhanced by the abundant supply of core goods
such as coal and oil.
Economic Boom
1920s Fact 22: The Republican backed
Mellon Plan resulted in
the
Revenue Act of 1924 that cut federal tax rates. In
1920 the majority of tax payers paid 4% federal income
tax and wealthy Americans paid 73% income tax. By 1928
the majority of tax payers were paying ½% income tax and
rich Americans had their income tax reduced to 73%
Economic Boom
1920s Fact 23: The Mellon Plan also cut government spending and
significantly reduced the WW1 government debt. Between 1921 and 1929 the
Republican Mellon Plan reduced the nation's debt by $7 billion.
Andrew Mellon was called "the greatest Secretary of the
Treasury since Alexander Hamilton."
Economic Boom
1920s Fact
24:
Isolationism: The Republican
governments of the 1920's also adopted the policy of
Isolationism which avoided foreign entanglements and limited foreign competition by
imposing high import tariffs (taxes).
Economic Boom
1920s Fact
25: The 1922 Fordney-McCumber Act saw the
introduction of the highest tariffs in American history,
this policy was called Protectionism
Economic Boom
1920s Fact
26: The Republican Presidents adopted a
'laissez-faire' (free market) policy which allowed big
businesses to expand without being held back by the
government.
Economic Boom
1920s Fact
27: The Easy credit of the 1920's saw
a massive increase in consumer indebtedness, together
with an equally dramatic decline in savings. 75% of the population spent most
of their yearly income to purchase goods
including food, clothes, radios, and automobiles.
Consumer Credit outstanding in 1929 totaled over $3
Billion. And ordinary Americans had started to gamble
on the Stock Market, believing it was a 'safe bet'.
Economic Boom
1920s Fact
28: The excess of the
1920's and the confidence inspired by the Economic Boom ended abruptly with the
1929 Wall Street Crash. Share prices began to fall and $30
billion was lost in just 2 days.
Economic Boom
1920s Fact
29: The Total Consumer Goods purchased on
Credit in 1929 was $7 Billion.
Economic Boom
1920s Fact
30: The Stock Market crash led to the
ruin of many Americans and was followed by the
Great Depression. The Great Depression witnessed the end of
the Economic Boom in the 1920's and the 'Bust' of the
1930's
Facts about
Economic Boom 1920s for kids
Facts
about
Economic Boom
in the 1920s for kids: The Negatives of the Economic Boom
Not everyone in America
prospered during the Economic Boom and 60% of Americans
were under the poverty line.
The Negatives of the Economic Boom
Black Americans: African Americans suffered from
racism and were unable to obtain high paying jobs
Immigrants: Immigrants suffered due to Nativism
(prejudice against immigrants)
Farmers: American farmers suffered due to
over-production that resulted in low prices
Facts
about
Economic Boom
in the 1920s: Reasons for the Economic Bust - The Boom
and Bust Cycle
An economic Boom is often followed by an Economic
Bust indicated by a fall in production and an increase
in unemployment, called a Boom and Bust Cycle. A boom
and bust cycle is an economy characterized by a period
of economic growth with an increase in its production
and GDP followed by a period of economic contraction
with a fall in production and an increase in
unemployment. The reasons for the Economic Bust are
detailed as follows:
Reasons for the
Economic Bust
1929 Stock Market Crash: A sudden fall in prices and a loss of
confidence led to the 1929 Stock Market Crash. People
had over-speculated and many had borrowed money to buy
shares. Refer to
The
Long Bull Market
Over-production in industry: Overproduction in industry resulted
in supply exceeding demand with a vast amount of unsold
goods.
Over-production in farming: Mechanization in agriculture led to
abundance of crops and falling prices, made worse by the
falling demand from Europe
Trade and Commerce: European countries had imposed a tax
on American goods making them too expensive to buy in
Europe
Property prices: Many houses were worth less money
than what had been paid for them.
Consumer Credit: The "Live now, Pay later" led to
massive financial difficulties as people were unable to
pay their debts.
Bank Closures: The Small banks in America did not
have the financial resources to meet the rush for money
when the Wall Street Crash happened. This led to bank
closures leaving thousands of American without money.
Reasons for the
Economic Bust
for kids
Facts
about
Economic Boom
in the 1920s for kids
For visitors interested in the history of
the 1920's Economic Boom refer to the following articles:
Economic Boom 1920s
The article on the
Economic Boom in the 1920s provides
detailed facts and a summary of the most important events and dates in the history of the
United States
- a crash course in
American History. The following video will
give you additional important facts, history and dates about the
personal and political lives of all the US Presidents.
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