Causes of economic prosperity in the 1920s

INHERITED FACTORS
1. World War One
  1. supplied the Allies with food and munitions
    1. took over markets previously saturated by exports from other countries
  2. became a creditor nation
  3. first industrial revolution
  4. good healthy workforce
2. technological innovations
  1. electricity
    1. new forms of advertising
      1. radio
      2. products more available to the mass market
      3. cinema
    2. cut costs of manufacture
    3. allowed for longer working hours
    4. electrical goods
  2. Henry Ford
    1. mass production
      1. assembly line
    2. scientific management
      1. interchangeable parts manufacture
      2. stimulated growth in other industries
    3. Model T
    4. large profits
      1. monopoly
REPUBLICAN GOVERNMENT POLICY
1. minimal government
  1. laissez faire attitude
  2. rugged individualism
2. low taxation for the rich
  1. increased marginal propensity to consume
    1. more spending power for upper and middle classes
3. high tariffs on foreign imported goods
  1. protectionism
  2. guaranteed high sales of home goods
    1. but prompted retalliation from other nations
4. Highway Act
SUPPLY-SIDE FACTORS
1. marketting and the media
  1. mass consumption
  2. Americans owned 10 million radios by 1929
2. entrepeneurial flair
3. increased production
DEMAND-SIDE FACTORS
1. growing number of department stores
2. hire-purchase schemes
  1. cheap credit
    1. multiplier effect
      1. first mass consumer society
  2. billboard adveritsing
3. opportunity to invest in the stock market
  1. shares bought 'on the margin'
4. consumer confidence
  1. spirit of optimism
  2. belief that economic progress was unstoppable
  3. greatly increased demand

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Causes of economic prosperity in the 1920s

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