AP Sources C5: Causes of the Economic Boom of the 1920s

Introduction

Focus on the causes of the economic boom during the 1920s, also known as the Roaring 20s, due to its vibrant economy.

Industrial Revolution (Late 1800s - Early 1900s):
- Great factories emerged in fast-growing cities.
- Scientific management (Taylorism) used for mass production.
- U.S. became one of the largest global economies.
World War I (1914-1918):
- U.S. joined in 1917.
Spanish Flu Pandemic (1918):
- Followed by a brief recession (1919-1921).
- After the recession, the U.S. economy experienced significant growth.

World War I Influence:
- Lucrative government contracts during the war boosted big corporations.
Pro-Business Government Policies:
- Shift from the Progressive Era to a pro-business stance.
- Presidents Harding, Coolidge, and Hoover favored laissez-faire approach.
- Coolidge's statement: "The business of America is business."
Protectionist Tariffs (1922):
- Made American products cheaper than foreign imports.
Mass Production of Consumer Goods:
- Cars, radios, refrigerators, toasters.
Explosion of Buying on Credit:
- Widespread access to installment plans allowed consumers to purchase expensive products over time.

Henry Ford's Impact:
- Ford Motor Company founder.
- Aimed to produce affordable cars for the masses.
- Reduced prices from $1200 in 1909 to $295 in 1928 using efficient mass production techniques.
- Implemented economies of scale and increased employee productivity.
- By the end of the 1920s, Ford was producing one car per minute.
- Paid employees well to increase demand for products.
Influence on Other Industries:
- Boost in related industries: steel, rubber, glass, leather due to increased car production.