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Causes of the Boom, The role of the Republicans (The Fordney-McCumber…
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The First World War
- The USA stayed out of the war at first due to the policy of isolationism. This allowed the USA to prosper financially.
- American banks loaned money to Britain and its allies to buy food, weapons and equipment.
- While the other countries involved in the war were economically struggling, America was on top and had taken over the German chemical market.
- Nations such as France, Germany, Russia and Britain were exhausted by the war. Skilled American inventors and business people were able to exploit American resources and make fortunes from them while they were still not involved in war.
- Even after joining the war very late in 1917, America was the only nation without wartime debt.
- This allowed the economy to continue to prosper until 1929
The consumer society
The number of US homes with electricity grew rapidly in the 20s, from 15% in 1916 to nearly 70% in 1927
This meant that people could buy ultra-modern electric-powered gadgets such as vacuum cleaners, record players, radios, telephones and refrigerators
Huge demand for these good created jobs in the factories that made them, and jobs in the shops that sold them.
New ways to buy and sell
Colourful billboards, newspapers and magazines urged people to buy the latest gadgets and "keep up with the Jones'". This lead to a boost in sales.
Catalogues made buying easy, and the goods could be delivered to your door.
'Buy now, pay later' schemes called hire purchase meant buyers could pay for goods in small instalments over a fixed period. Six out of ten cars were bought this way.