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The Cause of the Economic Boom in the 1920's

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The Cause of the Economic Boom in the 1920's

By the end of the First World War America was regarded as the most

powerful and richest country in the world. In the 1920´s the United

States economy was booming. This was a period of prosperity, when the

country's economy was doing well and some of the people were sharing

in it. A long-term cause of the American boom in the 1920´s was

America's natural advantage and regional diversity. The South was

mainly used for farming but also had large amounts of oil. The North

of America and the East Coast were the richest parts of America

because there was lots of industry, business and many new factories

were being built providing new jobs. This large area of farmland and

industry provided for all the food America needed and all the products

that the American people needed which meant that America did not need

to import any goods from outside the USA, to further discourage this

and keep prosperity increasing in the US, the Government imposed

tarrifs on imported goods. The main turning point of the boom was the

First World War and American Isolation. In the First World War America

lent millions of pounds to countries like Britain they would then be

paid back with interest on top of the original money. America also

exported many of its good and products such as munitions and natural

resources which it had lots of to Britain and France. This was a one

way trade system and it gave a real boost to American industry.

America got rich while the European countries were busy fighting.

America took over British and French markets. America also took over

German markets, before the war Germany was the world's...

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...have its resources it would not have

exported goods during the First World War and not have taken over its

trade competitors´ markets. The producing part of the economy would be

non-existent and half of the prosperity cycle absent. It is also clear

to see that the most important short-term cause of the boom was the

Republican Party and their policies attitude towards business. This is

because they lowered taxes and so people could spend more and they

made sure people spent it on American goods. They did this by

introducing tariffs making it expensive to buy foreign goods. Without

this the first part of the prosperity cycle would be non-existent. The

key to a boom is a country consuming and producing and these two

causes largely helped this.

Statistics and sources from:

class sheets and http://www.britannica.com
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