Booming Economy in the 1920s

By Emily Jeffords and Caileigh Snowdon

GNP is another way of saying Gross National product. This was the total value of all goods and services produced. Around 1929, it had risen to about $100 billion. In the 1920’s, the GNP per capita grew about 2.7% each year. Technology made industrial growth grow rapidly. By cutting costs, companies were able to lower prices which increased profits.


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Productivity is the amount of work each worker does. When adopting new works methods, businesses lowered costs and also increased productivity. Assembly lines also a way of increaseing productivity .


Buying on Margin and Growth of Stock Exchange- In the 1920s, stock prices were rising so fast, business owners were gaining money fast by buying and selling stock. Some people would buy stocks on margins which was like installment buying. The buyers would hold an object then sell it for a profit. The only way that this would work is if the stock prices continued rising like they are. Unfortunately, in the late 1920s, the prices of stock were rising faster than the companies the stock represented. (The Great Depression)


The Growth of Consumer Goods- The growth of consumer goods slowly started declining when the Great Depression started. Many people demanded more products because they now had more money to spend on stuff.


Recession- The economic downturn is recession. After World War 1, Americans had trouble readjusting to peacetime. Millions of soldiers came back and were all looking for jobs and companies had to lay off workers and then the companies became bankrupt. This recession lasted for two years.


Scientific Management- Many companies used scientific management to study how goods can be produced more quickly. It would help with lowering the costs and increase productivity. A way to create mass production is by using the assembly line introduced by Henry Ford.


Worker Relations- Welfare Capitalism- Many companies tried to build better relations with the workers. The companies lowered the risk of death or injury during working hours. They also sometimes provided health and accident insurance. Last, they wanted to buy stock in the company, that is known as welfare capitalism. It encouraged workers to become more closely to the company they work for and discouraged them from joining independent unions.


Installment Buying- The use of electricity became more and more popular and the costs of the products dropped rapidly. The products also helped people with everyday life like household chores. The car industry soon got involved and many local companies got replaced by national brands. Advertisements were made to persuade consumers, that grew from newspapers to commercial announcements. Installment buying let consumers buy products by promising to pay a small, regular amounts over a period of time.


Automobile Age- The installment plan was also often used to buy a car with. People’s lives as well as the nation’s economy depended on the automobile. Henry ford established the assembly line methods, as well as the 1914 Ford that stunned the auto industry. He also paid his workers the high wage of about $5 per day and the workers were very happy by that. Other companies tried to compete by making new cars and this competition came the practice of introducing new car models every year. New companies started growing such as gas stations, and businesses along major roads. Industries also profited such as the steel, rubber, and glass industries. Many farmers didn’t profit at all from this advancement and they lost their farms.

Some photos that are good to check out!