Economic Growth and Prosperity of the 1920s - Essay Example

Economic Growth and Prosperity of the 1920s Introduction Unites states of America is considered as the strongest economy around the globe. Several physical signs of the then economic growth and prosperity are still evident today. Long skyscrapers, Empire State building, technological advancement and developed public properties are the examples of the growth and prosperity of 1920s. The essay will analyze the reasons behind the economic growth and prosperity in 1920. Discussion This part of the essay will determine five accurate causes of economic growth and prosperity. In addition to this, the essay will identify three different groups that are benefited from this prosperity and three other groups that did not benefited from this economic growth and prosperity. Five Causes behind the growth Growth of stock market, reduced taxes, increased international consumption tariffs, increased production efficiency and technological advancement can be considered as five key reasons behind the economic growth and prosperity of America in 1920s. The First World War assisted the latter economic prosperity of America. Earlier European countries were known as major business hubs. During the First World War, American Industry benefited as the other countries could not buy goods and services from Europe. In this point of time the European countries were busy in fighting. Therefore, the production growth automatically went down in Europe. In this way, the American industries benefited as the country had the potentiality to supply products according to the demand of international market places. Looking into these aspects, several countries started to buy goods and services from the industries of America. At this point of time the banks of America lent huge money to the European Allies. However, this money was being paid back with a significant interest rate in the 1920s. The First World War saw the implementation of advanced technological weapons and tools. American industry had the capability to produce several types of advanced consumer durable goods and necessary FMCG goods. By the end of the war, the confidence of American people started to grow. They believed that they can get significant economic growth if the capitalize on their skills, competencies and expertise. In the 1920s, American stock market started to grow significantly. It significantly created quick wealth. Therefore, it was not necessary for the people to have lot of money to invest in property or business. At this point of time the American banks also started to give capital to the business owners at comparatively low tax rate. It helped the SME business owners to start business and make profit out of it. Most significantly, the industrialization in the 1920s helped American economy to grow at an impressive rate. Rise of stock market and banking sector helped the industries in America to start business individually and maximize business profit. Looking into these favorable aspects, the government made it highly expensive to buy imported products and services. It forced the people to buy American goods. In addition to this, reduced tax allowed the people of America to gain more income on respective paychecks. It is clear from the above mentioned things that the economy was reaching to boom stage. The purchasing power of people automatically increased due to low tax rate and industrial growth of country. The problem of high unemployment started to abolish from American market as the industries required more employees to produce goods according to the growing market demand. Last but not the least; the technological advancement helped the industries to implement advanced technology in business process. The telecommunication, consumer durable and automobile sector achieve huge growth due to implementation of technology in business process. Ford Motors started to introduce technologically advanced cars due to favorable market demand. It helped the business owners to reduce the production and delivery cost and time. In addition to this, continuous product up gradation by the help of technological integration helped the industries to meet market demand and contribute to the country’s economic growth. Three Groups who Benefited Consumers, business owners and the banking sector highly benefited from this economic growth and prosperity. Consumers enjoyed their high purchasing power and reasonable price of products. They had the ability to buy expensive goods and materials. Growth of automobile and consumer durable goods industry are major examples. Business owners had the advantage to borrow capital from the banks at reduced interest. In addition to this, high marker demand for each and every industry motivated the business owners to develop aggressive business strategies that ensured industrial growth. Banks and stock market made huge profit as they allowed people to borrow money at low interest rate for a longer period of time. Payback with long time interest increased the profitability of this sector. Three Groups who did not Benefited Farmers, black people and workers of old industries are the three groups that did not get any kind of benefit from this economic boom. Since First World War the farmers started producing crops more than market demand due to economic boom. It automatically resulted over supply as the farmers could not sell extra crops. Therefore, prices of the crops went down and farmers found it difficult to make profit. They started to borrow money from banks to survive. As a result, maximum farmers got into huge dead until they had to sell their lands. Black people suffered lot in the Southern States. The majority used to work under small and medium firms owned by white entrepreneurs or landlords. Unconditional segregation and lack of access to the developed public services made the lives worst of these people (Divine 481). Unkind treatment with these people by some racial groups in this part of country deprived the black people to enjoy the significance of economic prosperity. It is discussed earlier that several organizations started to implement advanced technology in business process in order to reduce business operation cost and time. However, it had resulted loss of jobs in coal mining, cotton and ship building industry. Machinery process replaced manual process. Lack of education and knowledge about advanced technological process caused unemployment for the low organizational level workers because the organizations were trying to reduce the wage cost. Conclusion Looking into these above discussion, conclusively it can be stated that the economic boom of America helped several industries to grow. In addition to this, it helped people to buy goods at low price. But, group of farmers, old industry’s labor and black people in Sothern State got affected due to this economic growth and prosperity. Work Cited Divine, Robert. America: Past and Present Since 1865. Vol 2. 10th Ed. Pearson: New Jersey, 2012. Print. Read More