Economic Growth and Prosperity of the 1920s Essay

Economic Growth and Prosperity of the 1920s - Essay Example 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 mon ey 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 A merican 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 aut omobile 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.