Economy of the United States in the 1920s facts for kids
The 1920s were a really exciting time for the USA! The country's economy grew super fast, and this big growth changed the USA forever, helping it become a world leader. Let's find out why this happened.
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Why the USA's Economy Boomed in the 1920s
The USA's economy grew for several important reasons. These reasons worked together to create a time of great wealth and new opportunities.
Lots of Natural Resources and More People
The USA had tons of natural resources. Think about it:
- Oil in Texas
- Coal in the Appalachian Mountains
- Ranching (raising animals for food) in the Midwest and Great Plains
Having all these resources meant the USA didn't need to buy them from other countries. This saved a lot of money!
Also, the number of people living in the USA was growing very fast. More people meant a bigger market. This means more people to buy all the things being made in the USA, which helped businesses grow even more.
Here's how the population grew over time:
| 1880 | 1890 | 1900 | 1910 | 1920 |
|---|---|---|---|---|
| 50.2 million | 62.9 million | 75.9 million | 91.9 million | 105.7 million |
Big cities also grew a lot, meaning more people lived closer together and could buy more goods.
How World War I Helped the Economy
During World War I, the USA didn't join the fighting right away. Instead, it sold a lot of things to countries like Britain and France. The USA sold them:
- Metal
- Weapons
Selling all these supplies made the USA a lot of money.
After the war, Europe was recovering, so the USA took over a lot of the world's trade. The USA became a leader in making things like:
- Chemicals
- Explosives
- Plastics
This was a huge boost for the American economy.
Republican Party Ideas for Growth
The Republican Party was in charge during the 1920s. They had some ideas that really helped the economy grow:
Less Government Control
The Republicans believed in "laissez-faire" (pronounced "less-ay fair"). This French phrase means "let do" or "leave alone." It meant the government wouldn't interfere much with businesses or people's lives. Republicans thought this would help businesses make more money, and it often did.
Protecting American Businesses
Republicans put "tariffs" on goods coming from other countries. A tariff is like an extra tax. This made products from other countries more expensive. The idea was to protect American businesses from competition. It also encouraged people in the USA to buy American-made products.
Lower Taxes
The Republicans also lowered taxes. This meant people, especially rich people, got to keep more of their money. The Republicans hoped people would spend this extra money on American goods or invest it in American businesses.
Allowing Big Companies to Grow
The Republicans allowed "trusts" to form. Trusts were very large companies that controlled almost an entire industry. For example, one company might control nearly all the oil production. Many people worried about these huge companies having too much power. But the Republican Party believed these big businesses could run things better than politicians. These trusts played a big part in the economic boom.
However, these policies also had some downsides. A lot of the wealth in the 1920s ended up with only a few very rich people. Also, farmers found it very hard to make money and often stayed poor.
New Industries and Smart Ways of Making Things
The 1920s brought many new inventions and better ways to make products. This created exciting new industries.
- New products like telephones, radios, vacuum cleaners, and washing machines became popular.
- These items were made in huge numbers, which made them cheaper for everyone to buy.
- Advertising became very clever, making people want to buy these new things.
The Rise of the Car Industry
The biggest new industry was the car industry. Henry Ford changed how cars were made with his assembly line. This made cars much faster and cheaper to produce. By 1929, an amazing 4.8 million cars had been made!
Radios Become a Household Item
Radios saw incredible growth. In 1920, only 60,000 radios were sold. But by 1929, that number jumped to 10 million! Overall, American industry produced about 50% more goods during this time.
The American Way of Thinking
During the 1920s, many Americans felt they deserved to be successful. They wanted:
- A nice house
- A good job
- Plenty of food
- Lots of new things to buy
Buying and using new products was seen as a very American thing to do. This idea of "consuming" (buying things) had a huge effect on powering the economic growth of the 1920s.
