The Roaring 20s: Economic Boom

The USA, December 1920. World War One is recently over, and the deadly Spanish Flu has finally run its course. One in 20 people around the world have died from war and disease. But in the next ten years, things are about to get better, much better, for Americans. The U.S.

government believes the best way to solve economic problems left behind by the war is to allow businesses to do as they please, with few rules and regulations. This way, it hopes, businesses will grow rapidly and everyone will benefit from the boost to the economy. So the government lets businesses set their own prices, and charges very little tax on the profits they make. This leaves more money to go back into the businesses, to help them grow. And the government doesn’t let issues of workers’ rights ‘interfere’ with money-making.

Rather than creating laws to protect workers, it lets businesses decide their wages and working conditions. The government’s hands-off approach to business is known as laissez faire, meaning “let do” in French. The laissez faire approach works… At least in the short term. The number of millionaires in America quadruples, and regular people prosper, too. Expanding businesses mean there are a lot of jobs to be filled.

Many people move from the country to the city to fill them, but still, there is competition for workers, so businesses increase their wages. Now people have plenty of money left, even after their bills are paid. They have disposable income to spend not on things they need, but things they want... and companies are happy to give them ideas. Factories churn out cosmetics and clothing.

And as more and more homes get electricity, products like hairdryers and radios hit the shelves. Soon washing machines, vacuum cleaners, and refrigerators become everyday household items. Life outside the home changes, too. Cars become cheaper than ever before when car maker Henry Ford perfects a new way to build them. Parts are added one by one by workers standing alongside a conveyor belt, or assembly line.

Ford’s Model T is cheaper than any car that has come before, and fifteen million Americans buy one. Items once seen as luxuries exclusively for the rich are now within reach of the masses. And if people don’t have quite enough money to buy one of those pop-up toasters their neighbour has, or the electric blender advertised on their new radio, they can simply borrow the money at the store to pay for one. Companies allow shoppers to pay just a small part of an item’s cost at the time of purchase, and to cover the rest in payments made each month. This is the decade for buying on credit.

Credit allows people to live a lifestyle they cannot necessarily afford. When family after family begins to live this way, the whole country is in danger of overextending itself... But for now, the economy is booming, people are prospering — the 20s are “roaring”. In the words of President Herbert Hoover, “Prosperity is written on fuller wage envelopes, written in factory chimney smoke, written on the walls of new construction…” America has “reached a higher degree of comfort and security than ever existed before in the history of the world.”