US Economy in the 1920s
- Booming Economy
Reasons for booming Economy:
- Growth in Automobile industry
- High levels of Consumer confidence, increased by new attitudes to consumerism.
- Improvements in technology, partly as a result of WWI
- Improvements in Labour Productivity - e.g. technology and new management techniques
- Scientific Management - Taylorism
- Mass Production - Assembly line e.g. Ford's Car Factory
- Anti trust laws were weakened.
- Trade Union membership declined
- Growth in Debt.
- Boom in Stock Market.
- Recession in Agriculture.
- Fragmented nature of banking system
There was also no system of lender of last resort. This meant that if the banks were short of money, they couldn't borrow from a Central Bank. When the Great Depression struck, people wanted to withdraw their money, but the banks didn't have enough reserves to meet this demand. This caused a fall in confidence in the banking system and many banks went under.