America in the 1920's
The powerful economic might of America from 1920 to October 1929 is frequently overlooked or simply shadowed by the more exciting topics such as Prohibition and the gangsters, the Jazz Age with its crazies and the Klu Klux Klan. However, the strength of America was generated and driven by its vast economic power.
In this decade, America became the wealthiest country in the world with no obvious rival. Yet by 1930 she had hit a depression that was to have world-wide consequences. But in the good times almost everybody seemed to have a reasonably well paid job and almost everybody seemed to have a lot of spare cash to spend.
One of the reasons for this was the introduction of hire-purchase whereby you put a deposit on an item that you wanted and paid installments on that item, with interest, so that you paid back more than the price for the item but did not have to make one payment in one go. Hire-purchase was easy to get and people got into debt without any real planning for the future. In the 1920’s it just seemed to be the case that if you wanted something then you got it.
But simply buying something had a major economic impact. Somebody had to make what was bought. This was the era before robot technology and most work was labour intensive i.e. people did the work. The person who made that product would get paid and he (as it usually was in the 1920’s) would not save all that money. He, too, would spend some of it and someone somewhere else would have to make that and so he would get paid. And so the cycle continued. This was the money flow belief of John Maynard Keynes. If people were spending, then people had to be employed to make things. They get paid, spent their money and so the cycle continued.
A good example was the motor car industry. The 3 big producers were Ford, Chrysler and General Motors.
A boom in the car industry came from Ford’s with the legendary Ford Model -T.
This was a car for the people. It was cheap; mass...