Essay History Usa 1920's

How important were credit and hire purchase as reasons for the economic growth in the USA in the 1920's?

In the 1920's USA's economic boomed and people were having a nice life, spending money like out of one's mind. Some of the reasons for this growth was the credit and the hire purchase. Credit was when banks loan money to people. On the other hand, hire purchase was when people were allowed to buy goods and pay for them little by little throughout a long period of time. This "support"were the reasons that then provoke many problems to the country and it's economy.



Firstly, people started to believed that these factors were the only ones that brougth the economic boom in the country and that were very important. These boom helped people to have an easier for low income families so as to buy new manufactured good and if they could not, they could buy them but then they had to pay for them with credits from banks as these were ready to loan money because confidence was really high. Additionaly, many new millionaires made from investments based on borrowing money by Speculation that were people who borrowed money and they invested it on firms or companies, then sell them again as soon as the price has risen, these was a way of gambling.



Secondly, people said that credit and hire purchase were not important for economic growth in spite of the republican policies they had (low taxation, tarrifs and laissez-faire economics) that allowed profits to increase. The mass- marketing and advertising campaigns encourage people to consume more that what they can "Buy now, pay later", so factories used to make goods cheaper and faster so as to make the citizens think that they should buy them. One of the main point of the economic boom was the new electrification that allowed factories to produce more and they did not need so much workers, these brought many people unemployed and without a salary. Many people were not benefit with all this since they used credits but they ended up having to pay many debts and these had to be solved inmediately. One of the most important reason was the gained that produce USA during the First World War since they sell many arms and food to allies and the chemical industries production.




To conclude, credits and hire purchase were not the main factors for the economic growth in USA in 1920's since there were other that influence a lot like the industries growth with electricity, the Republican Policies and the markets gained during the First World War.