Boom and Bust + extra

Reasons that led to economic prosperity

Massive exports to Europe, lended money at high interest rates, industrial strength, republican policies, confidence and speculation

Biggest lender

European countries borrowed huge amount of money and then paid back with huge interest. Made banks more eager to loan money to businesses

Industrial strength

car industry was growing

Assembly line

Created by Henry Ford, sped up the production of cars from 12 to 1.5 hours

Why was the assembly line good

Allowed for cars to be cheaply made, construction industry began to build road and restaurants to cater for cars

Isolationism

america wanted to concentrate on its own affairs and prosperity rather than be dragged in a war

Rugged individualism

the belief that everybody can help themselves to prosperity if left along to do it

Laissez-faire

let the markets run freely

Why did low taxes help America to prosper

Americans had more disposable income to spend on consumer goods

Protectionism

tariffs set to keep foreign imports more expensive to protect American Industries

Confidence and Speculation

People invested in stock on the margin, low interest rates.

How did banks cause America to prosper

Banks used savers money to invest in shared and lent money to stockbrokers and speculators

Hire purchase

allows people to buy consumer goods on credit

What led to economic collapse

overproduction, buying on credit stock market crash, bank failures