After the First World War the United States was in a strong economic position. The economies of her European rivals had been severely disrupted by the war and US companies were able to capture markets which had previously been supplied by countries like Britain and Germany.
Companies in the United States also began to make full use of what became known as mass production. Between 1919 and 1929 output per worker increased by 43%. This increase in output enabled America to produce items that were cheaper than those manufactured by her European competitors. Inflation remained low while incomes increased by an average of 35% during this period.
The United States also pioneered techniques in persuading people to buy the latest products. The development of commercial radio meant that companies could communicate information about the goods to a mass audience. In order to encourage people to purchase expensive goods like motor cars, refrigerators and washing machines, the system of hire-purchase was introduced which allowed customers to pay for these goods by installments.
The American economy appeared to be in such a healthy state that in 1928, Herbert Hoover, the man who was soon to become President of the United States, was able to claim that: "We in America are nearer to the financial triumph over poverty than ever before in the history of our land."
(1) Herbert Hoover, speech to the Western Society of Engineers (February, 1920)
I think our people have long realized the advantages of large business operations in improving and cheapening the cost of manufacture and distribution. The more goods produced, the more share there is to distribute.
(2) Andre Siegfried, America Comes of Age (1927)
In America the daily life of the majority is conceived on a scale that is reserved for the privileged classes anywhere else. The use of the telephone, for instance, is very widespread. In 1925 there were 15 subscribers for every 100 inhabitants as compared with 2 in Europe, and some 49,000,000 conservations per day. Wireless is rapidly winning a similar position for itself, for even in 1924 the farmers alone possessed over 550,000 radios. Statistics for 1925 show that the United States owned 81 per cent of all the automobiles in existence, or one for every 5.6 people, as compared with one for every 49 and 54 in Great Britain and France. Though its population does not exceed 6 per cent of the world total, the United States consumes almost three-quarters of the available supply of rubber and gasoline, two-thirds of all the raw silk, and one-quarter of the sugar.
(3) Selected share prices from the Wall Street Journal (1928)