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

There is no doubt that during the 1920s the USA was having a very big economic growth. There are many reasons to explain why this happened, but this essay will explore how far were credits and hire purchases important for the economy of the USA.

To start with, the difference between credits and hire purchases is very simple. People could borrow money from banks to make goods more accessible. They were able to take credits which were going to pay back later. On the other hand, hire purchases were a way of paying. People paid a fraction of the total price each month.

One of the most important things during the 1920s was the car industry. People could buy very easily a car because of hire purchases. Unlike Europe, cars were very common in the US society. Cars made it possible for people to move into the suburbs making cities to grow.

During the 1920s, shares were a very easy way of becoming rich. People bought shares, waited until their price rise and then sell them again. Usually they borrowed money which then they paid back with the profits. American banks lent $9 billion for speculating in 1929.

On the other hand we have the reasons that also helped in the economical growth in the 1920s. The Republican Party had some beliefs and policies that helped in the process. The government placed import tariffs to protect the USA industries from foreign competition, consequently the home market grew up. Furthermore, they thought that if people kept their money, they would buy goods instead of saving it, so they kept taxes very low.

Another way of making people buy, was by using advertisements. They encouraged people to buy even if they did not have the money they could borrow it. Moreover, industries had more methods to make goods cheaper, such as production lines. They used this method to speed up the production and make products more accessible.

As regards the US industry, we can say that it grew up after the First World War. Since the war did not drain the resources as it did with Europe, they bought to American companies, such as the chemical industries that outstripped Germany in the supply of it.

As a conclusion we can say that the US economy grew up because of all these reasons, among them credits and hire purchases, which were very helpful for poorer families. Although it was not the most important.