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

In the class of history, we studied USA and we wrote and essay answering this question: How important were credit and hire purchase as a reason for economic growth during the 1920s?

Here it's mine.

During the 1920s USA was suffering many changes. There was an  increase in production, known as the boom which made the economy grew. Credit, a financial facility which enables a person or business to borrow money to purchase products and to pay for them over an extended time period, and hire purchase, a system by which a buyer pays for an item in regular installments, were crucial for this growth.

On the one hand, credit and hire purchase allowed families with low income to buy goods. Big industries such as the motor car industry used hire purchase schemes and 6 out of 10 cars were bought on credit. During the 1920s, the economy was growing so people was confident and started to invest in the stock market. Americans started to speculate, this meant that they borrowed money from banks and bought shares on margin. However, when the prices of the share rised, they sold them and so they paid the loan and get a profit. Due to this, banks started to lend money and many new millionaires appeared. In this way, people invested money on companies.

Wall street market

On the other hand, the economy of the country boosted with the First World War since they provided Europe with arms, food and money. In this way, USA became leader of many sectors of industry. It outstripped Germany in the supply of chemical products and had massive steel, coal and textile industries. Electrification was an important factor too, since electricity was extended to new sectors of the country, making industries more productive. Due to this,  mass production became popular, after Ford’s line production invention, so many consumer goods were produced. With the help of advertisements, the idea of “buy now, pay later” was spread and more people started to buy goods since they considered that spending money meant having a good quality life. Moreover, Republican policies helped too. They protected the national industry against foreign competition by introducing import tariffs and keeping taxes low to let Americans spend more money.

Ford's invention

Radio in 1920s

As a conclusion, credit and hire purchase were important to economic growth during the 1920s. However, these factors were not the most important ones. These financial systems helped to the growth since they encourage people to buy but the economy grew due to other reasons, the industrial strength, the republican policies.