1.2 Limits of the Boom Flashcards
Uneven distribution of wealth
-Some regions were more prosperous than others
-Employment could be unstable with much unemployment and short-time working
Distribution of income
-The North East and Far West enjoyed the highest per capita incomes. In 1929, these were $921 and $881. In the South East, it was $365
-In 1929, 60% of American families had annual incomes of less than $2000
Distribution of industry
-The old industries of the USA had been entered in the North East and Midwest, i.e Illinois, Michigan and Pennsylvania
-Coal suffered from competition from newly discovered energy sources, such as Oil.
-The intro of synthetic fibres lessened the demand for cotton
-Changes in young women’s fashion, i.e shorter skirts meant there was less demand for material
Stability of employment
-Often unstable due to fluctuating demand for goods
-There was little welfare or unemployment benefits and most relief was supplied by charitable organisations
Native and African-Americans
-Native Americans often eked out a miserable existence on infertile reservations
-African-Americans made up 10% of the population, but 85% lived in the South. There was migration north in search of better opportunities, but here too, African Americans faced discrimination in housing and employment
They were often concentrated in ‘ghetto’ areas such as Harlem in New York. The population increased from 50,000 in 1914 to 165,000 in 1930
-The KKK still terrorised much of the Midwest and South, although the number of lynchings were falling
-14% of farmers were African-Americans
Rural Poverty
-The Census in 1920 showed that for the first time, the USA was essentially an urban nation. 31 million lived on the land but the rest lived in towns
-The growth of urbanisation was significant because farming had been extremely influential in American life and culture. As the majority of Americans had traditionally lived in rural areas, the farm lobby had been very powerful in influencing the government
However, it now felt that its influence was under threat from other groups
Farmers
-Wheat fell from $2.5 to $1 per bushel
-Prohibition cut the demand for grain previously used in the manufacture of alcohol
-Higher living standards meant people ate more meat and less cereals
-Growth on synthetic fibres, less demand for natural ones, i.e cotton
-Technological Advances meant that crops could be produced on the same or even a reduced acreage
66% of farms operated at a loss. 54% of farmers lived on less than $1000 per annum
Wage labourers, tenant farmers and sharecroppers, in the South, mainly African-Americans, suffered particularly bad
-Some farmers grew rich by selling their land for housing and industrial development, but most appeared not to share in any prosperity in the 20s
Role of the government
-Many farmers blamed the gov. During the war, they urged them to produce more crops but now it did little to compensate them for their losses. They were angered that tariffs protected industry but not agriculture
-Gov policy was to encourage farms to co-operate together to market their produce.
-The Agricultural Credits Act 1923 funded 12 Intermediate Credit Banks to offer loans to co-operatives- HOWEVER the measure was of little benefit to small farmers.Large agriculture businesses could afford to take out loans to market their produce, therefore dominating over small farmers
-The 1921 Emergency Tariff Act and 1922 Fordney-McCumber Act placed high tariffs on foreign goods protecting domestic industries
Ponzi Scheme
-People invested mass amounts in speculative ventures
-Charles Ponzi got thousands of people to give him their money by promising a 50% profit in just 90 days
Florida Land Boom
-Between 1920 and 25, the state of Florida underwent a “land boom”. It was seen as a desirable place to live, due to its sunshine all year round.This lead to many Americans investing in parcels of land they had never seen
-They aimed to sell their investment for a quick profit. Often these investments were paid on credit, with buyers only needing to put down a 10% ‘binder’
-People weren’t looking at at what land they were buying and so they were getting ripped off
International Debt
-Was at the heart of economic problems in the USA in the 1920s. America’s priorities was for the European nations they had lent money to during WW1 to repay their debts to America
-The USA was never going to get their loan money back, this was partly due to America’s high tariffs. This meant that European countries were unable to export their goods to the USA and so found it impossible to earn money to repay their loans to America
Banking
-Credit was very easy to get in the USA during the 20s, particularly to buy stocks with. This saw many banks lending money to investors which they didn’t actually have to lend
-The banks were gambling with people’s money to play the stock market
-Many local banks didn’t have to join a centralised system. These banks were what normal people would deposited their money, particularly in rural areas. In the 20s, almost 30,000 banks existed. Most were very small
