1.4-The Changing Quality Of Life Flashcards
Why did America go into a depression after WW1, what was the main impacts?
After FWW USA when into a brief depression mainly due to war production being stopped
Main impacts was on farming, industry, government reaction
How did it affect farming?
Urged during war to produce more wheat and were given subsidies
Loans- bought farmland and machinery
Mechanisation led to unemployment
Wheat farmers made a profit- successful but they produced too much and prices fell
Some produced even more to cover their loans but prices continued to fall
Some farmers had to sack workers , others went bankrupt
Farmers growing cotton faced difficulties due to Boll weevil- (beetle which eats cotton plants) causes 34% drop in production in 1921
How did it affect industries?
Strikes in 1919 and 1920, local and nationwide
Most strikes failed which caused some businesses to fail- increasing unemployment
Old industries (especially in north and west) in decline eg: coal industry
In 1990 coal produced 90% of energy in USA in 1930 this dropped by 60%
How did the government react?
Republican believe in liasses-Faire and did not try to stop the Depression
US exports fell as isolationist tariffs encouraged others to do the same
Pushed USA to buy US goods but couldn’t always get same goods had lost through exports
Government thought would recover itself, economy did- huge impact in 1929 when a Depression struck
What was mass production during the Boom period?
Broke production techniques into steps, one worker responsible for one section
Key example- Henry Ford and his Model T car
Produced more quickly and cheaply so could be sold at an affordable price
This meant they sold more especially cars and radios
In 1917 there were 4,727,468 passenger cars registered in the USA
Had knock on effects on whole industries eg: getting the raw materials to produce them, transportation for deliveries, production of spare parts and specialists to fit them
Standardisation
Also had problems eg: driven by customer spending, once everyone had one the demand dropped
They also took advantage of Laissez- Faire policies by not improving working conditions and banning unions
What new management techniques were used during the economic boom?
Used ‘scientific management’ ideas (set out by Frederick W Taylor) who made production more effective as much as the production line itself
Each worker was trained in the most effective way of doing each task
Also meant keeping skilled workers so paid them good wages- stayed longer and less likely to leave
Only some workers benefitted from system (if skilled)
What federal policies were introduced during the boom?
Encouraged to ‘buy American’
Cut taxes for businesses
Kept some of wartime subsidies to farmers
What was hire purchase and loans?
Pushed hire purchase which meant they product could be paid in instalments
Eg: Sears, sent out catalogues, promised ‘easy payments’
Banks more willing to lend homes and farms on mortgages due to prosperity
Between 1920-1929 consumer debt rose from $3.3 billion to $7.6 billion
People borrowed in average 5% of their income by 1929 this has almost doubled
What were the changing industries during the boom period?
New industries which were most efficient like mechanisation
Old industries decreased- not as important as didn’t produce consumer goods
Many of new industries and goods produced relied on electricity rather than things like coal
In 1917, 7,889,000 homes wired with electricity, in 1930, there 24,555,732
Why did the stock market collapse in 1929?
Ordinary people started to be able to buy shares as well as wealthy people. They bought shares for the long term, for the dividends they paid out
Shares went into their own boom cycle called a bull market
Process- people bought shares, they went up in price and then people sold them, making a profit
Demand ensured prices rise and so people began to borrow windy to buy shares (buying on the margin). People. Outdoor do this during the boom as they made a profit selling the shares and so could re-pay the loan. It became even riskier (government didn’t stop it) when banks being affected by the bull market started using customers investments to trade in shares. When the Depression hit the demand increased leaving them unable to payback loans and banks unable to pay back customers
What is a bull market?
Share prices rise and people expect this to continue
What is a bear market?
Opposite
When the price of share falls and people expect the fall to continue
What is The Federal Reserve Board?
Set up in 1913
Regulated banking
What is a dividend?
A regular, usually yearly , payment made by companies to their shareholders
What was the bust?
Most people had consumer goods- no longer a demand
Companies did not cut production enough so goods piled up
In 1927 unemployment was rising this meant employers cut wages and working hours
Republican Government still had the Laissez-Faire attitude so did nothing. Thought just like in 1919 it would sort itself out
The people and businesses and banks were in a lot more debt then in 1919, the stock market under huge pressure
It was made worse the Federal Reserve Board which attempted to control the boom by tightening the money supply
In 1929 as the share prices began to be dangerously high, sold shares and kept the profit- more and more investors sold causing the stock market to crash
Happened mainly due to rate, people having heavily invested on credit and so feared losing everything- rushed to sell
A bear market to replace the bull market
On 29th October the stock exchange closed by November small investors had lost everything
Banks that had gambled with customers money went bankrupt
1/3rd of banks in operation before the crash when all became bankrupt in 1933
Facts about the Great Depression:
Businesses and banks went bankrupt, unemployed shot up
Lost jobs and homes (could not lay mortgages)
People stopped buying- more businesses failed
Led to homelessness and poverty
Government didn’t intervene when president hoover did try to introduce federal action the congress were unwilling to help
Not enough measures out into place- got even worse
Hoover lost the 1932 election due to Roosevelt’s New Deal promises
Facts about the USA’s recovery:
Roosevelt closed all banks and had FED officials inspect them, they only re-opened the ‘healthy’/ stable ones
Used federal agencies to give employment, build infrastructure, re-establish confidence and provide loans
Natural disasters like the Dust Bowl hindered recovery especially amongst agricultural workers
Roosevelt also causes huge government debts
Recovery was slow, bumpy and did have economic decline- ‘Roosevelt Recession’
From 1938-39
1937- Wagner Steagall National Housing Act set up Federal Housing Administrations to oversee slum clearance and build housing for low income families
The agricultural adjustment act also pushed farmers to produce less
Still unemployment, homeless people, racial divisions that federal agencies couldn’t help
However, in 1939 the Second World War broke out and re-production started again eg: to help allies. Then in 1941 the USA also joined creating employment in factories and in the military
What were the main causes of the stock market collapse?
Too many shares being bought on credit
Média reportage of share prices
Businesses and farms overproducing
Prices falling
Rising unemployment
Wall Street Crash
No government control of bank lending or share buying with customers’ savings
Why was there a boom after the war?
Unemployment was low as there was a huge demand for consumer goods that they didn’t get during the war
Production went from $213 billion worth of goods in 1945 to $284 billion worth in 1950- production switched from war time essentials to civilian goods
Government efficiency in control of strikers eg: when coal miners went on strike Truman took control of the mines. When rail workers went on strike he asked congress to draft strikers into the army- fewer of them. The rail strike was particularly disruptive stopping 90,000 passengers and 25,000 perishable food meeting destinations
‘Baby boom’, in 1947 nappy sales at $32 million, in 1957 $50 million
Toy manufacturers made $1.6 billion in 1939
In 1940 there were 2,559,000 live births in the USA, in 1955 it was 4,104,000. More babies meant more teenagers- need for more schools and colleges, would become consumers themselves
Farmers- subsidies from government, more of a demand (more consumers) and from abroad like Europe
More employment and better living conditions as government spending rose- Truman’s ‘fair deal’ policies eg: 1949 National Housing Act introduced slum clearance and 810,000 low income housing to replace slums. Also money to those of military service- leaving payment, unemployment pay, loans to buy a home or business, medical and healthcare
Post-war inflation and growing affluence:
No control over prices unlike in war which had governments Office of Price Administration (OPA)- shut down in 1946
Prices jumped 25% in 2 weeks
Farmers and businesses wanted to exploit demand
Truman passed the 1946 Employment Act and set up a council of Economic Advisors (CEA)
Also gave a report to a joint Economic committee of House of Representatives and the snags after each federal budget
Kept taxes low
Buying on credit meant spending wasted tainted by inflation
Fed put controls on money supply (government can control this by longing more money) to keep inflation low
The 1950s key trends
‘Baby boom’
Confident about ‘the American way’ as opposed to communist ideas of Cold War opponents
Consumerism was patriotic
Were fluctuations eg: inflation or unemployment for a year or so
Always some not part of rising affluence
Growth of suburbs- saw inner cities as dangerous and slum-ridden
Consumer confidence - dependent and hid underlying problems
In 1960, children made up 30.8% of the population
What were the suburbs like in the USA? Why were they becoming more popular?
Factories, colleges and universities moved outside the cities
1956 Highways Act allowed for 41000 miles of interstate highways
Willing to invest in electricity, water, sewerage to maintain them because of boom economy
Levitt company, mass produced pre-fabricated houses, quick and cheap to build
Long Island had 17000 homes for 82000 residents, cheapest just under $7000
Could afford homes and therefore cars and mortgages- easy to manage
Levitt refused to sell to black Americans which led to black suburbs- example of northern segregation
Overall drawbacks of post-war Increasing affluence:
Not all members of society benefitted eg: Levitt refused to sell homes to black Americans, increased racial divide as forced to love in own black suburbs
1946 government’s Office of a Price Administration (OPA) shuts down
Food prices jumped as businesses wanted to employ demand, sometimes 25% in 2 weeks
Consumer confidence- depending and hid some of economy’s underlying problems
What is Stagflation?
When business stops expanding and stagnates (stops progressing/ inactive) , while inflation continues
What is CPI?
Stands for Consumer Price Index
An index compiled by the US Bureau of statistics that shows how the cost of a number of basic foods like bread, milk, butter… varies from year to year
Name some of the challenges in the 1970s:
Prices didn’t fall despite businesses falling (unlike other years) - inflation carried in and high prices became the norm
Some workers and their wages linked to CPI- kept them in line with inflation
Some workers managed others could not afford to spend money
Money could buy less and less for the unemployed or those on fixed incomes eg: fixed pension
Name some trends of the 1970s Stagflation:
No longer world leader in developing technology like cars, fridges, television. Countries like Japan, UK and Germany took over (in 1950s)
Japan dominated electronics
In 1953, the USA’s share of the world’s export if manufactured goods was 29% by 1973 this had become 13%
Business tax kept rising and costs for raw materials rose with inflation. This meant there was less businesses to invest in and improve technology
This meant production fell becoming a big issue
Failing business meant cutbacks and more unemployment
What actions did the government take?
Couldn’t cope
Saw 3 big economic crises due to rising food and fuel prices
Huge federal spending due to social security payments and the CPI
Ending of Vietnam war helped but lead to unemployment, drain on social and medical benefits due to returning soldiers
Public nervous as when government intervened didn’t control money supply leading to debt
But the spending did help those affected with wages, pensions and benefits linked to rising inflation
Some people fell deeper into debt or had to cut back in standards of living to cope
Failed to cope with credit payments, homes got re-possessed- became dependent on government welfare
Only in 1979 was the money supply contained by the FED not the government
What were the energy problems in the 1970s?
2 fuel crises in 1970s which led to…
- fuel shortages
- long queues for fuel
- speed limit of 55mph
- In 1st, even did fuel rationing with ration books
What were the reasons for these energy issues?
1)1973 Arab-Israeli war, OPEC supported Palestine, they put up prices by 70% and put an official ban (embargo) of oil exports to the USA and other countries that supported Israel
High even after the war, never returned to earlier levels
In 1974 world oil prices were 4x higher than before the crises
2) Fuel shortage from May to July in 1979
- Bad as 1973 but only lasted 3 months so there wasn’t any fuel rationing
- were worried about heating fuel shortage that winter
What were the impacts of these energy problems?
Bad to far-dependent Americans
Could drive from 15 years- huge dependence
Discontent with the government- believed made situation worse with 1979 stockpiling
Public felt were not dealing with the issue and if did made it worse
Changes in car-buying habits eg: less trucks more smaller European and Japanese cars which used less fuel
What was the confidence crisis?
Increases in fuel prices set inflation causing a Depression to set in
Unemployment levels rose from 5.8% of the workforce in 1978 to 7.1% in 1979
People and business scared to spend
1979 president Carter addressed the nation, tried to recreate confidence from Roosevelt’s ‘fireside chats’-didn’t work
Didn’t have the same personality
Public had little faith that the austerity measures would work
Unimpressed-asked them to cut standard of living (already had)
Reminded of GD with unemployment, homelessness…
1980 voted Republican for Ronald Reagan
What did the Tax Reform Act say? When was it?
1969
Raises the lowest tax, exempt 9 million poor families, increases social payments in line with inflation
What was the Economic Stabilization Act?
President Nixon has power to act on wages, prices, rents and interest rates to stabilise the economy, suspends link of the dollar to gold
What was the price and wage freeze? When was it?
1971
Introduced by Nixon
Lasted 90 days but renewed and lasted nearly 1000 days
What other freeze took place in 1971?
60-day price freeze
When was and what was Nixon’s Emergency Employment Act?
1971
Creates ‘community service’ (low-paid) employment for 2 years, aimed at getting people permanent work, especial bias for Vietnam veterans
What was the 1972 Social Security Act?
Twice amended
1st-raises payments by 20% in line with inflation
2nd-links benefit payments to the CPI
What happened in 1979?
FED put restraints on the increase in the money supply
What were the 1980 anti-inflation measures?
Introduced by President Carter: balance budget, reduce defence spending, voluntary wage and price controls (can’t freeze like Nixon), cuts in social welfare programmes
Name 3 key points form video and extra research:
Look in booklet for notes-KEY
1) Stagflation occurs when there is inflation combined with high unemployment and slow economic growth
2) Introduced the Humphrey Hawkins Act which required the federal reserve to give congress reports on its goals and policies twice a year
3) Thought it was because of fuel but main issue was monetary policies
How did leisure change from 1917-1945?
- Fair Labour Standards Act 1938
- Great Depression
- Prohibition
- Cinema
- National Parks
- Radio
- Spectator sports
- WWII
