America Economy: Economic Change Abd Development (1920-1945) Flashcards
Why was there a boom in the 1920s?
-dislocation caused by war in Europe = rise in American exports
-business friendly republican policies by Andrew melon included minimal government intervention and low tax
-modern industrial management methods (used by Henry ford to make cheap motors) , increased profit
-hire purchase
-leisure / goods , brand products more aimed at women
What are some stats which is evidence for 1920s boom?
• from (1922) annual unemployment figures not rise above 2%
• gross domestic product grew by 2% a year
• real wages rose by 30%
• (1929) 16 holding companies control most of American electricity companies
• motor cars: model T ford in (1925) was $400
What were the consequences of the 1920s boom?
-higher living standards: automobile, business prosperity, leisure, entertainment and rise in stock market
What structural weaknesses were in Americas economy?
-staple industries
-problems in agriculture
-instability in financial systems
Why were there structural weakness in the staple industries?
-shipbuilding, railroads, shoemaking and textile industries were not rising
-was undermined by trade unions
-growth of mechanism and technology methods reduced skill labour
-labour unions weakened by anti union policies prevalent among business leaders
stats to evidenced the structural weakness in staple industry?
-2 million jobs a year in skilled labour lost
-united workers had 5 million members (1920) but 75,000 (1928)
What problems were there in agriculture ?
[overproduction & falling prices]
Demographics readjustment of US
• rise in urban areas
- (1920) consenses had fewer than 50% population living in rural areas
•end of wartime boom by (1920)
- falls in prices in cotton, wheat, livestock & corn lead to depression in agriculture through 1920s
Structural weakness:
- became dependent on loans to cover losses
- farmland value fell by 30%
- (1929) agriculture workforce reduced by 15%
- mechanism meant more produced by fewer farmers on smaller land
What acts had been passed for agriculture industry?
-(1922) fordney-McCumber Tarrif Act raise protective tarrifs against imports
-(1923) agriculture credits act made low. Interest loans available
Why was the American finance system unstable?
-little securitization in finance economic expansion
-cheap money & easy credit encouraged high risk borrowing & lending, was fuelled by beliefs that the great bull market will always last
-banks undercapitalized
-a lack of reserve money to pay banks
-speculative bubble: financial speculation on stock & shares that rose far above the real price
What evidence is there for americas unstable economy?
(1927) share index of New York Times at 245 and by (1929) was 452
(1928) federal reserve system barley had $200 million of government securities
