(Economic prosperity) Government encouragement for business & laissex-faire economics

Question 1

Republican govt - outline what the Republican government of the 20s favoured.
What did this consist of?

Answer 1

Minimal economic interference

Low taxes & limited govt activity, generally to benefit big business.

Question 2

Republican govt - who were the 2 presidents of the 1920s before the Depression and when were they president?
What political party?

Answer 2

Warren G Harding, 1921 - 1923

Calvin Coolidge, 1923-1929

Both Republican

Question 3

Republican govt - what was significant about Calvin Coolidge?

Answer 3

He & his Treasury Secretary, Andrew Mellon, reduced taxes favouring the wealthy.

Question 4

Republican govt - who was Treasury Secretary whilst Calvin Coolidge was president?

Answer 4

Andrew Mellon

Question 5

High tariffs - give evidence of high tariffs being favoured.

Answer 5

The Fordney-McCumber tariff.

Question 6

High tariffs - the Fordney-McCumber tariff is evidence of high tariffs being favoured.
What was this and why was it beneficial for America?

Answer 6

Tax on imports that meant US goods were cheaper in US but difficult to sell abroad.
Limited foreign trade.

Question 7

What are the 4 general reasons to suggest why America underwent economic prosperity in the 20s?

Answer 7

Republican govt

High tariffs

Advantageous foreign markets

Hire purchase

Question 8

Advantageous foreign markets - what did the govt encourage?

What is this in spite of?

Answer 8

Business investment abroad, particularly in terms of raw materials.

High tariffs

Question 9

Hire purchase - how did easy availability of credit interact with the economic boom?

Answer 9

Fuelled it

Question 10

Hire purchase - what fuelled the economic boom?

Answer 10

Easy availability of credit

Question 11

Hire purchase - how did easy availability of credit fuel the economic boom?

Answer 11

Ordinary people could buy latest technological goods, meaning expensive & luxury goods became more affordable for Americans.

Question 12

Hire purchase - give evidence of ordinary people being able to buy the latest technological goods.

Answer 12

1929 - almost $7 billion of goods sold on credit, including 75% of cars & 50% of major household appliances.

Question 13

Republican govt - who did the laissez-faire policy mainly benefit?

Answer 13

Big businesses

Question 14

Hire purchase - what is Hire Purchase?

Answer 14

Buying goods by paying a percentage upfront, then paying the balance & small interest charge in installments.

Question 15

Hire purchase - why was credit unstable?

Answer 15

People got themselves into debts that they couldn’t pay back.

Question 16

Name two reasons for consumer boom.

Answer 16

1. Hire purchase

2. Mass production lowered prices

Question 17

What were the 8 SPECIFIC reasons for prosperity?

Answer 17

USA richest country after WW1
Automobile
Hire purchase
Republican laissez-faire
Technological advances
Advertising
Advantageous foreign market
Consumer boom