How Did The Economic Environment Change Between 1917-80? Flashcards
Post war depression effects on farming, industry and govt reaction
Farming: mechanism, over production, Boll Weevil
Industry: strikes
Govt reaction: laissez faire, republican presidents
Pre war ‘boom’ industry Ford motors
Production/ assembly lines reduced price of model T ford
Ford’s ‘scientific management’: 1 task given to specific worker/ group instead of a specialist
Psychologically damaging: pay rise
Pre war boom hire purchase
People could pay for goods in a series of payments
Positive effect on industry and encouraged a sense of prosperity
More bought homes and farms on mortgages
The stock market, dividend
Regular payments made by companies to shareholders
As share prices rose more rapidly, media suggest $ to be made buying and selling
What happened to shares as they boomed
Own boom cycle- ‘bull market’
People buy shares with burrowed $ to sell at a quick profit: ‘buying on the margin’
Bear market: price of shares fall and people expect to continue
What caused the Bust in the 1930s?
Overproduction matched by a drop in demand
Federal policies and tariffs
Farmers and ethnic minorities didn’t benefit from the boom
Key events and policies of the Roosevelt years
Closing banks, success hampered by natural disasters 1937 Fed Housing Administration 1938-39 Roosevelt Recession Agricultural Adjustment Act est 1933 Ww2 production 1939
Unemployment figures of the 1930s
In the worst years of 1932 and 33 25% of the work force was unemployed
WW2 affluence- ‘business boom’
Employers encouraged to expand workforces and increase pay
Huge demand for consumer goods as production increased, low unemployment
Post war affluence govt action
Govt came down hard on strikes
Spending rose steadily; Truman ‘Fair Deal’ support for those leaving military service
Increased security benefits
Built 810,000 low income homes
Post war ‘baby boom’
Growing demand for child centred goods and food stuffs, more toddlers and teens to come: required schools and colleges, become consumers
Post war boom effect on farmers
Managed to do well: demand for farm produce in US
Inflation and growing affluence
Prices rose, sometimes faster than wages
Buying on credit rising: inflation not down until 50s
Federation puts control on money supply: amount of money circulating country, govt impact by printing $
OPA in inflation and growing affluence
Govts Office of Price Administration had controlled prices during war
Shut down in 1946: farmers and business men want to exploit demand and prices jump 25% in 2 weeks- initial jump and then rose steadily
1946 Employment Act
Instated a Council of Economic Advisors (CEA) to advise country’s management; President has to give a strategy report to a Joint Economic Committee of the House of Representatives and Senate after each federal budget
Economy of the 1950s- baby boom
‘Baby boom’ fuelled by men working, fewer women working and buoyant economy
1950s economy
Sometimes inflation and unemployment increased sharply for a year
People always left out of affluence
Leave inner cities (dangerous, slum): growth in suburbs
Consumerism in the 1950s
People confident of ‘the American way’ and consumerism seen as patriotic
Consumer confidence vital in the growth of the economy- hid economy’s underlying problems
The suburbs of the 50s
Visible signs of change
Factories, colleges and unis moved outside of city
Gov’t funded building of roads and homes eg 1956 Highways Act
Building of black suburbs
Cheaper homes: could afford cars and mortgage from banks
Levitt
Specialist building company Mass produced, prefabricated homes Quick, easy and cheap- inspired by military industrial building Explosion of 'Levittowns' in NEast Refused to sell to BA
Technological advancement of US
End of 50s: US losing place as the country of technological advancement and hold of world markets: shift in where goods came from
Unlike US, Japan improved and miniaturised the transistor radio- US had to buy parts
Shift in industry
From the north and east towards south and west
Why did industry shift?
Largely due to wartime investment for war production industry; air craft manufacture and military bases, land goods and services cheaper in S+W- military bases stayed and new factories produced peace time goods
Pre vs post war thinking
Pre war economic thinking: high govt spending (even if budget deficit was caused) would keep the economy stable- didn’t work after WWII
Govt wanted to keep interest rate low so increased the money supply
1960s economy
US lost place as worlds most important exporter
Vietnam drains govt financed and social welfare payments
Balance of gold and paper money uneven- amount of gold kept falling
1960s govt economic policy
Govt increased money supply but inflation still rose- helped to meet increasing welfare costs and other bills
Short term helped economy
