Problems in the economy by 1929 Flashcards

1
Q

How was income distribution across America different

A

In 1929 average wages in NE was $921, SE was $365, for farmers in South Carolina it was $129

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2
Q

What was the stability of employment like in 1929

A

1) Fluctuating employment - 4 million unemployed during this period
2) For every 4 successful business, 3 failed

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3
Q

Why did get-rich-quick schemes lead to problems in the economy

A

The Stock market speculation led to the stock market crash because more and more people were buying shares and then selling them very quickly, and dishonest brokers would artificially put the value of shares up, and then withdraw investment all at once - leaving companies without investors

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4
Q

What were problems with the banking system

A

Federal Reserve board did not regulate small banks - there were over 3,000 in the USA. Because banks were small they did not have the reserves or strength to survive recession in 1926, or the crash in 1929 - losing people’s savings

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5
Q

What caused the cycle of international debt to cause economic problems for the USA

A

Dawes Plan 1924, and Young Plan 1929, lent European countries lots of money. Those countries began to struggle economically largely due to lack of trade because countries had all raised their tariffs

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6
Q

How did tariffs exacerbate issues with the drop in consumer demand

A

Fordney-McCumber tariff raised US tariffs by 50%. This then meant other countries raised their tariffs, so during the 1920s there was less and less trade

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7
Q

What signs were there that the economy was slowing down

A

After 1926 demand for consumer goods begane to drop, this caused companies to let workers go which lead to unemployment rising

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