Reasons for prosperity Flashcards
How did the USA emerge from WW1?
- No structural damage to repair in the US
- USA helped the old powers such as Britain, lending them money.
- US spent $27bn on the war; Britain spent $50bn
Government Policies:
Political party of the Presidents
The Republicans
Government policies:
Who were the Presidents?
Harding 1921-23
Coolidge 1923-1929
Herbert Hoover 1929-33
Government Policies:
General govt policy and what it meant for the market
Laissez-faire approach meaning very little govt involvement in the economy. The free market operated with minimal restrictions.
Belief in individualism meant people should create wealth for themselves and that the wealth should trickle down.
Government policies:
The Fordney-McCumber act 1922 + what it meant for the market.
Raised tariffs on imported goods. Meant American industry sold more of their goods.
Tariffs were on average 38.5% on dutiable products
Negative effect on farmers - they relied on foreign markets to export and they purchased their machinery from aboard.
Government policies:
Andrew Mellon’s tax cuts
Tax cuts to the rich in 1924, 1926 and 1928
1925 - Coolidge’s govt operated on a surplus despite tax cuts, at $677 million.
Handed out reductions totalling $3.5bn to large industry and corporations - rich got richer.
Government policies:
How did federal tax cuts impact the population?
They benfitted the wealthy, who paid less tax.
Didn’t impact the poor who didn’t have to pay tax.
What did the reduction in economic regulations mean for business activity?
Companies would fix prices to prevent fair competition
Workers exploited
In Southern textile mills, child labour was common, as were 56 hours. Wages rarely rose above 18 cents an hour.
New business methods:
How did industry develop new techniques?
Assembly line method was quicker, more efficient, and allowed mass production, ths mass consumer sales and profit.
New business methods:
How could huge corporations dominate industry?
- JP Morgan was the first $billion corporation. Controlled 67% of steel production in the USA.
- Cartels formed - different producers work together to fix prices or limit supplies to make the most profit.
- Holding companies were created - a big company that controls other companies enabling it to fix prices and make big profits.
- Small businesses struggled to compete
New business methods:
How were businesses changed by the growth of management science?
Became more complex to manage so businesses controlled by one man became old fashioned.
More specific management role were created such as marketing, production, design and accounting.
