The Capitalist Boom of the 1920's (4) Flashcards
What were the foundations for this economic boom? (3)
- America’s raw materials
- Skilled labor force
- A growing market for manufactured goods
The Republican policy helped the economic boom of the 1920s, what was the policy? (4)
- As little government interference as possible
- High customs duties on imported goods
- Low taxes (so that people would have more money to buy goods and to encourage the welathy to invest more in industry)
- Weak Trade Unions
How did high customs duties help?
It would encourage people to buy locally.
How did low taxes help?
This ensured people would have more money to buy goods and to encourage the wealthy to invest more in industry.
How did weak trade unions help?
Workers would not have the power to demand higher wages.
What principles did Hoover believe in? (4)
- Decentralized government
- Ordered liberty
- Equal opportunity
- Freedom of the individual
During the 1920s, new technologies were developed to produce a range of _____ ____.
Consumer Goods
Which industry experienced the most growth?
The motor industry where Henry Ford introduced the moving assembly line.
The price of cars ____ and so more people could afford them. The most famous of all was the _____ or ‘Tin Lizzie’.
Dropped
Model T Ford
What effect did the motor industry have on employment?
It created millions of jobs in the industry itself and also in related industries such as iron, steel, rubber and glass manufacturing.
Motor vehicles led to the building of _____,____,____ and restaurants as people began to travel to different parts of the country which had not been easily accessible before.
highways
petrol stations
hotels
What are consumer goods?
Goods such as food, clothing, furniture, electrical devices.
What is credit?
An arrangement which allows people to buy goods and pay later.
Other inventions became available such as as….(5)
telephones washing machines vacuum cleaners refrigerators radios
Office work changed dramatically when electric ____ and telephone ____ were invented.
typewriters
switchboards
What made the invention of skyscrapers possible?
The invention of the passenger lift.
What influence did advertising have?
It became important in encouraging consumers to buy now and pay later instead of saving up until they could afford the new goods.
The practice of easy credit increased the ___ for goods, and so the industrial boom continued.
demand
The 1920s saw the start of mass ____ such as newspapers, radios and the first sound films.
media
Why was advertising important?
It appealed to what people wanted, or to their fears or insecurities. This often resulted in people buying whatever they wanted, instead of simply what they needed. Advertisers learned how to control public taste and influence consumer spending.
True or False
There was a decline in shares
False, shares prices continued to rise for much of the 1920s.
How did credit and shares become related?
The system of easy credit was soon extended to the stock market. Investors could buy shares by paying only 10% of the value of the share and owing the rest to banks, who were eager to lend money in the booming economic conditions.
What is the main way in which businesses get capital?
By encouraging people to invest their savings by buying a share of the business.
How does the stock market work?
Shares can be bought and sold at the stock exchange at prices which vary from day to day according to the value of the business. Shareholders benefit from higher share prices and profits are paid out in dividends. But they can also lose the value of their original investment if the company makes a loss.
What is hire purchase?
Buying something by paying it off in regular installments.
What were the weaknesses in the US economy? (5)
- Uneven distribution of wealth
- Problems in agriculture
- Problems in trade
- Unsound business practices
- The stock exchange
How was the uneven distribution of wealth a weakness in the US economy?
Not all Americans could afford to buy the consumer goods being produced by the factories. Millions lived in poverty. so demand began to drop, factories decreased produced and workers began to lose their jobs.
How were the problems in agriculture a weakness in the US economy?
WW1 meant high demand for American farmers. After the war demand dropped. This created huge surpluses which, in turn, caused a drop in food prices and farmers could not make enough money to live on. Then farmers left their farms and farm workers were out of work.
How were the problems in trade a weakness in the US economy?
The USA had a policy of protective tariffs to protect the local industry from cheaper imports. This policy stopped free flow trade between the USA and the rest of the world.
How were the unsound business practices (the role of credit) a weakness in the US economy? (4)
- People could get credit too easily, which meant that many of them owed lots of money.
- There were also no proper controls over who banks lent money to.
- No protection for the millions of ordinary people who had bought shares or put money in banks.
- Laissez-faire policy by the government
How was the stock exchange of wealth a weakness in the US economy?
People were borrowing money to buy shares, hoping to sell them at a profit. This system worked as long as share prices continued to rise and there were people willing to buy them. The prices got higher and higher, and people were paying more for them than they were actually worth.
What are protective tariffs?
Customs duties placed on imported goods to make them more expensive and so protect locally made goods.
What is the stock market?
A market in which shares of companies are bought and sold.
