The USA after WW1 and 1920s politics - Ethan

Question 1

Consequences of WWI for the USA

Answer 1

Became major player for 1st time: Europe app determined to continue self-destruction. American leadership could develop

Agrarian -> industrial. Consumerism (economy grew avg 5%/yr)

Cultural: movies and jazz. Prohibition lobbied for by powerful Anti-Saloon League.

Question 2

Republican economic policies

Answer 2

• Laissez-faire economics + high tariffs to protect USA business. Other countries followed suit, restricted trade.
• Lower taxes for growth; Tax reductions for wealthy (TreasSec Andrew Mellon total $3.5bil to industrialists + corporations)
• Fewer regulations- business laws (eg, price fixing) ignored
• Industrialisation helps businesses grow (eg. Ford’s moving assembly line)
• Coolidge: “the business of the American people is business”
• 1929: half of American families owned an automobile

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Federal finances
Harding + Coolidge tried to reduce national debt

Balancing the budget, Budget Bureau to cut costs

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Tariffs
Fordney-McCumber Act (1922) allowed president raise/ lower duties up to 50% (saw them rise generally)

Smoot-Hawley Act (1930): tariffs on foreign import to peak levels

Question 3

Long-term causes of the Great Depression

Answer 3

David Kennedy: economic disparities between the agricultural and industrial markets (market fall for agric produce due to shrinking exports, slowed pop growth immig limits 1924 on)
Productivity/ worker hour rise 43% (1920-7). Mass production, but no consumption rise as richest 5% had ⅓ of personal income. Wage rises not enough to maintain consumption needed to avoid depression
USA creditor: had to import/ invest overseas to help debtors restore eco, pay back USA
Lack of economic leadership: Andrew Mellon (Sec Treasury) blamed for not curbing prices on Wall Street. “Depression would weed out weak companies, encourage ppl to save”
The shares bubble
7 million transactions/ day- 23 Nov 1928 (after Hoover elected)
Aug 1927: Fed Reserve lowers interest rate 4% to 3.5% -> increased borrowing, encourage international trade
Stockbroking offices: 500 (1919) to 1192 (1928)
Stockbrokers persuasive, President + media encouraged. People invested more than they could afford.
Purchased shares by paying deposit + borrowing the rest from a broker (who often borrowed from a bank)
Increasing share prices motivate people to buy shares and pay their debts out of the profits (bubble)- little consideration to what would happen if prices fell (people sell, markets fail)