THEME 1: a & b - economic boom & WSC

Question 1

Unemployment figures (1922 - 29)

Answer 1

Never rose about 3.7%

Question 2

How did the economic boom impact workers?

Answer 2

• worked fewer hours: (1920) 47 hr Vs (1929) 44 hr
• paid more:
  industrial workers wages rose by 14% between 1914 - 22
  USA wages 2 or 3x higher than European wages

Question 3

What happened to the production of industrial goods?

Answer 3

(1922 - 29) production rose by 50%

Question 4

What were the reasons for the 1920s prosperity?

Answer 4

• gov policies
• tech advances
• new buisness methods
• easy credit
• advantagous foreign markets

Question 5

What was the Fordney-McCumber Act 1922?

gov policy

Answer 5

• raised tariffs on imports
• meant foreign goods were much more expensive to buy than domestic (American) goods.
• led to a boom in American industry as everyone bought domestic
• Tariffs were on average 38.5% on dutiable products.

Question 6

How did fewer regulations fuel the 20s prosperity?

gov policy

Answer 6

• little regulation on big businesses meant they could get away with price-fixing & preventing fair competition
• Led to companies making huge profits
• Child labour was common in Sothern text tile mills - cheap employment & exploitation

Question 7

How did Mass Production contribute to the 20s prosperity?

tech advances

Answer 7

• brought in assembly lines - highly efficient production
• particular used by Ford motor cars (opened their first one in 1913 Highland Park factory)
• caused a massive increase in production (cars, clothing & labour-saving devices)
• fuelled consumer boom

Question 8

How did the motor vehicle industry contribute to the 20s prosperity?

(tech advances)

Answer 8

• High demand: (1920) 7.5 mil on road - (1929) risen to 27 mil & a study found 65% of people were working to pay for cards
• One of the biggest industries in the US - fuelled consumer boom by lots of production
• Stimulated other industries - petrol, rubber, tin
• Big employer: by 1929 the motor industry employed 7% of all workers & paid them 9% of all wages
• The industry was so important that the temporary closure of Ford was a big contributing factor to the 1927 recession

Question 9

How did the growth of huge corporations contribute to the 20s prosperity?

(new business methods)

Answer 9

• they were able to dominate industry through cartels - use them to price fix and increase their profit (illegal but could run due to little regulation)
• They could create holding companies - allows them to control more companies & bring in a bigger profit
• by 1929, the largest 200 corps owned 20% of the nation’s wealth

Question 10

How did advertising and salesmanship contribute to the 20s prosperity?

(new business methods)

Answer 10

• companies would hire psychologists to design campaigns & target specific groups (women)
• Ads would emphasise slogans, brand names, celeb endorsements etc
• E.G Lucky Strike marketed cigarettes ‘torches of freedom’ as a way for women to liberate themselves
• This all created a desire to consumed and fueled the consumer boom

Question 11

How did easy credit contribute to the 20s prosperity?

Answer 11

• Hire-purchase allowed a wider scope of people to consume goods - easy credit financed the consumer boom
• by 1929, almost $7 bill worth of goods sold on credit
  
  • 75% of cars, 50% major household appliances
• Companies & individuals used easy credit - banks seemed to be falling backwards to lend money
• Brought it’s issues: speculation, debt, repossession, interest

Question 12

How did foreign markets contribute to the 20s prosperity?

Answer 12

• the gov encouraged businessmen to develop interests abroad - raw materials fuelled technological advancements
• Many bought oil concessions in foreign countries (Canada, Venezuela, Iraq)
• often US investment saw the development of public health & education in developing countries - in order to provide a decent workforce

Question 13

Which groups were left out of the 20s prosperity?

Answer 13

• Farmers
• Women
• Black Americans

Question 14

What was the experience of farmers like during the 20s?

Answer 14

• peacetime & overproduction meant falling prices
  ( wheat = %2.5 –> $1)
• prohibition cut the demand for grain
• growth of synthetic fibres reduced the market for natural ones
• 66% of farmers operating at a loss
• Rate of foreclosure increased: (1913) 3.2% –> (1926) 17.4%
  (partly because of the growth of ‘agriculturl businesses’)

Question 15

What was the experience of women like during the 20s?

Answer 15

• no improvement in career opportunities - by 1930 only 150 female dentists
• only 2 women in HoR
• clerical/menial jobs open to women were low paid
• no. of women receiving college education dropped by 5% during 20s
• Despite flapper girls, women still expected to play a traditional role

Question 16

What was the experience of Black Americans like during the 20s?

Answer 16

• did not share in the prosperity - 85% still lived in the South (the poorest region of the US) –> having to work as sharecroppers/ domestic servants
• In northern cities they faced discrimination in employment & housing
• often concentrated in ghettos: Harlem NY pop grew from 50,000 (1914) –> 165,000 (1935)
• overcrowding & poor living conditions in ghettos

Question 17

What were the causes of the Wall Street Crash?

bullet points

Answer 17

• uneven distribution of health
• stability of employment
• ‘get-rich-quick’ schemes
• weakness of the banking system
• the cycle of international debt
• overproduction & the slow down of the economy

Question 18

How was income unevenly distributed throughout the US? (1929)

Answer 18

per capita income:

• Northeast & Far West: $921, $881 (the HIGHEST)
• SoutheastL $365

Brookings Institute found that in 1929 60% of families had under $2,000 as annual income

Question 19

How was employment unstable prior to the WSC?

Answer 19

• the fluctuating demand of goods allowed for unstable employment
• A sociological study found 72% of workers had been unemployed
• No welfare or benefits system (charitable agencies)
• ‘yellow dog’ clauses stopped workers for joining unions

Question 20

What were ‘get-rich-quick’ schemes?

Answer 20

• investment in speculative ventures through easy credit - people really wanted to get rich quickly
• provided golden opportunities for tricksters & many lost their money
• Charles Ponzi conned thousands of people into investing in his ventures - promising a 50% profit within 90 days!
• Played a big part in the Florida land boom

Question 21

What was the Florida land boom?

Answer 21

• Flordia had a small pop. & it’s all-year-around sunshine was attractive to the wealthy/MC who owned cars
• 1920-25 the pop. grew 968,000 to 1.2 mil as people began to invest their money unseen development & holiday homes increased
• success stories fuelled the boom - that you could buy land cheap & sell it for triple the money later
• demand tailed off in 1926 when scandals of land being sold and not developed on
• Hurricanes in 1926 left 500,000 homeless
• many bankrupt - the coastline was left with half-finished developments

Question 22

What was the bull market?

Answer 22

• 1927-29 people went ‘Wall Street crazy’
• easy credit meant many could buy stocks/shares ‘on the margin’ - on credit loans from the broker
• the demand to buy shares is known as the ‘bull market’
• these were purchased as speculation rather than investment in a company
• if the price rose shares were sold - making an easy profit

Question 23

What were the weaknesses of the banking system? (20s)

Answer 23

• outdated
• the system allowed banks to regulate themselves without federal interference
• reserve banks represented the interests of the bankers so couldn’t be relied on to act in the best interests of the nation
• Federal reserve board favoured low-interest rates
• local state (small) banks did not have to join the centralised system & these were the banks with ordinary people’s money
• small banks more likely to collapse from financial difficulty - losing people’s money

Question 24

What was the cycle of international debt?

Answer 24

• heart of the economic problems
• European countries couldn’t pay war debts due to financial difficulty - tariffs made this worse
• European countries could not export their manufactured goods to the USA in great quantities
• impossible to earn the money to repay loans

Question 25

How did the economy slow down in the late 1920s?

Answer 25

• small business faced hardship due to the emergence of big businesses
• through the 20s, every 4 businesses that succeeded, 3 failed
• after 1926 demand for work from the construction industry tailed off - led to a fall in demand for materials & their transportation
• led to higher unemployment in construction-related business

Question 26

How did overproduction emerge & what were its effects?

Answer 26

• production outstripping demand & market flooded with goods that weren’t being sold
• credit exhausted & electrical goods had reached their peak - no one could afford anymore
• led to unemployment as production was cut back
• thousands of automobile workers laid off
• Yale economist estimated that in 1929 around 80% of Americans were living close to subsistence

Question 27

Although the economy was experiencing problems, what overshadowed this?

Answer 27

It was concealed by superficial optimism & the frenzy of stock market speculation