THEME 1: a & b - economic boom & WSC Flashcards
1
Q
Unemployment figures (1922 - 29)
A
Never rose about 3.7%
2
Q
How did the economic boom impact workers?
A
- 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
3
Q
What happened to the production of industrial goods?
A
(1922 - 29) production rose by 50%
4
Q
What were the reasons for the 1920s prosperity?
A
- gov policies
- tech advances
- new buisness methods
- easy credit
- advantagous foreign markets
5
Q
What was the Fordney-McCumber Act 1922?
gov policy
A
- 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.
6
Q
How did fewer regulations fuel the 20s prosperity?
gov policy
A
- 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
7
Q
How did Mass Production contribute to the 20s prosperity?
tech advances
A
- 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
8
Q
How did the motor vehicle industry contribute to the 20s prosperity?
(tech advances)
A
- 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
9
Q
How did the growth of huge corporations contribute to the 20s prosperity?
(new business methods)
A
- 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
10
Q
How did advertising and salesmanship contribute to the 20s prosperity?
(new business methods)
A
- 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
11
Q
How did easy credit contribute to the 20s prosperity?
A
- 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
12
Q
How did foreign markets contribute to the 20s prosperity?
A
- 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
13
Q
Which groups were left out of the 20s prosperity?
A
- Farmers
- Women
- Black Americans
14
Q
What was the experience of farmers like during the 20s?
A
- 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’)
15
Q
What was the experience of women like during the 20s?
A
- 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
16
Q
What was the experience of Black Americans like during the 20s?
A
- 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
17
Q
What were the causes of the Wall Street Crash?
bullet points
A
- 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
18
Q
How was income unevenly distributed throughout the US? (1929)
A
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
19
Q
How was employment unstable prior to the WSC?
A
- 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
20
Q
What were ‘get-rich-quick’ schemes?
A
- 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
21
Q
What was the Florida land boom?
A
- 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
22
Q
What was the bull market?
A
- 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
23
Q
What were the weaknesses of the banking system? (20s)
A
- 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
24
Q
What was the cycle of international debt?
A
- 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
25
Q
How did the economy slow down in the late 1920s?
A
- 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
26
Q
How did overproduction emerge & what were its effects?
A
- 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
27
Q
Although the economy was experiencing problems, what overshadowed this?
A
It was concealed by superficial optimism & the frenzy of stock market speculation
