U1 - Boom and Bust - The 1920s Flashcards
1
Q
The Boom
A
- Favourable government Policies/Republican Governments
- Credit Boom
- The effects of WW1 (became rich, joined later)
- New business methods
- technical advances (rubber, plastic, glass)
2
Q
The Bust
A
- Weaknesses of banking system
- Overproduction under consumption (unemployed)
- International debt issues
- Uneven distribution of income/wealth
- Wall street crash (trigger of depression)
3
Q
The Bust
Weaknesses of banking system -
A
- Little regulation
- There was small state banks with limited assets and were not part of an national organisation
- Due to laissez faire policies of the government, reliability of banks were never checked
- These banks offered easy terms for loans which encouraged high levels of borrowing: contributed to crash
4
Q
The Bust
Weaknesses of banking system - Stats
A
- In 1921 there was over 30,000 independent banks
5
Q
The Bust
Overproduction under consumption
A
- The American economy was changing in the 1920s
- These new production methods, goods that were only available to wealthy people were now available to general public
- Goods: radios, watches, vacuums etc
- By 1929 those who could afford the goods already had them so the market was flooded with items that couldn’t be sold
- Confidence slipped and consumers began to try and save money, sale figures went down dramatically
6
Q
The Bust
Overproduction under consumption - Stats
A
- In the decade of the 1920s economic output increased by a staggering 50%
- By 1929 more than 23 million Model T’s were produced
- By 1920 more than 8 million Model T’s were produced
- By 1923 there were over 3 million radios in America
7
Q
The Bust
International debt issues
A
- Can argue that the Republican Governments desire to protect US businesses caused the crash
- Republican Governments had passed the Fordney McCumber tariff of 1922
8
Q
The Bust
International debt issues - Fordney McCumber tariff of 1922
A
- Placed high tariff on all imports so that people would buy American goods
- Both sides put tax on imports up (Europe and America)
- Foreign states also raised tariffs against the US goods: making it impossible for USA to export goods
9
Q
The Bust
International debt issues - Fordney McCumber tariff of 1922 - Led to
A
- US couldn’t expand to foreign markets
- Led to stockpiling of goods in USA leading to cut backs in production
- Eventually hit employment, profits and the value of shares
- Germany go bankrupted which didn’t help America as they gave them money after the war
10
Q
The Bust
Uneven distribution of income
A
- The rich got richer: Average incomes rise slowly
- Middle and low Americans were doing okay
- Many areas, north and mid west fared far better than states in the south
- Blacks were still worst than whites women also did not share in the prosperity
11
Q
The Bust
The Wall Street Crash
A
- October and November 1929
- Over 13 million shares were sold on the stock market
- ‘Black Tuesday’ over 16 million were sold
- Prices collapsed and kept falling until middle of November
- By November 1929, stock market lost $30 billion in value
- More than USA spent in WW1
12
Q
The Bust
The Wall Street Crash - Short term causes
A
- By end of 1929, shrewd investors knew the prices were false and started to sell their stock
13
Q
The Bust
The Wall Street Crash - Social and Economic effect
A
- Economic Depression
- Extreme Poverty
- Homelessness
- Collapse of farming
- Mass Migration
14
Q
The Bust
The Wall Street Crash - Buying on Margin
A
- People would borrow money to buy shares
- When the share goes up in price they sell it and pay back the bank and keep the profits
15
Q
The Boom
Republican Governments
A
- 1920s saw 3 Republican Presidents
- Warren Harding, Calvin Coolidge, Herbert Hoover
- Followed Laissez faire pro-business policies
- Included imposing tariffs o foreign goods and cutting taxes and regulations on business
16
Q
The Boom
Natural Resources
A
- American had an abundance of materials such as coal, oil and land
- These were used to produce goods that would be purchased by the population
- Became very rich because of these materials
- Oil was first found in Texas, 1901
17
Q
The Boom
Effects of World War 1
A
- The war had ruined much of Europe
- US was now the world’s largest economy
- Europe depended on the USA for much of its imports
- Need for quick wartime production had led to improvements of efficiency
18
Q
The Boom
Credit
A
- A new way of paying for goods emerged called Hire Purchase
- Involved paying a small deposit and the balance in instalments
- Allowed people in work to be able to afford the latest goods
19
Q
The Boom
Confidence
A
- Americans were confident they would remain in employment
- They were therefore not afraid to go into debt to buy consumer goods
20
Q
The Boom
Advertising
A
- Advertising persuading many Americans that the continued purchased of new good was a necessity
- Fuelled demand for these goods
- Demand grew and so did production
21
Q
The Boom
Methods of Production
A
- New methods of production such as ‘assembly line’ allowed huge amount of goods to be produced
- Known as mass production
- Most commonly associated with Henry Ford’s automobile company
- Helped create middle class
22
Q
The Boom
Economic Boom - Saying
A
L - Laissez Faire
A - Assembly Line
C - Credit
K - Knowledge
P - Position of USA in war A - Advertising N - New consumers goods T - Tariffs S - Share confidence
23
Q
The Boom
Added Notes
A
- Between 1922 and 1929 the value of what the USA produced every year increased by 40%
- During the same period average income increased by 27%
24
Q
The Boom and Bust
The depression
A
- Herbert Hoover in 1928 - “We in America today are nearer to the final triumph over poverty than ever before in the history of the land”
25
Q
The Boom and Bust
Unemployment
A
- 1932 it reached 25.2%
- Currently stands a 7% (nationally)
- No benefit system in America
- 50% in Cleveland Ohio desperate
- 1 million people were unemployed in New York
26
Q
The Boom and Bust
Cities
A
- People are going hungry and face starvation: Large food queues formed
27
Q
The Boom and Bust
Countryside
A
- Sheep were slaughtered and left to rot prices made it uneconomical to transport to cities
