Unit 1 - The Great Depression in America Flashcards
Republican values
Less taxes for businesses so that they have increased investment power
Rugged individualism - little gov intervention + people look after themselves
Lassiez faire approach - let economic events run their course
Democrat values
Willing to accept and encourage change
Increased gov control
Will intervene in economic matters to support social concerns/problems
Higher taxes
‘A Return to Normalcy’ 1920
1920 - USA didn’t sign TOV and refused to join League of Nations which triggers period of isolationism regarding international affairs
Harding (republican) won 1920 election with ‘A Return to Normalcy’
Focus on themselves, not world
Protectionist policy + Ford McCumber tariffs
What caused the economic boom in the early 1920s?
1) Republican policies
- Fordney McCumber tariff
- Low tax on wages
- Allow powerful single companies in one specific area eg Rockefeller oil
2) New technologies + consumer goods
3) Productivity
Henry Ford
Mass production = faster and cheaper
Assembly Line
By 1928 a Ford TT (car) was $285 (3 month wage) so very affordable
Car industry caused growth in other American industries eg steel (20%), rubber (80%)
Triggered cycle of prosperity
Change in consumer behaviours re economic boom
Credit - buy now pay later/deserve to have things - consumer culture
8/10 radios and 6/10 cars purchased on credit
Mail order companies - rural areas
Chain stores - cheap, standardized products
Rural industries were losers of the 1920s economic boom
1920 economic boom focused on cities
During WW1 farmers had to increase production but the sudden fall in demand caused overproduction so they had to sell products at low prices
Unable to sell overseas because of retaliatory tariffs
1924 - 600,000 farmers lost farms
1928 - half of American farmers living in poverty
Traditional industries were losers of economic boom
Coal industry: prices fell so thousands being made redundant bc too much coal being produced for such a small demand
Ship building: new technology = less ships being built = companies forced to make thousands of people redundant
Cotton industry: new synthetic fibers created = easier to produce in factories needing less workers = large number of textile mills forced to close = less jobs
Speculation and the banks
1920s = booming economy = more money to ‘play with’ = many investing in stock market to try and increase wealth
Seen as way to get rich quick
1920 = 4 million shareholders by 1929 there was 20 million
In 1928, 600,000 new investors - speculators
1929 = banks lent $9 mill for speculation
During the 1920s 40c of every $1 loaned was for the purchase of stocks
Unregulated and unrestricted by gov
Overproduction - slowing of boom
Farmers struggling so forced to borrow money
1924 - 600,000 farmers lost farms
3 million going to city
City $140pm vs Rural $49 pm
Increase competition for jobs = wages start to decline
Boom slowing - mass production of luxury items = surplus but can’t sell overseas bc of tarffis
12 million living below poverty line but still had access to credit
Panic - mass selling of shares
1929 = US personal debt high and unable to repay
By end of 1929, 6 mill had migrated to cities in hope of work / selling of stocks bc decrease economy and confidence
June 1929 = output of car industry decreased for the first time in 4 years + knock on effect on other industries
Wall Street Crash
21st - 29th Oct 1929 = Wall Street Crash
21st = less confidence so selling stocks
24th = banks buying mass stocks to try and keep market stable
28th = stock prices severely decreased and banks not supporting
29th = stock prices continue to decline - selling shares for a fraction of the cost – $14 billion lost in a single day
Social impact of WSC
Rapid increase in unemployment + widespread poverty in urban areas
Unemployment in 1928 = 5 mill and in 1932 = 12 mill/
main form of aid = charities
40 mill Americans part of a family where main breadwinner was out of work (1/3)
Those who had employment forced to accept lower wages (if not, would be replaced bc ppl so desperate for work)
Women in Tennessee textile mills = $2.29 for 50hr week
Sawmills = 5c an hour
High unemployment + low wages = unable to repay loans = homelessness
1932 = 273,000 families evicted from homes
No gov support = homeless forced to live in shanty towns called ‘Hoovervilles’
Open parks + railroads
Tin, boxes, rubbish for makeshift home
33% of deaths in 1932 due to poverty
Economic impacts of WSC
Banks + industries collapse
5000+ banks 1932-33 bust
Foreign trade decreased from $9 bill to $3 bill
Industrial manufacturing decreased 45% = less jobs
House building decreased by 80%
Rural areas
1920-1932 farmer income dropped by 70% bc overproduction
1932 = The Dustbowl - 90 million acres destroyed and damaged so many being evicted
To escape hardship, 1-2mill men left for cities in hope of finding work = more competition for jobs in cities
300,000 Oklahoma farmers migrated to California to search for work
Hoover’s initial response to GD
Stick to Republican ideals:
Laissez faire - letting economic events run their course/economy will fix itself
Rugged individualism - little gov support
Business responsibility to create jobs