Weaknesses of the boom Flashcards
What were the problems with trade?
The US had put tariffs on all products coming from Europe, because of this Europe retaliated by putting tariffs on American goods.
This made selling to Europe very difficult and very costly. The USA then couldn’t export all of their surpluses to Europe when demand began to fall.
What were the effects of overproduction?
By the end of the 1920s people were creating more things then there were people to buy them.
Due to this the companies frantically tried to, lower their prices, make smaller profits and even started to lay off some workers.
Why did agriculture fail?
Agriculture began to fall after some farms began to lay off workers after the invention of new machinery that would help their work get done faster and more efficiently.
Without the entrepreneurs having to pay them. Due to the lower incomes that these other farms had, the ones without the machinery, they had no way of paying back the bank what they owed them.
Because of this the bank started taking away properties, in 1924, 600,000 farmers lost their land.
How unequal was the distribution of wealth?
In the 1920s the richest 5% of the population earned 33% of all of the money earned in the US.
Due to this inequality it meant that a lot of people that were buying these new cars and houses didn’t actually have the money for it. Instead they used credit or hire purchase.
What were the old industries?
The old industries like coal and textiles, were starting to lose demand because of new and improved technologies and resources.
For coal this was oil and for textiles it was just the fact that it wasn’t as needed as before since women were wearing clothes that required less fabric. Due to this many coal mines closed and people were laid off work.
