Britain and America in the 1920s Flashcards
(29 cards)
What was laissez-faire?
-it was when the government wouldn’t interfere with the economy
-Coolidge and Hoover (presidents) believed businesses should run themselves without rules or limits
How did laissez-faire lead to the Wall Street Crash?
-the policy meant that banks were left unregulated, so there were lots of banks that gave out risky loans
-this lack of control meant that the economy looked strong on the outside but was unstable in reality
What was overproduction like in America 1920s?
-new machines made it easy to produce loads of stuff — cars, radios etc.
-not everyone was rich enough to keep buying.
-shops filled up with unsold goods, and companies started losing money
How did the overproduction of goods lead to the Wall Street Crash?
-supply of goods outstripped the demand, which led to job losses
-people also had less money to spend, making a bigger supply
What was credit?
-when people would buy something and pay for it later (cars, radios, clothes etc.)
How did credit lead to the Wall Street Crash?
-many people bought expensive items using credit
-credit companies got into financial difficulty when customers did not pay their debts
What were the tariffs like in America in the 1920s?
-taxes on foreign goods imposed by the presidents
When was the Wall Street Crash?
24 October 1929
How did tariffs on foreign goods lead to the Wall Street Crash?
-both the US and the European countries imposed them
-meaning that US goods were also expensive, which led to a further fall in trade
What was overspeculation?
-when millions of Americans bought shares ‘on the margin’ (borrowed money to buy shares)
How did overspeculation lead to the Wall Street Crash?
-it pushed the stock market to an unrealistic and unsustainable level
Why was there so much panic by September 1929?
-many people rushed to sell their shares and prices dropped sharply
What happened on Black Tuesday?
-16 million shares were sold
> the New York Stock Exchange crashed and the US economy collapsed
Why did prices drop sharply once people tried to sell their shares in 1929?
-there weren’t enough buyers
-prices plummeted — fast.
-each sale made the next person more desperate, dropping prices even more
What were the general causes of the economic boom?
-mass production
-credit
-advertisement
How did it go from a boom to a crash?
Cheaper goods → more people buy
More buying → companies hire more workers
More jobs → more people with money
More spending → economy grows = BOOM
Everyone already owns the goods (cars, radios, fridges)
Factories keep producing → = overproduction
Not enough buyers → goods pile up → profits fall
Companies cut jobs → people lose income
Investors panic → sell shares → stock prices crash
Banks collapse
Millions lose savings + jobs = Great Depression
What were ‘flappers’ in the 1920s?
-young women who embraced new freedoms and fashion
Which industry is most associated with Henry Ford and the economic boom?
-automobiles
What was the main goal of the Prohibition in the 1920s?
-reduce crime and corruption
What was a major consequence of the Prohibition?
-rise of organised crime and figures like Al Capone
What was the ‘Red Scare’ in 1920s America?
-fear of communism and radical ideas
What was the Emergency Quota Act of 1921 designed to do?
-restrict immigration by setting quotas
What was the Dust Bowl during the Great Depression?
-severe drought that affected farmers in the Midwest
What was the name of the tariff passed in 1922 to protect American businesses and farmers?
-Fordney-McCumber Tarrif
