Economic Change Flashcards
Why did the First World War increase the demand for production capacity?
They were supplying Britain and France for the first few years of the war and the increasing need to supply their own Army after April 1917.
What effect did the First World War have on farming and industry?
The economic boom created a huge demand for various goods which led to many industries introducing mechanisation.
What problem did mechanisation cause after the War Ended?
Increased levels of mechanisation meant that fewer jobs were available to the returning soldiers whilst farmers were overproducing which led to reduced prices and profit.
How did Republican Governments following Wilson deal with the post war depression?
They in fact did very little as they believed in Laissez Faire economics and believed that the depression would fix itself which it ultimately did. They did introduce some tariffs which reduced exports but also encouraged people to buy American goods.
How did Mass Production contribute to the Boom in the 1920’s?
Ford introduced the first mass production line in which things were made in a serious of steps in which one worker was responsible for each stage.
How did New Management Techniques contribute to the Boom in the 1920’s?
Business owners introduced a system of scientific management in which they maintained good wages and good working conditions so that workers would produce more goods.
How did Federal Policies contribute to the Boom in the 1920’s?
The Republican Governments interfered very little in business but did maintain some wartime subsidies and did cut taxes for businesses and consumers to encourage people to buy American.
How did Hire Purchase and Loans contribute to the Boom in the 1920’s?
People were now being encourage to buy now and pay later by 1929 the average consumer was borrowing 10% of their average annual income. Between 1920 and 1929 consumer debt had increased from $3.3 billion to $7.6 billion.
How did Changing Industry contribute to the Boom in the 1920’s?
New industries were more efficient and used higher levels of mechanisation and there was also a shift away from staple production. This new industry could not have taken off without the expansion of the electricity grid in 1917 7.9 million homes had electricity, in 1930 24.6 million had electricity.
What happened in regards to shares during the early stages of the 1920’s?
Share prices in new modern industry rapidly rose which led to many ordinary people chasing to invest in what was known as the bull market which would frequently boom. People wanted to make money on this “sure thing”. People bought shares on the margin with loans knowing that the profit would allow them to pay it off.
How many shares were traded in 1910, 1920 and 1929?
1910 - 164 million shares traded.
1920 - 227 million shares traded.
1929 - 1125 million shares traded.
What role did the media have in the bull market?
Media outlets would constantly encourage the purchasing of shares and highlight the money that could be made from them. Many people borrowed money to buy shares which was known as buying on the margin.
What were the early warning signs that a bust was approaching at the end of the 1920s?
- Most people who had bought consumer goods had bought them leading to falling demand.
- In turn companies did not cut production enough so they piled up in warehouses.
- In 1927 Unemployment was rising which led to employers cutting hours and wages.
Yet the Republicans did nothing.
Why did the depression spiral?
- In September 1929 some people believed that share prices were dangerously high and in turn sold and kept the profit.
- More and more people began to do this leading to decreasing value.
- The media warned of a crash with lead to hysterics and the value increasing even faster.
How many people were unemployed at the height of the depression?
By December 1933 24.9% of the National Workforce was unemployed. The number of workers in employment fell by 42.9% between 1929 and 1933.
