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History - USA: Boom, Bust and Recovery > Economic problems in the 1920s (T1) > Flashcards

Economic problems in the 1920s (T1) Flashcards

1
Q

What was distributed unevenly in the USA?

A

Industry and income which meant that some regions were much more prosperous than others.

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2
Q

What was the issue of patterns of employment?

A

Patters of employment could be unstable, with much employment and unemployment.

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3
Q

What was the per capita income in the Northeast and Far West?

A

Northeast: $921
Far West: $881

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4
Q

What was the per capita income in the Southeast?

A

$365

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5
Q

What was the per capita income of non-agricultural sectors in South Carolina?

A

$412

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6
Q

What was the per capita income of farmers in the South?

A

$129

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7
Q

What percent of American families had annual incomes of less than $2,000?

A

60%

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8
Q

Why was employment often unstable?

A

Due to owing to fluctuating demand for goods.

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9
Q

Was there a lot of support for unemployed people?

A

Very little welfare or unemployment benefit and most relief was supplied by charitable organisations.

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10
Q

Was there any support workers could find?

A

Workers could not, on the whole, look to labour unions for help.

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11
Q

Did the government offer any support for workers?

A
  • The government did nothing to protect workers.
  • Supreme Court had blocked attempts by unions to ban child labour and impose a minimum wage for women as being unconstitutional.
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12
Q

What did many companies operate to exploit workers?

A

Many employers operated ‘yellow dog’ clauses by which their employees were not allowed to join a union.

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13
Q

How high was union membership in the early 1920s?

A

4 million.

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14
Q

How much did union membership fall by?

A

Declined overall by 1 million.

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15
Q

How much of the industrial workforce was unionised in 1910?

A

8.5%

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16
Q

How much of the industrial workforce was unionised in 1930?

A

7.1%

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17
Q

What was a popular aim for many Americans in the 1920s?

A

‘Get rich quick’ schemes

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18
Q

What were ‘Get rich quick’ schemes?

A

People would invest in hugely speculative ventures and inevitably many lost their money.

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19
Q

What did ‘Get rich quick’ schemes allow for?

A

Provided golden opportunities for confidence tricksters and crooks.

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20
Q

What are some examples of ‘Get rich quick’ schemes in 1920s America?

A

Notably the Florida land boom and on the stock exchange.

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21
Q

What was Florida like before the 1920s?

A

A relatively undeveloped state with a small population.

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22
Q

What was the population of Miami in 1910?

A

54,000

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23
Q

What allowed for Florida to become more accessible to people?

A

With the coming of the motor car, Florida’s all year-round sunshine became much more accessible.

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24
Q

Who was most attracted to Florida?

A

The nation’s middle classes.

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25
Q

What led to the land boom?

A

Massive interest that grew in the state as a paradise for vacations and retirement.

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26
Q

How much did the population of Florida increase by?

A

Between 1920 and 1925, increased from 968,000 to 1.2 million.

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27
Q

What were the large-scale coastal developments in Florida?

A

Parcels of land began to be sold to wealthy northerners on the basis of glossy brochures.

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28
Q

What was the problem that began with the Florida Land Boom?

A

People began to invest their money in unseen developments, hoping to sell and make a quick profit.

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29
Q

How did people pay for developments in Florida?

A

Often they paid on credit, with a 10% deposit known as a ‘binder’

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30
Q

How could the land boom be sustained?

A

Only as long as there were more buyers than sellers.

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31
Q

When did demand for land in Florida begin to tail off?

A

1926

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32
Q

What led to this tailing off of demand?

A

Scandals of land advertised as within easy access of the sea that were really many miles inland or in the middle of swamps.

33
Q

How did nature impact the land boom?

A

Hurricanes in 1926 killed 400 people and left 50,000 homeless.

34
Q

How did the Florida land boom collapse?

A

With thousands of people bankrupted, Florida was left with half-finished and storm battered developments.

35
Q

What happened between 1927 and 1929?

A

Many Americans went ‘Wall Street Crazy’

36
Q

What did easy credit allow for?

A

Meant many were able to invest in stocks and shares.

37
Q

How were stocks and shares bought?

A

Could be bought ‘on the margin’ - on credit with loans from their broker.

38
Q

What was this demand to buy shares called?

A

This demand to buy shares is known as a ‘bull market’.

39
Q

Why were people buying stocks and shares?

A

People purchased stocks and shares as a speculation.

40
Q

How was quick and easy profit made?

A

If the price rose shares were sold so making a quick and easy profit.

41
Q

What was the ‘bull pool’?

A

Many ‘streetwise’ brokers took full advantage of the boom, intending to make as a much money as possible before the inevitable collapse.

42
Q

Who were typical ‘streetwise’ brokers?

A

Tended to be the large-scale financiers and bankers.

43
Q

What did many of ‘streetwise’ brokers attempt to do?

A
  • Many of these attempted to inflate prices artificially.
  • Eg. William Durant operated the famous bull pool, he and his colleagues bought and sold shares to each other.
44
Q

What would ‘streetwise’ brokers do to create a huge profit?

A

Once unwary outsiders began to buy, sending the prices still higher, they would sell, making a huge profit.

45
Q

What would this selling cause?

A

Cause prices to fall and the outsiders would be left with much depreciated stock.

46
Q

What did little regulation mean for these bull pools?

A

Little regulation of these activities such as insider dealing meant it was easy to take advantage of others’ naivety.

47
Q

What was the banking system of the USA like in the 1920s?

A

Outdated by the 1920s even though the central banking system had only been created in 1913.

48
Q

What did the banking system consist of?

A

Twelve regulatory Reserve Banks were headed by the Federal Reserve Board with seven members appointed by the president.

49
Q

What did the banking system allow banks to do?

A

Allowed banks to regulate themselves without the government having to intervene.

50
Q

What was the importance of the Reserve Banks?

A

Represented the interests of the bankers and so could not be completely relied on to act on the best interests of the nation if there was a conflict of interests.

51
Q

How did the banking system fuel easy credit?

A

The Federal Reserve Board wanted to keep the market buoyant so it favoured low interest rates.

52
Q

What was the difference between national banks and local state banks?

A

While national banks had to join the centralised system, local state banks did not.

53
Q

Why were smaller, local state banks important?

A

Most ordinary people’s money, particularly in rural and semi-rural areas, was invested in the latter.

54
Q

How many banks were there in the USA in the 1920s?

A

30,000

55
Q

What was the issue with these banks?

A

Many were small and therefore unable to coper with financial problems.

56
Q

What was the problem with these banks collapsing?

A

If they collapsed their depositors would probably lose virtually all their savings.

57
Q

What was at the heart of economic problems in the USA?

A

Cycle of international debt

58
Q

What was America’s priority?

A

For Europeans to repay the loans they had taken out to finance WW1.

59
Q

Why was this an issue for America?

A

Most European countries, still suffering from depressed economic conditions, could not afford to repay.

60
Q

What made this cycle worse?

A

Prohibitive tariffs

61
Q

Why did tariffs make this issue worse?

A

European countries could not export their goods to the USA in great quantities so found it impossible to earn the money to repay the loans.

62
Q

What was the boom dependant on?

A

Continuing domestic consumption

63
Q

What created a problem in selling goods?

A

High tariffs and generally depressed economies in Europe meant that American producers could sell comparatively little abroad.

64
Q

What were the three indicators that the boom was slowing down?

A
  • Problems in small business
  • The construction industry
  • Falling domestic demand
65
Q

What was the rate of businesses in the 1920s?

A

For every four businesses that succeeded, three failed.

66
Q

How much did the number of motor vehicle companies fall by?

A

Fell from 108 in 1920 to 44 by the end of the decade.

67
Q

Was the government prepared to help failing industrial concerns?

A

The government was no more prepared to help out failing industrial concerns than it was to help the farmers.

68
Q

Where was there a boom in construction?

A

Housing, office building and highways.

69
Q

When did construction demand begin to tail off?

A

1926

70
Q

What did this loss of demand in construction lead to?

A

Led to a fall in demand of building materials, skills such as plumbing and the transportation of building materials.

71
Q

What did this fall in demand of materials lead to?

A
  • Led to higher unemployment in construction-related businesses
72
Q

What happened with the fall in domestic demand?

A

The domestic market was becoming flooded with goods that could not be sold.

73
Q

What were examples of falling domestic demand?

A
  • Electrical goods such as labour saving devices seemed to have reached their peak.
  • Credit seemed exhausted.
74
Q

What was the result of a fall in domestic demand?

A

Growing unemployment as firms cut back production, thousands of automobile workers were laid off.

75
Q

How many Americans were living in subsistence in 1929?

A

80%, even when they were in work.

76
Q

How did the economy enter into a downward spiral?

A
  • Growth in new industries began to slow.
  • Full-time employment fell
77
Q

What added to this problem in the economy?

A

A fall in income led to a fall in demand, led to a fall in production which added to unemployment and underemployment.

78
Q

How was the problems in the economy concealed?

A

Concealed by superficial optimism and the frenzy of stock market speculation.

History - USA: Boom, Bust and Recovery (17 decks)

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