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why did low paid workers suffer
because there was no fixed minimum wage , nor strong tade unions to bargain for good wages for all . there was no state welfare system of pensions or unemployment or sickness benifit to help the old , the sick or the unemployed
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it was generally believed that it was the task of the individual to help himself through private schemes , but the
poor could not afford to so . Any kind of state provision could only have come from heavier taxes on the wealthy , and this was strongly oposed
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as the 1920's wore on , American industries produced
more goods than people were able to buy
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American industries produced more goods than people were able to buy because the new
technology and mass production techniques allowed vast quantities of goods to be produced , more than actually needed
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American industries produced more goods than people were able to buy because the unequal
distribution of wealth meant that most people who could afford consumer goods had already bought them , so demand for goods fell . Even hire purchase did not help poor people , who couldnt afford consumer goods at all
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American industries produced more goods than people were able to buy because when the USA imposed
tariffs on foreign goods , other countries retaliated by putting tariffs on American goods . This made it very difficult for industrialists and farmers to export their goods . It didnt matter when Americans were buying plenty of goods , but eventually the USA had a saturated market , so the inability to export was a seriuos problem causing overproduction
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By 1929 unsold stocks of goods were
building up . As a result , industrialists cut production and laid off workers . these unemployed workers and their families now could not afford to but consumer goods and the demand fell even further , leading to further cuts in production , more unemployment and so on
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the laissez faire policies of the Republican goverment in the 1920's helped buisnesses to grow , but they had some underlying problems including
- lack of credit controls
- trusts and monopolies
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The 1920's saw the development of ver large buisness firms , such as these owned by ........ , ........ and .............. . these corporations or trusts were formed by smaller firms combining , or by large firms taking over smaller ones . Many of these trusts acquired ...... or ....... ........ in their industry
- Vanderbilt
- carnegie
- rockefeller
- monopolies
- near monopolies
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by 1929 the wealthiest ......% of corporations had taken over ........% of total corporation income
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trust were able to increase ....... , but they were also able to ---------------------------------------------------------
- efficiency
- keep wages lower and prices higher than neccesary , they could also keep trade unions weak by forbidding workers to join them
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the Republican governments , who were supporters of buisnessmen and the policy of laissez faire ,did nothing to
limit the growth of trusts or to protect the rights of workers
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keeping wages low and prices higher than neccessary was going to have far reaching effects as it
reduced the spending power of the workers . This coupled with , a reduction in overseas trade was going to lead to overproduction of goods
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had wages kept the pace with profits in the years
1923-1929 then more would have been sold at home , offsetting the loss of trade overseas . However , America buisness was much more powerful than the unions so was able to keep wages down
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As previously stated America could not solve her problems by selling her surplus food and goods to other countries . this was because
America had put tarrifs on foreign goods comin into the country, so other countries did exactly the same to American goods . this meant that American buisnessmen found it hard to sell abroad
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American buisnessmen found it hard to sell abroad . This did not matter if as long as America could
consume everything made in America , but by 1929 it did matter , as there were huge surpluses of food
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by 1929 a
cycle of depression had set in
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reduced demands of goods led to
factories closing down and workers being made unemployed . This meant there was less money to spend on consumer goods , which further reduced demand and led to more closures
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as we have seen , many Americans invested in stocks and shares in the 1920's . In 1924 , .......... million dollars worth of stock and shares were bought and sold . with little effort huge prifits were quickly made
282
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there was such a lot of confidence in the stock that people did not realise
that the buying of shares is sort of a gamble . Shares can go up and shares can go down
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the point of investing is to choose a
company that is making good profits , so that the investor gets a share in these profits
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the point of investing is to choose a company that is making good profits , so that the investor gets a share in these profits however lots of people were new investors , who had never bought shares before , and did not
understand about the need to think about how reliable a company was . Instead they were taking risks or speculating , in hopes of making a quick profit. Banks were willing to lend money to investors , meaning that much of the spending was done with borrowed money
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sales reached a frantic pitch in ......... with sales over $....... million
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although share prices continued to rise in 1929
they did not rise as rapidly as they had done in previous years
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why did companies say their profits were falling
due to overproduction , however share prices in these companies were contuniung to rise
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some more experienced investors realised that
share prices had become artificially high , and no longer reflected the true value of the company
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these experienced investors knew that share orices had to
fall , so they began to sell their shares . When other small investors saw this they began to sell too
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when was the wall street crash
october 1929
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