1.
What industrial weakness
signaled a declining economy in the 1920s?
Railroad, textile, and steel companies barely
made a profit in the 1920s, especially the railroad companies because of the
new forms of transportations, such as trucks, buses, and automobiles. Other
companies that went down in the 1920s was lumbering, and mining, especially for
coal. Coal used to be the biggest source of energy in America, especially
during the war, but by the early 1930s coal was being replaced with
hydroelectric power, fuel oil, and natural gases. Eventually the jobs for
construction, consumer goods, and automobiles weakened. When the construction
of houses went down so did other industries such as furniture manufacturing and
lumbering. All of these were signals of a declining economy in the 1920s.
2.
What did the experience
of farmers and consumers at this time suggest about the health if the economy?
The farmers also got hit pretty hard after
the war ended. During the war, there was a high demand for crops such as wheat
and corn internationally and in order to keep up with the demands farmers
invested in new equipment and made more crops, but after the war the prices of
the crops went down and the demand for them also went down by forty percent.
Since the prices and demand went down, the farmers had debt that they could not
pay off and they would lose their farms to the bank to pay off the loan, and
then the banks would have to auction off the farms to try and get their money
back from the loans. The consumers also showed
signs of an unhealthy economy. The consumers started buying less because the
prices were rising, stagnant wages, and unbalanced distribution. Another reason
was people were overbuying on credit in the previous years.
3.
How did speculation and
margin buying cause stock prices to rise?
People were buying stocks of speculation,
which is out of hope that it will rise and there would be a quirk profit. Also
when people were buying stocks on margins, which is paying for only part of the
share upfront and loan the rest of the money for it, and since people were
buying on margin the prices of the stocks were rising, which reflected that a
company was worth more money than it actually was. Then if the stocks declined
the people who bought the stocks on margin did not get the money that they
needed in order to pay back the loans.
4.
What happened to
ordinary workers during the Great Depression?
A lot of the people lost both their jobs and
all of their savings during the Great Depression. For one a lot of the banks
closed because the banks had invested all of their money in the stock market
therefore they did not have the money to give to the people when they tried to
pull their money from their savings account. Another thing that went down was
the output of goods and services, which was a lot of people’s jobs. It was cut
nearly in half; it went from $104 billion to $59 billion. Even the companies
that were one extremely successful, such as the automobile companies and
railroad companies were failing. Unemployment skyrocketed, it went from three
percent unemployment to twenty five percent unemployment, and even those who
had their job faced pay cuts and reduced hours.
5.
How did the Great
Depression affect the world economy?
The Great Depression also affected the world
economy. European countries were struggling in the 1920s due World War I and
the war debts that it created for the countries. Germany also had a huge war
debt that they had to pay to the Allied countries. The Great Depression
compounded these problems by making it harder and limiting America’s ability to
import European goods, which also made it difficult to sell American farm
products and manufactured products in Europe. Congress also put a tariff in
place on foreign goods to try and increase the purchase of American goods,
which in the end had hurt world trade and it went down by 40 percent.
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