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Questions and Answers

What was the primary role of the War Industries Board during World War I?

  • To promote laissez-faire economic policies.
  • To coordinate the production of war materials and set industrial priorities. (correct)
  • To discourage the formation of labor unions.
  • To regulate immigration policies.

Which presidential administration was characterized by the slogan 'The business of the American people is business'?

  • Franklin D. Roosevelt
  • Calvin Coolidge (correct)
  • Herbert Hoover
  • Warren Harding

What was a significant factor that contributed to the economic expansion in the U.S. during the 1920s?

  • Increased regulation of labor unions.
  • Tightening of credit availability for consumers.
  • Decreased government spending on infrastructure.
  • Technological advancements and increased consumer goods production. (correct)

The Immigration Act of 1924 reflected what sentiment prevalent in the USA during that time?

<p>Growing nativist sentiment and isolationist tendencies. (D)</p> Signup and view all the answers

What financial practice contributed significantly to the stock market crash of 1929?

<p>Buying stocks on margin with borrowed money. (B)</p> Signup and view all the answers

Which of the following was NOT a primary cause of the Wall Street Crash of 1929?

<p>Strict government regulations on financial institutions. (C)</p> Signup and view all the answers

What was the approximate peak unemployment rate during the Great Depression?

<p>25% (B)</p> Signup and view all the answers

How did the Wall Street Crash of 1929 impact the banking system in the United States?

<p>It caused widespread bank failures and undermined public confidence. (A)</p> Signup and view all the answers

Which of the following best describes the initial governmental response to the Great Depression under President Herbert Hoover?

<p>A hands-off approach, which was later viewed as inadequate. (A)</p> Signup and view all the answers

Which of the following best describes the New Deal?

<p>Programs and projects aimed at revitalizing the U.S. economy during the Great Depression, involving active government intervention. (B)</p> Signup and view all the answers

Which act was part of the New Deal and designed to stabilize the banking system by closing insolvent banks?

<p>The Emergency Banking Relief Act (B)</p> Signup and view all the answers

Which of the following New Deal programs focused on providing jobs through public works projects?

<p>The Civilian Conservation Corps (CCC) (D)</p> Signup and view all the answers

The Wagner Act of 1935, also known as the National Labor Relations Act, primarily aimed to do what?

<p>Strengthen the rights of labor unions. (A)</p> Signup and view all the answers

What was a common criticism of the New Deal by business leaders?

<p>It imposed excessive regulations and high taxes, stifling entrepreneurial initiative. (A)</p> Signup and view all the answers

Which of the following is true regarding the long-term impact of the New Deal?

<p>It laid the groundwork for modern welfare states and a mixed economy. (D)</p> Signup and view all the answers

What immediate economic effect did the onset of World War II have on the United States?

<p>A surge in employment and revitalization of industries. (C)</p> Signup and view all the answers

Which iconic symbol represented the entry of women into the workforce during World War II?

<p>Rosie the Riveter (A)</p> Signup and view all the answers

How did the economic impact of World War II compare to the New Deal in terms of government spending?

<p>WWII spending far exceeded New Deal spending. (A)</p> Signup and view all the answers

What was the initial purpose of the Neutrality Acts passed by the United States Congress?

<p>To keep the United States out of foreign wars by prohibiting arms sales and loans to nations at war. (C)</p> Signup and view all the answers

How did the shift from the 'Neutrality Acts' to the 'Cash and Carry' policy benefit the U.S. economy?

<p>It boosted exports without entangling the nation in foreign alliances. (B)</p> Signup and view all the answers

Which of the following innovations emerged from war-related research and development during World War II?

<p>Radar and jet engines (C)</p> Signup and view all the answers

How did the economic mobilization for World War II ultimately affect the Great Depression in the United States?

<p>It effectively ended the Great Depression by providing jobs and revitalizing industries. (A)</p> Signup and view all the answers

Consider the economic policies adopted during the early 20th century in the USA. Which of the following contrasts best illustrates the shift in government economic philosophy from the pre-WWI era to the New Deal era?

<p>From prioritizing balanced budgets and minimal intervention to implementing large-scale government spending and regulation. (A)</p> Signup and view all the answers

Imagine you are an economic advisor during the Great Depression. Propose the most effective long-term measure to prevent a similar economic crisis, considering the lessons learned from the 1920s boom and bust. Which strategy would you champion?

<p>Implementing robust governmental regulation of financial markets coupled with social safety nets. (B)</p> Signup and view all the answers

Assess the following scenario: A historian argues that the economic policies of the 1920s were fundamentally unsustainable due to inherent structural weaknesses. Which of the following pieces of evidence would most strongly support this claim?

<p>The widening gap between the rich and the poor, coupled with excessive credit expansion. (A)</p> Signup and view all the answers

Evaluate the claim that the New Deal was a betrayal of American capitalism. Which statement provides the most nuanced perspective on this issue?

<p>The New Deal was a necessary intervention that saved capitalism from collapse by reforming and regulating it. (A)</p> Signup and view all the answers

Analyze the long-term effects of World War II on the United States' global economic standing. Which outcome is the most significant?

<p>The emergence of the United States as a dominant global economic superpower. (A)</p> Signup and view all the answers

During the 1920s, consumerism increased significantly, with more people buying goods on credit. What would be an example of a negative consequence of using available credit options?

<p>Over-extension of debt leading to personal bankruptcies during an economic downturn. (A)</p> Signup and view all the answers

Which action represents a significant departure from traditional U.S. economic policy during World War I?

<p>Increased government regulation and control over industries. (C)</p> Signup and view all the answers

Suppose you are an economist tasked with advising President Roosevelt on the effectiveness of the New Deal in 1936, after the First New Deal but before the full implementation of the Second New Deal. What would be your primary concern?

<p>The programs have not done enough to address the underlying structural issues in the economy, as gains were reversed in the recession of 1937-1938. (A)</p> Signup and view all the answers

Imagine an alternate timeline where the U.S. government maintained a strict laissez-faire policy throughout the Great Depression, rejecting the New Deal. Which outcome is most likely?

<p>A more severe and prolonged economic downturn with higher levels of unemployment and social unrest. (A)</p> Signup and view all the answers

The Teapot Dome scandal, which occurred during the Harding administration, is an example of what?

<p>Government corruption and mismanagement of public assets. (B)</p> Signup and view all the answers

Which sentence best describes the economic state of farmers in the USA during the 1920s?

<p>Farmers struggled with falling prices and overproduction, despite the overall economic boom. (C)</p> Signup and view all the answers

What was a key characteristic of labor relations in the USA during the 1920s?

<p>Rolling back of labor protections established during World War I. (C)</p> Signup and view all the answers

Which demographic group faced the most significant immigration restrictions in the United States following the Immigration Act of 1924?

<p>Immigrants from Southern and Eastern Europe and Asia. (C)</p> Signup and view all the answers

How did technological advancements in the early 20th century contribute to the nature of capitalism in the USA?

<p>They facilitated mass production, making goods more accessible and encouraging consumerism. (D)</p> Signup and view all the answers

What was 'buying on margin', related to the Wall Street Crash of 1929?

<p>Borrowing money to purchase stocks. (A)</p> Signup and view all the answers

What was a significant consequence of the bank failures that occurred following the Wall Street Crash of 1929?

<p>Erosion of public confidence in the financial system. (C)</p> Signup and view all the answers

What was the primary objective of the Emergency Banking Relief Act of 1933?

<p>To stabilize the banking system by reorganizing and reopening selected banks. (C)</p> Signup and view all the answers

Which New Deal program focused on providing employment through large-scale public works projects?

<p>The Works Progress Administration (WPA). (B)</p> Signup and view all the answers

What was the primary goal of the Agricultural Adjustment Act (AAA) during the New Deal?

<p>To stabilize agricultural prices and incomes for farmers. (B)</p> Signup and view all the answers

Which of the following was a significant critique of the New Deal from a business perspective?

<p>It imposed excessive regulations and high taxes on businesses. (C)</p> Signup and view all the answers

How did the outbreak of World War II initially impact the U.S. economy, even before the country officially entered the war?

<p>It spurred increased industrial production as the U.S. began supplying war materials. (C)</p> Signup and view all the answers

What was the economic effect of the 'Cash and Carry' policy adopted by the U.S. prior to its entry into World War II?

<p>It boosted the U.S. economy by increasing exports to belligerent nations. (D)</p> Signup and view all the answers

What was the primary purpose of the Neutrality Acts passed by the United States Congress in the 1930s?

<p>To keep the United States out of foreign wars. (D)</p> Signup and view all the answers

How did economic mobilization for World War II impact unemployment rates in the United States?

<p>Unemployment rates drastically decreased as millions of jobs were created. (D)</p> Signup and view all the answers

Which statement accurately describes the state of the economic prosperity during the 1920s?

<p>Wealth was unevenly distributed, with overreliance on credit and speculative investments. (A)</p> Signup and view all the answers

What was a lasting impact of the New Deal on the role of the federal government in the United States?

<p>It established a model for a mixed economy and a stronger social safety net. (B)</p> Signup and view all the answers

Which of the following best describes the economic philosophy during the presidency of Calvin Coolidge?

<p>A return to normalcy with minimal government intervention and pro-business policies. (D)</p> Signup and view all the answers

How did the role of women in the workforce change during World War II?

<p>They entered industrial jobs in large numbers, symbolized by 'Rosie the Riveter'. (C)</p> Signup and view all the answers

Which of the following best characterizes the United States' economic policy regarding international trade during the early years of World War II, prior to its direct involvement?

<p>A policy of 'cash and carry', allowing trade with nations that paid in cash and transported goods themselves. (B)</p> Signup and view all the answers

What underlying condition in the U.S. economy contributed to the severity of the Wall Street Crash of 1929?

<p>Overvalued stocks inflated by speculative investment. (B)</p> Signup and view all the answers

How did government spending during World War II compare to that of the New Deal?

<p>Government spending skyrocketed during WWII, far exceeding that of the New Deal. (C)</p> Signup and view all the answers

Which long-term effect did the economic policies of the New Deal have on the United States?

<p>The establishment of a social security system providing old-age benefits and unemployment insurance. (D)</p> Signup and view all the answers

What was a major consequence of the New Deal programs that sparked debate about their effectiveness and impact on American capitalism?

<p>Increased government control and intervention in the economy. (C)</p> Signup and view all the answers

Which aspect of the economic mobilization during World War II most directly contributed to overcoming the Great Depression in the United States?

<p>The surge in industrial production and employment. (D)</p> Signup and view all the answers

Which of the following best represents the long-term impact of World War II on the structure of the American economy?

<p>Increased government spending and continued technological advancement. (D)</p> Signup and view all the answers

Reflecting on the economic history of the U.S. in the first half of the 20th century, what was the most significant challenge posed by rapid industrial expansion during the 1920s?

<p>Maintaining stable employment levels and fair labor practices. (D)</p> Signup and view all the answers

In retrospect, what fundamental weakness of the American economy during the 1920s contributed most significantly to the onset of the Great Depression?

<p>The stagnation of the agricultural sector coupled with income inequality and over-reliance on credit. (D)</p> Signup and view all the answers

Which policy decision would have most likely prevented the stock market speculation that contributed to the Wall Street Crash of 1929?

<p>Increasing margin requirements for stock purchases. (B)</p> Signup and view all the answers

If the goal was to prevent future economic depressions similar to the Great Depression, which New Deal initiative would have proven most beneficial?

<p>Social Security Act. (A)</p> Signup and view all the answers

Suppose the United States had not entered World War II. What is the most likely economic outcome?

<p>The U.S. economy would have continued to stagnate, and the Great Depression would have persisted longer. (C)</p> Signup and view all the answers

Imagine that the First New Deal focused solely on direct relief efforts. Which of the following would most likely result?

<p>Continued economic instability with no long-term economic planning. (C)</p> Signup and view all the answers

Given the economic conditions preceding the New Deal, which action would have been most effective in preventing the complete collapse of the American financial system?

<p>Implementing government insurance for bank deposits. (C)</p> Signup and view all the answers

Suppose the Washington Naval Conference (1921-1922) had failed to produce any agreements limiting naval armaments. What would be the most reasonable prediction?

<p>The US federal budget would likely have to increase to maintain naval superiority. (A)</p> Signup and view all the answers

What was a key characteristic of the U.S. government's approach to business before World War I?

<p>A <em>laissez-faire</em> approach with minimal intervention in business. (D)</p> Signup and view all the answers

What was the primary purpose of the War Industries Board (WIB) during World War I?

<p>To coordinate the production of war materials and set industrial priorities. (C)</p> Signup and view all the answers

What sentiment did the Immigration Act of 1924 reflect in the United States?

<p>A growing nativist sentiment and desire for isolationism. (A)</p> Signup and view all the answers

What was a significant feature of the labor relations in the USA during the 1920s?

<p>A procapitalist environment that often weakened labor protections. (C)</p> Signup and view all the answers

What role did technology play in the nature of capitalism in the USA during the early 20th century?

<p>It facilitated mass production, reducing costs and increasing consumer access to goods. (B)</p> Signup and view all the answers

How did buying stocks on margin contribute to the Wall Street Crash of 1929?

<p>It amplified both gains and losses due to the leveraged investment strategy. (D)</p> Signup and view all the answers

What was a consequence of the bank failures after the Wall Street Crash of 1929?

<p>A sharp decrease in the money supply and reduced access to credit. (B)</p> Signup and view all the answers

How did the New Deal attempt to stabilize the banking system?

<p>By auditing and reorganizing the banking sector through the Emergency Banking Relief Act. (A)</p> Signup and view all the answers

What was the main objective of the Agricultural Adjustment Act (AAA) during the New Deal?

<p>To stabilize farm prices by limiting agricultural production. (B)</p> Signup and view all the answers

What was a common criticism of the New Deal from the perspective of some business leaders?

<p>It imposed excessive regulations and taxes that stifled economic freedom. (D)</p> Signup and view all the answers

How did the economic mobilization for World War II affect unemployment rates in the United States?

<p>It significantly reduced unemployment by creating millions of jobs in war-related industries. (A)</p> Signup and view all the answers

How did the U.S. policy shift from the Neutrality Acts to 'Cash and Carry' benefit the U.S. economy before officially entering World War II?

<p>It allowed the U.S. to provide aid to allies while remaining officially neutral, boosting exports without entangling the nation in foreign alliances. (C)</p> Signup and view all the answers

What was the most significant cause of the Wall Street Crash of 1929?

<p>Rampant stock market speculation and overvalued stock prices. (D)</p> Signup and view all the answers

What was the key factor that led to improved wages and working conditions, contributing to a rise in labor union membership?

<p>The war and subsequent economic conditions. (B)</p> Signup and view all the answers

What was the Economic and Social outcome of the Wall Street Crash?

<p>Social Strain: The economic downturn had severe social repercussions, including poverty, loss of homes, and a decline in living standards. (B)</p> Signup and view all the answers

Which action exemplifies the U.S. government's shift away from traditional economic policies during World War I?

<p>Increasing regulation and control over industries via bodies like the War Industries Board. (D)</p> Signup and view all the answers

How did the New Deal influence the role of the federal government in the United States?

<p>It marked a shift towards a mixed economy with an expanded role for the federal government. (C)</p> Signup and view all the answers

What was a key difference between the First and Second New Deal?

<p>The First New Deal emphasized immediate relief and financial reform, while the Second New Deal introduced more comprehensive social security and labor reforms. (B)</p> Signup and view all the answers

Which of the following best illustrates the shift from the 'Neutrality Acts' to the 'Cash and Carry' policy?

<p>A recognition that economic engagement could benefit the U.S. without direct military involvement. (A)</p> Signup and view all the answers

What was a lasting impact of World War II on the structure of the American economy?

<p>A significant expansion of the military-industrial complex. (D)</p> Signup and view all the answers

Imagine the U.S. government maintained a strict laissez-faire policy throughout the Great Depression. What outcome is most likely?

<p>A collapse of the American financial system and widespread social unrest. (D)</p> Signup and view all the answers

During the 1920s, consumerism increased significantly, with more people buying goods on credit. What would be an example of a negative consequence?

<p>Increased personal debt and potential for financial instability. (C)</p> Signup and view all the answers

Consider the economic policies adopted during the early 20th century in the USA. Which contrast best illustrates the shift in government economic philosophy from the pre-WWI era to the New Deal era?

<p>From minimal regulation to extensive government intervention. (A)</p> Signup and view all the answers

Suppose the goal was to prevent future economic depressions similar to the Great Depression. Which New Deal initiative would have proven most beneficial?

<p>The Social Security Act, since it created a <em>safety net</em>. (A)</p> Signup and view all the answers

Reflecting on the economic policies of the U.S. in the first half of the 20th century, what was the most significant challenge posed by rapid industrial expansion during the 1920s?

<p>The lagging capacity for consumption relative to production. (D)</p> Signup and view all the answers

Assess the following scenario: A historian argues that the economic policies of the 1920s were fundamentally unsustainable due to inherent structural weaknesses. Which piece of evidence would most strongly support this claim?

<p>The increasing concentration of wealth and rising levels of consumer debt. (C)</p> Signup and view all the answers

Imagine an alternate timeline where the U.S. doesn't enter WWII but maintains trade relations. How would it compare with what actually happened?

<p>The Great Depression would have been prolonged indefinitely. (D)</p> Signup and view all the answers

A big portion of the American Dream is to own a home, which became mainstream in the 1920s. What would have been seen as the most dangerous trend that eventually caused the Great Depression?

<p>Lack of regulation allowing predatory lending on mortgages. (B)</p> Signup and view all the answers

Flashcards

Early 20th Century American Capitalism

Period of rapid industrial growth, changing labor relations and governmental policies.

War Industries Board (1917)

Coordinated war material production and set industrial production priorities with presidential approval.

Post-WWI Economic Policies

Presidents Harding and Coolidge's policies that reduced government involvement in business.

1920s Industrial Expansion

Expansion in American industry marked by technological advancements and increased consumer goods production.

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Immigration Act of 1924

Limited immigration from southern, eastern Europe, and Asia.

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Mass Production Techniques

Reduced costs and made consumer goods more accessible.

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Wall Street in the 1920s

Driven by rampant speculation, with soaring stock values.

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Buying Stocks on Margin

Investors paid a small percentage of the stock value and borrowed the rest.

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Stock Market Before 1929 Crash

Operated with minimal government oversight that allowed speculative excess and risky investment practices.

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Investors Unable to Repay Loans

Led to bankruptcies and financial strain on banks.

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Economic Disparities in the 1920s

Uneven distribution of wealth, stagnation of real wages, and overreliance on credit.

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Bank Failures After the 1929 Crash

Over 650 banks failed, undermining public confidence.

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Impact of the Crash on Employment

Businesses failed and unemployment soared to 25%.

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Reduction in Production and Prices

Sharp decline in industrial output and deflation.

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Social Strain of the Great Depression

Poverty, loss of homes, and decline in living standards.

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Hoover's Response to the Crash

Inadequate initial governmental response that led to a shift in political sentiment.

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The New Deal

A series of programs and projects aimed at revitalizing the U.S. economy during the Great Depression.

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First New Deal (1933-1935)

Focused on immediate relief, economic recovery, and financial reforms.

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Second New Deal (1935-1940)

Introduced comprehensive reforms in social security, labor relations, and housing.

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Emergency Banking Relief Act (1933)

Stabilized the banking system by closing insolvent banks and reorganizing the banking sector.

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Civilian Conservation Corps (CCC) & Works Progress Administration (WPA)

Provided millions of jobs through public works projects.

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Agricultural Adjustment Act (AAA) & Tennessee Valley Authority (TVA)

Aimed at revitalizing agriculture and developing regional economies.

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Social Security Act (1935)

Established a system of old-age benefits and unemployment insurance.

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National Labor Relations Act (Wagner Act, 1935)

Strengthened the rights of labor unions.

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Regulatory Frameworks of the New Deal

Stabilized industries and financial systems, preventing speculative excesses.

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Creation of a Safety Net

Increased job security and consumer confidence.

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Boosting Demand

Government spending on public works injected capital, boosting demand.

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Increased Government Control

Expansion of federal government's role in the economy

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Business Opposition to the New Deal

Saw the New Deal as imposing excessive regulations and high taxes.

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Dependency Concerns

Argued that New Deal programs created a dependency on government assistance.

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Helping the United States recover from the Great Depression

Improving infrastructure, providing jobs, and restoring faith in the banking system.

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Increased Industrial Production

Led to a ramp-up in military production, expanding manufacturing capacity.

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Employment Surge

Created millions of jobs, reducing unemployment rates.

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Government Spending

Stimulated economic activity across various sectors.

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Cash and Carry Policy

Allowed trade with belligerent nations if they paid cash and transported goods.

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Laissez-faire Economics

A hands-off approach where the government minimizes intervention in business and economic affairs.

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Growth of Labor Unions

War boosted wages and improved working conditions, leading to increased membership and influence for labor advocates.

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Shift in Labor Laws

Rolling back labor protections established during the war, reflecting a pro-capitalist drive for industrial growth.

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"The business of the American people is business"

The notion that American prosperity is rooted in business success, supported by policies favoring free markets and limited regulation.

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Speculative Bubble

Euphoric surge in stock values during the 1920s, fueled by excessive speculation and often detached from actual company earnings.

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Black Tuesday

October 29, 1929; the day the stock market crashed triggering The Great Depression.

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Overvalued Stocks

Stocks valued far beyond company earnings, creating an unstable and unsustainable financial market.

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The Great Depression

A period of severe economic decline characterized by bank failures, business closures, and high unemployment.

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Franklin Delano Roosevelt (FDR)

President Roosevelt's programs aimed at relief, recovery, and reform during the Great Depression.

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Technological Advancements

Wartime innovations like radar and jet engines that found applications in civilian sectors post-WWII era, spurring economic growth.

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Neutrality Acts

Laws designed to keep the U.S. out of foreign wars by restricting arms sales and loans to countries at war, reflecting isolationist sentiments.

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Shift from Depression to a War Economy

Shift from peacetime production to wartime manufacturing, creating jobs and revitalizing industries that had suffered during the Depression.

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Economic Mobilization During WWI

A period where the US government exerted significant control over industries to support the war effort through coordinating production, setting priorities and fixing prices.

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Stock Market and the 1920s Boom

The economic boom of the 1920s was heavily reliant on the performance and soaring values of the stock market.

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Wall Street Crash of 1929

Catastrophic economic event caused by speculation, overvalued stocks, and minimal regulation.

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Reduction in Production

The crash led to a drastic decrease in the amount of goods produced as businesses failed.

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Neutrality Acts Evolution

The initial aim was to keep the US out of foreign wars, but later evolved to benefit the US economy.

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Shift to War Economy

The United States had transitioned from the economic struggles of the Depression to wartime manufacturing, revitalizing industries and creating jobs.

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Buying on Margin

A key factor of the 1929 crash where many investors used borrowed money to purchase stocks.

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Study Notes

The Nature of Capitalism in the USA in the Early 20th Century

  • The early 20th century was a crucial time for American capitalism because of rapid industrial growth and changes in labor relations and government policies.
  • The United States became a leading global industrial power because of raw materials, a growing labor force, and mass production innovations.

Economic Mobilization During WWI

  • World War I caused the U.S. government to shift from laissez-faire to increased regulation and industry control to support the war effort.
  • The War Industries Board was established in 1917 to coordinate the production of war materials, set industrial priorities, and fix prices with Presidential approval.

Post-War Economic Policies and the 1920s Boom

  • After a brief slump, the U.S. economy quickly recovered post-WWI.
  • Presidents Harding and Coolidge reduced government involvement in business, favoring a return to a free-market economy.
  • Coolidge's pro-business stance, encapsulated by "The business of the American people is business," led to the economic boom of the 1920s.

Industrial Expansion and Labor Dynamics

  • The 1920s saw significant industrial expansion due to technological advancements and increased consumer goods production.
  • The war and subsequent economic conditions led to improved wages and working conditions, contributing to a rise in labor union membership.
  • Many labor protections established during the war were rolled back, reflecting the era's pro-capitalist focus on industrial growth over workers' rights.

Immigration and Isolationism

  • The 1920s saw tighter immigration restrictions, reflecting growing nativist sentiment.
  • The Immigration Act of 1924 limited immigration from southern and eastern Europe and Asia, mirroring isolationist tendencies in foreign policy.

The Role of Technology and Consumerism

  • Technological advancements shaped early 20th-century capitalism in the USA.
  • Mass production techniques, like Ford’s assembly line, reduced costs and made consumer goods accessible.
  • Advertising and credit systems encouraged increased consumer spending.

Stock Market and Economic Speculation

  • The prosperity of the 1920s was tied to the stock market, with Wall Street symbolizing financial might.
  • Soaring stock values were driven by rampant speculation, creating an unsustainable bubble.
  • The stock market crash of 1929 marked the start of the Great Depression.

Causes of the Wall Street Crash of 1929

  • The Wall Street Crash of 1929 was marked by Black Tuesday on October 29th.
  • Rampant speculation led to unprecedented growth in the stock market in the 1920's.
  • Investors bought stocks on margin, amplifying gains but creating catastrophic impacts when the market declined.
  • Many stocks traded at prices exceeding companies' profits and potential earnings, leading to an economic bubble.
  • Banks extended excessive credit to investors and investors couldn't repay loans after the market crashed, leading to bankruptcies and financial strain on banks.
  • Wealth was unevenly distributed, and over reliance on credit and stagnation of real wages contributed to instability.
  • Minimal government oversight of the stock market allowed for speculative excess and risky investment practices.

Economic and Social Impact of the Wall Street Crash

  • Over 650 banks failed in 1929, and around 4,000 more by 1933 undermining public confidence in the financial system.
  • Businesses failed, and unemployment reached 25% at the depression's peak, reducing consumer spending.
  • Industrial output fell sharply, and deflation set in, harming the economy as price decreases led to decreased revenues for businesses.
  • The economic downturn resulted in poverty, loss of homes, and a decline in living standards.
  • Initial governmental response was inadequate, leading to the election of Franklin D. Roosevelt, who introduced the New Deal to restore economic stability.

Overview of the New Deal

  • The New Deal was a series of programs and projects introduced by Franklin D. Roosevelt (FDR) from 1933 to 1945 to revitalize the U.S. economy during the Great Depression.
  • Roosevelt's approach actively involved the federal government in economic recovery

Phases of the New Delegate

  • First New Deal (1933-1935): Focused on immediate relief for the needy, economic recovery, and financial reforms to prevent future depressions.
  • Second New Deal (1935-1940): Introduced comprehensive reforms in social security, labor relations, and housing, and further entrenching the government's role in economic management.

Key Programs and Legislation

  • Emergency Banking Relief Act (1933): Stabilized the banking system by closing insolvent banks and reorganizing the banking sector.
  • Civilian Conservation Corps (CCC) and Works Progress Administration (WPA): Provided millions of jobs through public works projects.
  • Agricultural Adjustment Act (AAA) and Tennessee Valley Authority (TVA): Aimed at revitalizing agriculture and developing regional economies.
  • Social Security Act (1935): Established a system of old-age benefits and unemployment insurance.
  • National Labor Relations Act (Wagner Act, 1935): Strengthened the rights of labor unions.

Strengthening Aspects

  • The introduction of regulatory bodies and frameworks helped stabilize key industries and financial systems, preventing speculative excesses.
  • Social security, unemployment insurance, and labor protections helped create a more sustainable economic environment by increasing job security and consumer confidence.
  • Government spending on public works injected much-needed capital into the economy, boosting demand and helping to stabilize the economic downturn.

Weakening Aspects

  • Expansion of the federal government's role in the economy was seen as a move away from pure capitalist principles of minimal government intervention.
  • Business leaders criticized the New Deal for imposing excessive regulations and high taxes, which they argued stifled entrepreneurial initiative and economic freedom.
  • Critics argued that the New Deal programs created a dependency on government assistance, which could undermine the work ethic and entrepreneurial spirit necessary for a capitalist economy.

Legacy of the New Deal

  • The New Deal led to significant changes in American society and governance, laying the groundwork for modern welfare states and shaping future economic policies.
  • It marked a shift towards a mixed economy where government and private enterprise play roles in regulating and sustaining economic activity.
  • The New Deal helped the United States recover from the depths of the Great Depression by improving infrastructure, providing jobs, and restoring faith in the banking system
  • Many economic gains were reversed in the 1937-1938 recession, and it was ultimately the economic mobilization of World War II that lifted the U.S. fully out of the Depression.

Increased Industrial Production

  • The anticipation of war led to a ramp up in military production.
  • Industries that had suffered found new life in producing military vehicles, weaponry, and other logistics.

Employment Surge

  • The war effort created millions of jobs in the U.S., drastically reducing unemployment rates.
  • Both men and women entered the workforce in unprecedented numbers, with women taking on roles traditionally held by men.

Government Spending

  • Federal spending skyrocketed during WWII, exceeding the expenditures of the New Deal and stimulating economic activity across various sectors.
  • The government funded massive projects like the construction of new factories and infrastructure improvements, which further bolstered economic growth.

Neutrality Acts and Economic Position

  • Initially, these acts prohibited arms sales and loans to nations at war, reflecting the isolationist sentiment.
  • The U.S. policy evolved, allowing trade with belligerent nations if they paid cash and transported goods on their own ships, which boosted exports without entangling the nation in foreign alliances.

Transformative Impact on the U.S. Economy

  • The economic mobilization for war effectively ended the Great Depression providing jobs and revitalizing industries.
  • War related research and development led to innovations such as radar, jet engines, and the atomic energy sector.
  • As tensions in Europe and Asia escalated, the U.S. began to expand its manufacturing capacity to produce war materials, even before it officially entered the war in 1941.
  • The iconic figure of "Rosie the Riveter" epitomized women taking on roles traditionally held by men, who were now overseas.
  • The injection of capital stimulated economic activity across various sectors.
  • Over time, the U.S. policy evolved, allowing trade with belligerent nations as long as they paid cash and transported goods on their own ships.

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