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Problems in the US Economy (Rural Poverty (Affected African Americans,…
Problems in the US Economy
Rural Poverty
Affected African Americans, Whites, and Immigrants
Despite agricultural overproduction and successive attempts in Congress to provide relief, the agricultural economy of the 1920's experienced an ongoing depression
Large surpluses were accompanied by falling prices at a time when American farmers were burdened by heavy debt
Between 1920 and 1932, one in four farms was sold to meet financial obligations and many farmers migrated to urban areas
many farmers lived in unhygienic conditions in tin shacks, without electricity or running water
In 1929, when the average monthly income of a skilled manufacturing worker might be $140, farm workers were earning only $49 a month
In 1920, the total population was 106,466,000, of these; 31'614,000 live on land and the rest lived in towns
The growth of urbanisation was particularly significant because farming had been a predominant part of American life and culture
Uneven distribution of wealth
Distribution of income
The income of people in the high society increased by 75%, thus creating tension between the upper class and the working class/minorities
People who were wealthy in America were extremely rich, but few people shared in this prosperity
Only 5% of the American population owned a third of the wealth, while 42% of the population were living below the poverty line
More than 70% of the American population earned less than 2500$ a year which was the minimum amount needed for keeping a family alive
Many Americans lost their jobs and became bankrupt, and couldn't provide enough to sustain their families
Distribution of Industry
Old industries were centred in the North, East, and Midwest, especially in Illinois, Michigan, and Pennsylvania
The introduction of synthetic fibres reduced demand for cotton... that and young women's fashion switching from longer to shorter skirts which required less material
Stability of employment
Employment was often unstable as people often worked part-time jobs, and due to the fluctuation demands for goods
Robert and Helen Lynd found that during the first 9 months of 1924, of 165 families they surveyed, 72% had been unemployed at some stage. of these, 43% had been jobless for over a month
Women
By 1930, there were only 150 women dentist, >100 female accountants
In 1928, the league of women voters reported that while 145 women held seats in state legislature, there were only two women among the 435 delegates in the house of representatives
Native and African Americans
They were negatively discriminated and were mainly concentrated in "ghetto" areas such as Harlem and New-York
African Americans made up 10% of the total population and out of those, 85% still lived in the south, itself the poorest region in America
'Get Rich Quick' schemes
Many Americans invested in hugely speculative ventures and inevitably lost all their money
Charles Ponzi
In the early 1920's Charles Ponzi, a former vegetable seller, convinced thousands of gullible investors into investing into his ventures in return for 50% of the profits within 90 days, and naturally none of them ever saw a cent of their money again
When sentencing him to prison, the judge criticized his victims for their greed. Ponzi had not forced the people to part with their money
The period saw other more larger speculations, notable during the Florida Land Boom and on the stock exchange in the later part of the decade
The Florida Land Boom
While on bail awaiting trial, Ponzi found employment selling land in Florida. This was a venture well-suited to his talents
In 1910, Miami was the most populated state, but Florida's population increased hugely when wealthy industrialists came and built luxurious hotels, and with the motor car to come, Florida's renowned all year sunshine would become more easily accessible to virtually everyone
Between 1920 and 1925, the population of Florida increased from 968,000 to 1.2 million
Stock Market Speculations
Plenty of people started to invest in stocks with the help of easily accessible credit. loaned to them by their brokers with a 10% interest rate
Cycles of International Debt
Loans/Aid
Dawes Plan 1924
Young Plan 1929
The USA helped Germany pay off its debt towards Europe who then used that money to pay back their own debt to America
The cycles of international debts was the heart of the US's economic problems
America's priority was for Europe to repay the loans they had taken out to finance the first world war
When the Europeans inability to pay came up, President Coolidge is reported to have said 'They hired the money, didn't they?' Although this quotation may have been fictitious, it did accurately express the sentiments of many Americans that the Europeans should repay their debts
Slow Down
The Boom was dependent on continuing domestic consumption. High tariffs and generally depressed economies in Europe meant that American producers could sell comparatively little abroad. There were, by the late 1920's, three indicators that the boom was slowing down:
Three Indicators:
The Construction industry: After the boom, demand for housing and other large scale construction decreased, in its turn decreasing the demand for construction materials, as well as transport, plumbing, etc...
Falling Domestic demand: The market overproduced and became flooded with goods that could not be sold, more and more people were were in no position to spend on non-essential items
Problems in small industries: The decade witnessed the growth of huge corporations with considerable marketing power. Due to this, for every 4 smaller businesses that succeeded, 3 others failed. And the government was no longer willing to help failing businesses