Original post by chl0ejasmineeEconomic collapse in 1929 was essentially due to a collection of reasons which interconnect:
- 1920s Republican Policies (High tariffs: 1921 Emergency Tariff Act & 1922 Fordney McCumber Act limited trade, Pro-business policies allowed price fixing and monopolies, Low taxes only benefitted the Middle Classes and distribution income upwards, No regulation of Wall Street and the Banking System allowed them to collapse)
- Weaknesses of the Banking System: The banking system was not regulated, many banks were small and operated independently, there was no protection or security of banks.
- The Wall Street Crash: Crashed due to unregulation, low interest rates, buying on the margin etc.
- Agriculture Problems: Farming was devastated due to over production post WW1, they used new technologies such as fertilisers which increased this and high tariffs reduced their exports. Net farm income decline, 54% of farmers had an annual income of less than $1000 and 66% operated at a loss, farm prices were declining. This all meant farmers couldn't prosper or consume.
- Overproduction in New & Old Industries: Old industries declined due to insufficient demand which derived from new industries limiting their markets, high tariffs limiting their trade etc. This in turn led to a decline in prices, thus decline in wages and employment, which inevitably led to underconsumption and lack of purchasing power.
- The International Dimension: WW1 meant that countries such as GB/France had war debts which limited their purchasing power and Germany was in a recession. This created a decline in international trade ($36 billion - $12 billion) But this was fuelled by republican policies and their high tariffs.
Who benefited from the boom:
Benefited:
- Middle Classes (due to low taxes)
- Big businesses (pro-business: price fixing/monopolies/cartels and anti-trade unions)
Didn't benefit:
- Farming (high tariffs, devastation post WW1 made worse by the introduction of new technologies etc)
- Black & Native Americans (many were sharecroppers, 85% lived in rural America, many had incomes of less than $200 a year and those who migrated north had to live in ghettos and faced discrimination)
- Trade Unions (government was against their interests)
- Women (to an extent; remained in low paid jobs, domestic service, discriminated in wages but also gained the vote and 23-24% were employed)
Reasons for the boom:
(These are also interlinked)
WW1: laid economic foundations for prosperity (increased trade, employment, wages etc)
New Technologies: such as the car industry (Ford/General Motors) which in turn increased its suppliers industries (rubber/plate glass/steel) electrical industry (Insull) chemical (Du Pont)
Working Practices: Taylorism: scientific management: faster production, cheaper, mass production, more efficient.
Consumerism & Advertising: Billboards, radios, cinemas: raised profits (80%) and share dividends (65%) and sale of consumer goods ($7 billion on easy credit)
Republican policies: High tariffs (gave a domestic market) Low taxes (increased purchasing power) Pro business policies (allowed businesses to prosper)
KKK:
Influential:
1920 it had 100,000 members > 5 million 19125
Not simply concentrated in rural areas, also in big cities eg Dallas/Detriot
Entered congress in 1924 (Klan members were governors/senators) and contributed to Al Smith's defeat
Not simply working class members of the Klan: also middle class
Controlled politicians and other forces (police force in Birmingham)
Obviously there is loads to counter against this.
Hope any of this helps! Message me if you need more evidence etc.