Weaknesses in the Economy

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Unequal Society

African Americans particulary bad. Sharecroppers (work for farmers, not paid but given land to provide crop for family) Settled in Harlem, 42% higher death rate

George Shayler (African-American Intellect)- Reason why depression didn't have an impact on negros like it did on whites was because they were in the depression all the time

Divides between rich and poor- combined wealth of top 1% equated to 42% of bottom- Maldistribution

Brookings institute 1900-1930= 70 million below poerty line

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Declining Industries

Really bad business- Construction-1926- Florida Land Boom

Coal Mining

Textiles- Women wearing less e.g. shorter skirts and flapper dresses- Discovery of Synthetic fabircs e.g. Rayon

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Declining Industries Continued...


  • Over-production
  • Due to prohibition- grain was not being used for alcohol
  • Europe doesn't need it as much
  • Use of tractors- efficient
  • Fertilisers helped to produce more
  • Competition from abroad increased- Canada and Argentina
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John Freeman- 'The capacity to produce had out ran the capcity to consume'

Saturated Market

Not enough consumers

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International Problems

Europe struggling due to the effects of the war

China- Political unrest- Can't trade

Russia- Communist- Can't trade

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Government Policies

Farmers wanted them to buy excess

McNarry- Haughen Bill-1926- Coolidge got rid of it as it went against Lassiez-Faire

Tariffs- Low taxation used, rich get richer-Retalliatory tariffs meant that they could not sell left over produce abroad

Lassiez-Faire- Government would not intervene in struggling industries, -only 1/3 of banks were regulated

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The Banking System

David Kennedy- 'The banks were rotten, even in good times'

40 banks a day closed-1932

A run on the bank- people wanted thier money back

Problem was they were too small and too many- 30,000- 1929

1/3 of banks under federal reserve

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