Question

What industrial weakness signalled a declining economy in the 1920s?

Answer 1

Hint: Textiles, coal, and railroads, which were once critical to the economy's native well-being, were now hardly usable. Few were rich, but the majority struggled to make ends meet. Farmers grew more vegetables and raised more cattle than they could market profitably, and important businesses suffered.

Complete answer:
The American economy was fundamentally broken by 1929. The following industrial weakness signalled a declining economy :
- The economic recovery was beginning to drop. It was too reliant on automobiles and luxury products.
- Most sectors of the economy were affected by overproduction and underconsumption.
- Industries that had been there for a long time were in decline.
- From 22 billion dollars in 1919 to 13 billion dollars in 1929, farm profits collapsed. The debts of farmers have risen to 2 billion dollar. When cotton crops died or prices fell, sharecroppers were often left penniless.
- In America, wealth was rather unequally distributed. Just 5% of the population received a third of all taxes.
- Wages did not rise at the same rate as earnings, especially in the construction sector, where pay increased by just 4% over the decade.
- There were 12 million people living in poverty in the United States. Immigrants and black Americans were the hardest affected.
- The number of hours worked remained high.
- There were a lot of people who were in debt. Credit was used to purchase 60% of vehicles and 80% of radios.
- A total of 20 million investors participated in the stock exchange by buying and selling shares in order to benefit. This is referred to as betting, and it resulted in overvalued stocks. Ordinary people were “on the margin” buying stocks.

Note: The Great Depression of 1929 created chaos on the American economy. one third in all banks went bankrupt. Unemployment has risen to 25%, and homelessness has intensified. Housing rates fell by 67 percent, foreign trade fell by 65 percent, and deflation spiked to over 10%.