Germany had to pay huge reparations to allied powers

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= Germany had to pay huge reparations to allied powers= potential markets also lost due to the world’s first communist state in Russia ( and the conflict that the USSR had with capitalist countries)(1920-1929) = US manufacturing rose by 50% - However US exports only rose 38%Consumption within the US was also artificially high due to the existance of easy credit (through hire purchase schemes) = thousands of Americans = buying good and paying a small price upfront= once the confidence of the economy began to disappear following the Wall Street Crash (1929) = consumer spending dropped rapidly The difference in wealth between the extremely rich and the bottom third of the population = meant that the economic boom (1920s) unsustainable (not able to be maintained) Too many goods were being produced in an economy that lacked the spending power to buy themThe stock market crash of 1929 revealed the weakness of the US economy LAND SPECULATION;The first problem the USA faced was not the wall street crash of 1929 it was actually the land speculation that hit Florida (1926) = many saw the 1920’s as a time of unrivalled prosperity average incomes rose + the idea of owning property in sunshine Florida was seen as very attractive to people(extremely-rich industrialists) such as – T. Coleman Du Pont (owned Americas largest chemical company) saw the opportunity to buy up land in Florida and sell it to the prosperous populations that face cold winters (North-eastern USA) Growth of motor cars made the trip to Florida even more accessible (hundreds going down to Florida to buy their dream home)New houses built in; Miami Beach / Palm Beach / Coral Gables Miami population grew = 30,000 130,000 HOWEVER BY 1926 = Florida Land boom had collapsed= lack of infrastructure (railway / roads) = prevented developmentSwindlers (use of deception to deprive someone of money) like unscrupulous (having no moral principles) speculators – sold land in non-existent town of Nettie (this gave the land boom a very bad name = causing a loss in confidence)1925 – “Internal revenue service” began taxing profits on property speculation = this reduced levels of speculation and confidence September 1926 = a huge hurricane hit Southern Florida – killing 400 people and left 50,000 homelessDissuaded (opposite of persuaded – persuade not) many from investing in property (in Florida) Investors buying property in 1925 reduced to a trickle (?) by 1927
BULL MARKET;another major reason due to the 1929 crash the over speculation on future share prices the USA had had “Bear markets” (period where share prices fall) however it was thought to be that the 1920s (roaring twenties) would be a never-ending “Bull market” (period where share prices go up) share values on the NYSE (New York Stock Exchange) almost doubled between 1925-1929 – from $34 billion $64 billionthe idea that even the average American could ‘get rich quick’ through buyingshares = led to considerable share speculation1929 = many people were buying shares “at the margin” (borrow money and buy shares at 10% of the share price)

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