Question

Which of the following factors was primarily responsible for the excess production capacity in the U.S. in the first half of the twentieth century?

A. Technological innovation revolutionized production during this time.
B. Many firms from other nations shifted their production facilities to the U.S.
C. Domestic demand was at a historic low and resulted in excess capacity.
D. Swelling labor supply of returning military after World War II.
E. Influx of migrant laborers from Europe and Japan.

Answer 1

Technological innovation was the key factor responsible for the excess production capacity in the U.S. in the first half of the twentieth century leading to a situation where goods were produced faster than the market could absorb them.

Step-by-step explanation:

The factor primarily responsible for the excess production capacity in the U.S. in the first half of the twentieth century was technological innovation that revolutionized production during this time. The industrial revolution led to a major shift from manual labor to machines, which significantly increased productivity. For instance, inventions like the mechanized seed drill, cotton gin, steam engine, and the mechanisms for textile production exemplified the technological advancements that contributed to mass production capabilities.

This surge in technological innovation allowed industries to produce goods at a rate that ultimately surpassed the purchasing capacity of the American public, leading to an accumulation of unsold goods and a decrease in prices and profits. This overproduction was not immediately absorbed by the market, causing excess capacity. Government efforts during wars, such as World War II, also contributed to an increase in productivity and output. The Lend-Lease program was a key example of how the wartime economy boosted U.S. production to meet both domestic and international needs. However, it was the peacetime technological innovations that laid the groundwork for the overcapacity seen in American industries.