A Level History - America - Practice Exam

What was one major factor leading to the decline of industries like coal in the 1920s?

1. Overproduction leading to falling prices

2. Increased foreign competition

3. High demand for coal

4. Lack of technological advancement

The correct answer is: Overproduction leading to falling prices

The decline of industries like coal in the 1920s can be significantly attributed to overproduction leading to falling prices. During this decade, advances in technology and production methods had allowed coal companies to increase their output substantially. However, this overabundance of coal led to a surplus in the market. With more coal available than there was demand, prices began to drop sharply. This decline in prices made it difficult for coal miners and companies to maintain profitability, resulting in factory closures and job losses within the industry. The other factors mentioned do have relevance to the context of the coal industry, but they do not explain the primary cause as effectively as overproduction. Increased foreign competition certainly posed challenges, as other countries began to supply cheaper alternatives, yet the immediate issue of market saturation had a more direct impact on the coal industry's profitability during this period. High demand for coal would generally support the industry's growth, but the 1920s observed fluctuations and diminishing demand; thus, this option does not apply. Similarly, while the lack of technological advancement could have contributed to inefficiencies in certain sectors, the coal industry at the time was not fundamentally stalled by technological issues compared to the consequences of overproduction.