Beginning of the Great Depression 1920 – 1932 AP U.S. History B Mr. W.

Weaknesses of the 1920s Economy Failing old industries being replaced by newer industries; Farmers’ plight; Florida real estate boom goes bust; Overproduction from mechanization, plus unemployment; Weakening world economy; Buying stock on margin; Uneven distribution of wealth.

Failing Old Industries Textile industry decreased b/c of changing women’s fashions. Railroads had to shrink b/c of trucks and cars moving goods / people. Coal industry hit hard b/c of electric light, heating.

Farmers’ plight – The Dust Bowl A decade long drought that forced 1/3 of the Great Plains farmers off of their land. Dust storms would destroy crops and cause “dust pneumonia.”

Farmers’ Plight – Overproduction Coolidge had twice vetoed the McNary- Haugen Bill which would have allowed the fed government to buy surplus wheat and store it for export. Because of high American tariffs, other countries raised tariffs on American foodstuffs, and farmers were unable to sell their excess products.

Florida Real Estate Boom 1920 – 1926 Miami and Biscayne Bay were being bought quickly and then flipped for higher prices. As long as they could find someone to buy, prices went up. The sales cooled off by 1925 and then a hurricane hit Miami in 1926.

Mechanization - Overproduction By 1920, many factories had adopted “Fordism” or the assembly line and mass production. People were out of work and couldn’t buy the stuff American factories were cranking out.

Weakened World Economy Because of Germany’s hyperinflation in , and Britain and France’s inability to sell goods in America (because of the high tariffs), Europe’s economy never fully recovered from World War I. Plus, Britain and France still had to pay off war loans to the U.S. and couldn’t rebuild or recover as quickly as the U.S. had done.

Buying on Margin! -Those who invested in the stock market could make money between by borrowing the majority of a stock purchase. -For instance, borrowers paid % down of the purchase price and the bank paid the rest. Banks agreed to this b/c for three years, the stock market could NOT fail. Prices kept going up. Banks also borrowed from other banks to keep the gravy train rolling. -In addition to buying on margin, many Americans were buying goods on credit. Americans appeared wealthier b/c they had more stuff, but they were in serious debt.

Uneven Distribution of Wealth 2/3 of Americans made less than $2,500 / year ($34K in 2014$$). This was the minimum amount needed to have a decent living. Today’s federal poverty line for a family of four is $23,550 / year. Today’s average household wages are $71,000 / year. 1/5 of the nation lived at a barely subsistence level.

New vocabulary Hoovervilles – temporary shack cities/towns for the homeless; Hoover flags – empty pockets pulled out of their pants; Hoover blankets – newspapers used like a blanket; Hoover wagons – horse- drawn cars; Hoover leather – cardboard used as the sole of a shoe. The blame goes to Hoover