Superficial Prosperity

Indicators of Superficial Prosperity Stock Market Activity Overuse of Credit Crisis in Agriculture Urban / Rural Divide

Many investors purchased stock through margin buying Stock Market Activity Stock prices and numbers of investors rose steadily throughout the 1920s Many investors purchased stock through margin buying

Read “Understanding the Stock Market” Stock Market Activity Read “Understanding the Stock Market” As you read, answer the following questions: What was the benefit of owning stock (both to the stockholder and the corporation)? Describe margin buying. What is the problem of margin buying?

Margin Buying

Overuse of Credit In order to compensate for overproduction, industry spent millions on advertising to increase demand Industry pushed installment plans (credit) Americans continued to accrue debt as installment buying got out of hand (sign of fundamental weaknesses of a superficial economic prosperity)

Crisis in Agriculture 42% of Americans were farmers in 1900 - 25% of Americans were farmers in 1929 Young people were lured to cities by industrial wages, excitement of city life, and lack of prosperity in agriculture

Crisis in Agriculture Profits declined significantly after WWI for farmers Automation and leisurely living meant that most people ate less (by 1920 the average American ate 75 lbs of food less per year than they did in 1910) Less grain was needed for livestock with the advent of automobiles Prohibition laws eliminated the need for grapes for wine and barley for beer

Crisis in Agriculture Wheat in 1920 = $2.46/bushel  Wheat in 1921 = $1.33/bushel

Crisis in Agriculture Land prices dropped Farmers defaulted on mortgages and entered bankruptcy (1920-1921  more than 500,000 farmers lost their farms) Farmers migrated to urban areas in massive numbers

Government responses to the crisis: Crisis in Agriculture Government responses to the crisis: Federal Farm Loan Banks = lent money for mortgages on more favorable terms than most banks Farmers given the right to set up cooperatives and pools to help regulate prices McNary-Haugen Bill = government would purchase land from farmers to sell to foreign investors (vetoed twice by Coolidge)

Urban / Rural Divide “Farmers and City Slickers” – phrase indicated that the philosophical and social divisions among urban and rural Americans

Urban / Rural Divide Read the “Farmers and City Slickers” section on pages 333 and 334 of your textbook. As you read, take notes on the ways urban and rural Americans were different. (Focus especially on the role of women, marriage, and religion.)