1. Superficial Prosperity

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

3. 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

4. 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?

5. Margin
Buying

6. 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)

7. Crisis in Agriculture
42% of Americans were farmers in % 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

8. 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

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

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

11. 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)

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

13. 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.)