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Superficial Prosperity

Superficial Prosperity. Indicators of Superficial Prosperity. Stock Market Activity Overuse of Credit Crisis in Agriculture Urban / Rural Divide. Stock Market Activity. Stock prices and numbers of investors rose steadily throughout the 1920s

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Superficial Prosperity

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  1. Superficial Prosperity

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

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

  4. 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 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

  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 (1920-1921  more than 500,000 farmers lost their farms) • Farmers migrated to urban areas in massive numbers

  11. 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.)

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