First noticeable in 1925, the stock market prices began to rise as more people invested their money. During 1925 and 1926, the stock prices vacillated but in 1927, it had an upward trend. The stock market boom had started by 1928. The stock market was no longer a long-term investment because the boom changed the investor’s way of thinking.
During 1928, the stock market was common among any class of the roaring twenties. Ordinary people talked about and many made millions off the stock market. Many people did not have money to pay the total prices of stocks; people bought stocks “on margin”, meaning that the buyer would put down some of his own money, but the rest the buyer would borrow from a broker. Thus the buyer borrowed about 80-90 percent of the cost of the stock and only 10-20 percent of his money.
This way of investing money was very risky. At times brokers issued a “margin call”. In this case the buyer had to pay back the money he borrowed earlier. Most ordinary people bought these stocks on margin and ignored the risk to buy stocks on margin. Most Americans were trying to get into the stock market by early 1929. Many companies also invested money in the stock market because the profits were guaranteed. Some banks invested their customers’ money (customers’ were unaware) which created more problems.
Everything seemed great with stock market profits guaranteed. Many people were shocked when the crash hit in October. There had been warning signs before ...
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...eyond 30% in other industrialized countries. Household income, tax profits, and international trade declined over half of the value it was before.
"The Stock Market Crash of 1929." About.com 20th Century History. Web. 17 Apr. 2012.
"The Stock Market Crash of 1929 â Did You Know . . ." Stock Market Crash of 1929. 25 July 2010. Web. 17 Apr. 2012.
"Stock Prices Slump $14,000,000,000 in Nation-Wide Stampede to Unload; Bankers to Support Market Today." The New York Times. The New York Times. Web. 17 Apr. 2012.
Kennedy, David M., Lizabeth Cohen, Thomas Andrew Bailey, and Thomas Andrew Bailey. The American Pageant: A History of the Republic. 12th ed. Boston: Houghton Mifflin, 2002. Print.
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