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Written by Amanda Pegher, Susie Spitnale, John Zachok, Brooke Hambright


The 1920s was a prosperous time known by many names. Some include the Roaring Twenties, the Jazz Age, the Age of Wonderful Nonsense and the Age of Intolerance. During this time many people invested in the stock market. As the stock market rose even farther, more and more people invested. Most of them putting all of their money in. There are many different and interesting things that occurred in the market but the most devastating thing by far was the Stock Market Crash of 1928.

The stock market was known as a sketchy environment, but not during the 1920's. People started investing in the stock market like crazy. As the more people invested the more stocks would increase. It started to become more noticeable during 1925. Stocks were going up and down during 1925 through 1926. It was also followed by a strong increase trend in 1927. The powerful bull market encouraged even more people to invest. By 1928, the stock market boom had begun. It changed the way investors looked at the stock market. In 1928, the stock market was a place where people believed they could become wealthy. Stocks soon became the hot topic everywhere. Newspapers reported stories about citizens with everyday jobs, who had just earned millions from the stock market. But some people didn't have the money to invest (Rosenberg 1).

When someone didn't have the money to invest in stocks, they could buy stocks on margin. When someone bought stocks on margin, it meant that the buyer would use their money, but the rest they would borrow from the broker. During the 1920's the buyer could put down only 10 to 20 percent of their own money, and borrowed 80 to 90 percent of the broker's money. Buying on margin could sometimes be unsafe. If the price of the stock decreased lower than the loan amount, the broker would do a "margin call". That meant that the buyer had to come up with the money to pay back their loan as soon as possible (Rosenberg 1).

By early 1929, people all across the US were trying to get into the stock market. Profits were seemed so gauranteed, even companies invested. Even worse, some banks would invest their customer's money. On March 25, 1929, the stock market experienced a small crash. It was a small preview of what was coming. Prices began to drop, and margin calls were assigned all across the country. Banker Charles Mitchell made an announcement that his bank would keep lending; it stopped some of the panic (Rosenberg 1).

"The prosperity of the 1920s finally ended when the bull market suddenly showed the strain of overvaluation in the fall of 1929. The value of the stock market had more than quadrupled during the 1920s primarily because Americans had purchased stock on margin by using the future earnings from their investments to buy even more stock. Even though buying stock on margin grossly distorted the real value of the investments, most people naively assumed the market would continue to climb. Therefore, they funded their lavish lifestyles on credit
("U.S. History: 1865 through the 20th Century" 1)."

By spring 1929, more signs occurred showing that the economy might be in danger. Steel production, house construction, and car sales all slowed and decreased. By then a few people were concerned that a huge crash was in the near future. Most people ignored their warning (Rosenberg 1).

During the summer, people started forgetting about the stock market mini crash. From June to August, the stocks became very high. On September 3rd, 1929 the stock market reached its peak, with an average closing of 381.17. The market then fell sharply for a month, losing 17% of its value. Prices then recovered more than half of the losses over the next week, only to turn back down immediately afterwards.(Wikipedia) Stock prices were bobbing up and down through September to October, until the massive drop known as "
Black Thursday" (Rosenberg 1). On this day a record 12,894,650 stocks were traded (Britannica 1).

On Monday, October 28, the first "Black Monday", investors decided to get out of the market, and the slide continued with a record loss for the day of 13%. The next day, "Black Tuesday", October 29, 1929, about 16 million shares were traded. The market lost another 12% that day. The ticker did not stop running until about 7:45 that evening. The market lost $14 billion in value that day, bringing the loss for the week to $30 billion, ten times more than the annual budget of the federal government (Wikipedia).

external image 180px-Crowd_outside_nyse.jpgOctober 29, 1929, "Black Tuesday," is known as the worst day in stock market history when about 16 million stocks were traded. There were so many orders to sell that the ticker quickly fell behind and at the end of the day it was two and a half hours behind. Since everyone was selling and nearly no one was buying, stock prices collapsed. People were in a panic and they couldn't get rid of their stocks fast enough. Stocks that were originally sold for over a hundred dollars were sold for three dolars (Stewart 45). Rumors started that banks were selling and the country was panicked over 16.4 million shares of stocks were sold. The government decided to close the Stock market on Friday November 1, 1929. Then it reopened on Monday November 4, 1929 for limited hours. The stock Market seemed to level out on November 13, 1929. The market closed at 198.6 that day being the lowest ever. "The market embarked on a steady slide in April 1931 that did not end until 1932 when the market closed at 41.22 on July 8, concluding a shattering 89% decline from the peak. By then 40% of America's banks had gone out of business(Wikipedia). The stock market had not been this low since the nineteenth century. The slump continued until November 23, 1929, when prices seemed to stabilize. However, this was not the end. Over the next two years, the stock market continued to drop. In the early thirties eighty-six thousand businesses folded (Ware.63).

After the stock market crashed, the Great Depression started. Lots of people were forced to move from their homes and find jobs in different cities. But sadly, businesses couldn't afford to pay their workers. Some people had to move over and over again. Businesses went bankrupt, people lost their jobs, and people couldn't even pay for their houses or food to eat. Where ever people lived, they always heard rumors of better places to live and get jobs. The U.S was a nation that was constantly on the move. The automobile became the new vehicle of people migrating. People that were lucky enough to have small farms were able to stay there. Unlike the other people who lost their farms. Children in the Great Depression had no food or clothing to wear. The Great Depression ended in the 1930s; for some states it lasted until the 1940s.

Overall, the nation had taken a big hit from the stock market crash. Many people lost their homes, businesses and some even their lives. This was a time of great poverty and trouble. Even though the nation took a big hit form this catastrophe, we soon recovered and went back to a time of wealth and happiness. Even though the Stock Market Crash of 1929 might be far behind us, we will never forget the impact that it had on our economy and our nation.








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Work Cited

"Gail, Stewart." 1920s. 1. New York: Crestwood House, Macmillan Publishing Company, 1989.
"Rosenberg, Jennifer." The Stock Market Crash of 1929." About.com . < http://history1900s.about.com/od/1920s/a/stockcrash1929_2.htm >.
"Stock Market Crash of 1929." Encyclopedia Britannica. 2007. Encyclopedia.com. 27 Jan. 2009 <http://www.encyclopedia.com/doc/1B1-379616.html>.
"Stock Market Crash of 1929." money-zine.com. 2004. money-zine. 26 Jan 2009 <http://www.money-zine.com/Investing/Stocks/Stock-Market-Crash-of-1929/>.
"Stock Market Crash of 1929." < http://www.stock-market-crash.net/1929.htm >.
"U.S. History: 1865 through the 20th Century." Spark Notes 1. 27 Jan 2009
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"Wall Street Crash of 1929." Wikipedia.com. 2002. Wikimedia Foundation. 25 Jan 2009 <http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929>.
'Ware, Caroline Farrar." The Twentieth Century. New York: Macmillan Publishing , 1992.