The stock market crash

The stock market crash - The stock market crash. Stocks...

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Unformatted text preview: The stock market crash. Stocks were bought on credit like many other commodities in the '20s. Millions of investors paid as little as 25 percent of the face value of a stock, and paid off the balance when the stock was sold after the price went up. This practice of buying on margin contributed to the rampant speculation in the market. Americans who had no knowledge of what to do in the market put their money in investment trusts, a forerunner of today's mutual funds, and let professionals determine which stocks to buy. Everybody profited as long as prices continued to go up, and the market value of stocks did climb from $27 billion to $87 billion between 1925 and 1929. Stock prices began to decline in early September 1929, however. On October 24 (known as Black Thursday) prices fell sharply as investors unloaded their stocks. The following Tuesday, 16 million Thursday) prices fell sharply as investors unloaded their stocks....
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