Be sure to read on down to find out about the giveaway!
New technologies and inventions not only preceded the spike in the stock market but they also were the driving force behind it. Contributions to our society's enthusiasm were the discoveries and inventions of a liquid-fueled rocket, traffic signals, radios, the first television broadcast, refrigeration, band aids,
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The twenties brought with it so much wealth that the stock market no longer seemed like a risky venture. More and more invested in the market causing it to fluxuate up and down during 1925 and 1926. But by 1927 the market was in a very strong upward trend. This enticed people to become active in their savings and many pulled their money from the banks to invest, some even borrowing money to invest.
By 1928 the market boomed. The common man could now invest and become rich. The stock market was no longer for long-term investments. It was a way to fast success. The newspapers were filled with working people such as waitresses, teachers and laborers becoming rich from their investments. The market went into a fevered pitch.
Before long everyone wanted in the get-rich-quick scheme. People who couldn't afford to buy stocks mortgaged their homes, used all their savings or bought on margin (this is when a buyer only put down 10 to 20 percent of his own money and then borrowed 80 to 90 percent of the cost of the stock from his broker.) The problem was that buying on margin was very risky. If the stock went below the loan amount the broker could and usually would issue a 'margin call'. This meant the buyer now had to come up with the cash immediately to pay back his loan.
Not only people invested in the stock market but businesses began to invest. Banks unbeknown to their customers began investing in the market. From 1921 to 1929 the Dow Jones sky rocketed from 60 to 400 making many of the investors millionaires. it seemed to be a sure thing and soon everyone was trying to make a quick killing.
The Federal Reserve recognized the over inflated economy and stock market in 1929 and in an attempt to calm things raised interest rates. In October investors started to realize that the boom was an over-inflated bubble. They started to liquidate their shares causing panic and sending the Dow into a crises crash. By the end of the year $16 billion dollars worth of market capitalization had been lost from the New York Stock Exchange.
Remember the banks that had invested unbeknownst to their clients? They lost all their depositors savings when the stocks fell. A run on the banks took place as people panicked and tried to withdraw their money. But the money wasn't there because of the bank's market investments. This only added to the fear. As the market plummeted to a devastating low, people lost their homes, their life savings, and their confidence in America's dream.
Thousands of banks closed and unemployment went out the roof as the crash of 1929 unfolded. Suicides were a daily occurrence as men jumped from windows preferring to face death rather than a life of poverty.The Great Depression had come to America. Our country would never be the same.
I'm giving away a devotional of Chicken Soup for the Soul on CD and a package of pretty plaid note cards. Leave a comment to be entered in the drawing! Ends August 12th.
She and her husband have four children and live
in upstate South Carolina. She spent thirteen years coaching cheerleading and
trying to make a difference in young girls’ lives. In her spare time, she sews,
paints, knits, camps (in a fifth wheel) and plays with the grandbabies.
I'm giving away a devotional of Chicken Soup for the Soul on CD and a package of pretty plaid note cards. Leave a comment to be entered in the drawing! Ends August 12th.
Debbie Lynne Costello is represented by Tamela Hancock Murray of the Steve Laube
Agency. She attended Heritage University, where she studied Journalism and
worked in the editing department.
Her stories are set mostly in Charleston,
SC and Savannah, GA during the late 19th century.
Loved this post! Hearing about how well the stock market was doing is great, but then it went downhill fast. That was a sad time. I can't imagine what people went through.
ReplyDeletetscmshupe [at] pemtel [dot] net
Hey Sally, Thanks so much for coming by! I've always been fascinated with that time. I've sat and listened to my grandparents talk about it. We always think about the wealthy being the ones that suffered so much during the market crash, so finding out that middle class people wanting to get in on the the get rich quick scheme lost everything was a real surprise.
ReplyDeleteSuch a devastating time for so many!
ReplyDeleteAmen, Britney. A lot of people chose to die rather than face poverty. So so sad.
ReplyDeleteIt's sad to say that I never fully understood all that happened with the stock market crash. Now it all makes sense. Thanks for sharing this.
ReplyDeleteThanks for the awesome write up. Very interesting!
ReplyDeleteThanks for coming by!
Deletemy grandpa would not keep his money in the bank as he lived through this and kept his money hidden at home. Thanks,
ReplyDeleteRhonda
rhonda_nash_hall AT comcast DOT net
There are a lot of older people who didn't trust banks after the great depression. Thanks for coming by Rhonda.
DeleteMy dad told me many stories of the depression, he even rode the rails to find work where ever he could. Love the pics they are fantastic.
ReplyDeletecenya2 at Hotmail dot com
Thank you, Marjorie! I bet you it was interesting listening to his stories. I'd heard about riding the rails. A dangerous thing. But when it came to feeding your family men were willing to do what they had to. thanks for sharing!
DeleteI wish I had asked him more about this time.
DeleteHow interesting ~ a revelation. I knew there was a rush on the banks, but did not know the banks had invested depositors money, which was subsequently lost before the banks opened or shut their doors. Kathleen ~ Lane Hill House lanehillhouse[at]centurylink[dot]net
ReplyDeleteHey Kathleen. Thanks for coming by. I wasn't aware of this either. It was so interesting and explained some things that I didn't understand before.
ReplyDeleteWow, what a different time from now. Great info to remind me how good I have it!
ReplyDeletelattebooks at hotmail dot com
In so many ways its a different time. Man when I think back to when I was a kid...well, maybe I don't want to go there and give away my age. LOL> Thanks for stopping by, Susan.
ReplyDeleteMy Dad didn't trust banks so he had his own hiding place. Would love to read this.
ReplyDeleteBlessings
joeym11@frontier.com
Thanks for coming by Diana. Throwing your name into the hat. Good luck!
DeleteThis comment has been removed by the author.
DeleteEnjoyed your blog post, Debbie. Have heard my parents & grandparents talk about the depression - just glad I wasn't living during that era, although, I think my parents & grandparents fared better than a lot of people because they were farmers & grew a lot of their own food - preventing them from having to spend as much money.
ReplyDeleteThanks for the giveaway opportunity!
bonnieroof60(at)yahoo(dot)com
Growing your own food was definitely a huge asset during those years. I love to hear the stories my grandmother tells about the depression. She was a young, newly married woman. So interesting.Thanks for coming by Bonnie. Good luck!
DeleteAND THE WINNER IS...DIANA MONTGOMERY! CONGRATULATIONS!
ReplyDeleteThanks so much was happy to hear I won! Can't wait to listen to it.
DeleteBlessings
Diana