The Stock Market

Term Paper Title	The Stock Market
# of Words	476
# of Pages (250 words per page double spaced)	1.9

The Stock Market

On Thursday October 24, 1929 the headline, �Prices of Stocks Crash,� boldly lined the front page of the New York Times.  Within only hours the country had lost over $4,000,000,000.   The most feared nightmare had happened.  Not only did bankers and brokers loose their fortunes; some ordinary working people were financially ruined.   But what created this devastation?  Why did the bottom of the stock market fall out so quickly?
Today, 70 years later, many people speculate and even suggest explanations for the 1929 stock market crash.  However, most of these theories can not be proven.  The only explanation that is widely agreed on is the understanding that the stock market was built on a rocky foundation.
The 1920�s were booming.  Wages and customer spending began to soar.  In fact, the economic growth made people optimistic, convincing them it was safe to invest in the stock market.   The middle class saw easy opportunities to make millions.  There was just one problem, large businesses had already thrown huge amounts of money into the stock market causing prices of stocks to be greatly overpriced.  The middle class was forced into buying stocks on margins, in other words, loans.  These margins are what held up most of the stock market.  Basically, half the money invested in the market was owed.  Therefore, just a small drop could have serious consequences.
Most economist of that time began warning investors tha...

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