1929: The Great Crash (8 of 30)

1929: The Great Crash

The Stock Market was the world.
I started in 1928 because, like many young people, I wanted to go to the place where everybody was making all this money.
My first job was to be a messenger boy on the floor of the Exchange.
It took only a week or two to find out that, most of the time, people are greedy.
People had so much faith in the bull market that they borrowed increasing sums of money to speculate on rising share prices.
This way of buying shares was known as "buying on margin".
The investor was required to put down only part of the money, with their broker funding the rest.

The culture of "buy now, pay later" had spread to the Stock Market.
Buying stocks on margin means essentially that you're buying them with borrowed money.
By the late 1920s, 90% of the purchase price of the stock is being made with borrowed money.
There were no rules about how much you could borrow, and people borrowed enormous sums of money to buy stocks.
You could buy $100 stock for $25, and then the brokerage firm would loan you the other 75.
And if the stock went up - and in the late '20s, everything seemed to go up and up - then that $25 could turn into an investment worth 200 or 300.
So it became a huge part of the US economy to loan money for the Stock Market.
In fact, in the late 1920s, nearly 40 cents of every dollar loaned was for stocks.
This vast influx of borrowed money into the Stock Market created more demand for shares, pushing prices ever upwards.