The 1920’s were a time of peace and great prosperity. After World War One many machines were invented to improve the way of life. Many people bought stocks fast because they were seen as safe because of the economic boom. Many investors began to purchase stocks in margins, which is when they would borrow money to get even more money. Ex. for every dollar they borrowed they would get nine dollars.From 1921 to 1929, the Dow Jones rocketed from 60 to 400! Stock market trading became America’s favorite pastime.Few people actually studied the fundamentals of the companies they invested in. Most investors never thought a crash was possible. To them the stock market “always went up”.The Great Depression of 1929 was a worldwide depression that lasted for 10 years. On Oct.24 1929 when 12.9 shares were being sold in one day, which was triple the amount that is usually sold. Share prices fell 15-20 % which caused the stock market to crash. Un employment reached 25% during the Great Depression. GDP was cut in half, from $103 to $55 billion. This was partly because of deflation where prices fell 10% per year.
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