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How Did The Stock Market Affect The Economy In The 1920s

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Glamor, drinking, optimism, flappers, and prosperity all describe the 1920s. It was a period following the United States' involvement in World War I from 1914-1918. The US had successfully entered the war in 1917. Their effort and contribution helped win the war and shaped US attitudes for the next decade. The stock market value increased after the war, and it reached record-breaking highs. This high plummeted near the end of 1929. During a time of excitement and hope, behind the scenes, the stock market crash was brewing, which would shock, impact, and change the American economy. Following a decade named “The Roaring ’20s,” the stock market crashed on October 29, 1929. After World War I, America was high on patriotism and nationalism. The shock and victory affected the US society; there was a sense of pride ringing throughout the nation. This pride was evident as America had tremendous economic growth as the nation's total …show more content…

Just a month prior to the crash, the stock market reached a historic high on September 3, 1929. The historic high was due to Americans' ability to invest in the stock market by buying on a margin. The practice of buying on margin allowed a person to acquire stock by paying in cash only a portion of the price of a stock, typically as little as 10 percent and the balance was covered by a loan from a broker (Riggs). By early October, the signs became clear the economy could not support the stock market numbers. Linda Paulson, “Stock Market Crash” displays that with the rise, “home building had declined, the farming industry was deteriorating, production lines slowed, and stocks began to decline.” It was clear to any American the economy was in terrible shape and declining rapidly. In fear of what was to come, investors started to sell shares rapidly. Despite their efforts to correct the market, it crashed on October 29, 1929, by 37.5

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