Essay The stock market in the 1920s

Submitted By Saundra67
Words: 899
Pages: 4
Open Document
Pierce English
Ms. Bixler
English 131
5 June 2015

The Rise and Fall of the Roaring 20s

The period referred to as the “Roaring 20’s” was created by a unique set of circumstances in American History. The euphoria after World War I, the economy starting to boom because Americans could see progress and the short sightedness that stocks had a guaranteed return.
The 1920’s was a decade when America focused on itself. This was really the beginning of the modernization of America as we know it today. The sense of joy after the end of the war to end all wars (World War 1) helped create a nationwide atmosphere of extreme optimism. Americans looked forward to the future with a greater sense of well being, individualism, and overwhelming confidence in the country’s economic future.
The decade was jump started as industries quickly transitioned from wartime to peacetime production. A primary example was the Ford Motor Company. It began to mass produce automobiles via an assembly line that was previously used to build military equipment. Henry Ford paid workers $5 day when most were earning $2 a day. More cars meant that there was an increased need for construction of all-weather roads. Increased traffic on the roads required more gas stations, which lead to greater need for restaurants, hotels and other retail shops. Americans, wanting to keep up with their neighbors, bought new appliances, lighting and heating for their homes and thanks to America’s appetite for alcohol, illegal bootlegging was one of the most notorious endeavors that grew uncontrollably. Things were booming and Americans enjoyed this new way of life.
To say that the 1920’s stock market experienced a boom is stating the obvious. It was like a new gold rush. Stocks more than quadrupled in value and the average earning per share rose by 400 percent between 1923 and 19291. Those who warned about the value increasing so rapidly were often called doom-mongers2. Many investors became convinced that stocks were a sure thing and borrowed heavily to invest more money in the market. Some American’s buying on credit didn’t realize that buying a share of a company did not guarantee a return. But the Twenties was a decade where people had money to spend and weren’t afraid to spend it. No longer was the stock market for long-term investment. Rather the stock market had become a place where everyday people truly believed that they could become rich.
With all of this purchasing US companies boomed and so did the company shares on the stock market. Prices of the shares went up, year after year. Some bought shares in hopes of making easy money. Some borrowed money to buy shares and others bought on the margin (paying only 10 percent of the value) hoping to get rich quick and pay the full price at a later date. Buying stock was the thing to do in the 1920s. It was considered modern, and only smart, sophisticated people participated.
The market got caught up in a speculative bubble. The problem was that stock prices became separated from the real earning of a share price and overall company. Prices were not being driven by economic fundamentals but by the optimism of the investors. To make matters worse, initially there were no controls on buying and selling shares. Company shares could be purchased on the street. There were no controls on setting up companies and while many people were putting their entire life savings and what they could borrow into the stock market, fraudsters were selling shares to companies that manufactured nothing and only existed to buy and sell shares. Companies sold
Show More

Related Documents: Essay The stock market in the 1920s

An Asset Bubble In The 1920's

to the crash. Ultimately, the stock market crash was the result of an asset bubble in the 1920's (2). An asset bubble is when the prices of a resource or commodity become over inflated (2). During the 1920's, the United States stock market underwent a rapid expansion, reaching its peak in August of 1929 (1). Between the years of 1922 to 1929, the stock market had gone up nearly twenty percent per year (2). Eventually, many Americans were investing in the stock market thanks to the financial invention…

Words 645 - Pages 3

Essay Great Depression

Essay 1920s vs 1930s For many Americans, the 1920s was a decade of prosperity and confidence. However, there were drastic changes economically, politically and socially through the course of 1920 to 1930. Which turned for Americans lives into a nightmare and what once was the land of wealth, prosperity and huge pride had become the land of desperation. Even though there was a lot of changes in these two decades there were also similarities and differences between them. As the 1920s began…

Words 504 - Pages 3

How Did The Stock Market Crash Lead To The Great Depression

Due to the fact that the 1920's were a time of climbing economic prosperity, American businesses and their stocks were at unjustifiable highs and this ultimately led to the stock market crash in 1929. Several key factors were involved in the period that led up to, and eventually caused the crash and the Great Depression. Wild speculation by individual investors, businesses, and banks all led to the inflation of stocks, far beyond their actual value. Unbridled speculation, led to massive loan that…

Words 507 - Pages 3

Essay On 1920s America

The 1920’s one of the most important era in U.S. history when things changed dramatically in every aspect of the society. During 1920’s America became the powerful economy of the world. Daily lives of American were changed by growth in economy and new innovations in technology. After the world war1 and later on world war2 America became an industrial nation. Americans were first to wear ready-made exact size clothing. They were first to use electric vacuum cleaners, and to listen to commercial radio…

Words 1597 - Pages 7

West Egg In The Great Gatsby

made the wealth in the 1920s. During the 1920s in New York City people really didn’t…

Words 932 - Pages 4

Depression DBQ Essay

America’s society had an extreme change for the worst during the 1920s. After World War One, Americans began to practice nativism. Nativism is the policy of protecting the interests of Native- born or established inhabitants against those of immigrants. America also began to establish fear for immigrants or xenophobia. They began to feel this way when America turned to domestic isolation and social conservatism due to the “Red Scare”. Many Americans were scared of the communists because the Bolshevik…

Words 1285 - Pages 6

The American Dream In The 1920's

resulted in our country facing a nightmare. During the 1920’s, an era of sensational change occurred in America. The economy prospered and it was driven by wartime devastation. This was a time where Americans were living the American dream. The 1920’s were also referred to as “the roaring 1920s” because it was the first time in American history that people could afford to buy whatever they pleased. Americans were learning how to live the life. The 1920s was definitely an instance where people were living…

Words 807 - Pages 4

Essay about The Great Depression and American History

the stock market crash, throughout the 1920’s the stock rose steadily which made it eventually take over and make the Great Depression have some major causes and effects to American people. Many Americans began to buy stocks and bonds; they also took advantage of the bull market. By then it was 1929 when about 4 million Americans owned stock markets. The Americans noticed that stock prices began rise, and speculation began to engage with the investors. By September the prices with the stocks began…

Words 479 - Pages 2

The Roaring Twenties Essay

The Roaring Twenties The roaring 1920s was a time where Americans were living the American dream. Many people called it the “Age of Excess” because it was the first time in American history that people could afford to buy abundance and buy anything that they pleased. The outstanding time period, the 1920s, was affected by many inventions and a new life that Americans were adapting to. Fashion was a big part of the 1920s and it was all about comfort. The women wore there skirts short…

Words 1054 - Pages 5

How Should The President Respond To The Huge Sell-Off Of The Stock Market

economic prosperities of the 1920s caused the stock market to go upward exponentially. Everyday people now think as the stock market a no risk option and an easy way to get rich quick. This has also caused people to buy on margin sometimes even mortgaging there home and property to put in the stock market. Investors and people alike have now realized that the market is an exavergated market bubble and there has been a massive sell-off. In the last two days the market has shed 60 points or 12% of…

Words 917 - Pages 4