The Roarin’ 1920s
The 1920s was painted as a period of significant economic growth for the U.S. economy and saw some major cultural and technological developments take place in American society. These developments included the expansion of consumer culture, where ownership of cars, electronic appliances, and other manufactured goods rose greatly, as well as advances in telecommunication technology, where commercial radio and telephones gained a much greater presence in the home, and Americans were more connected and informed than ever before. However, this lifestyle was not affordable for all, and banks rolled out installment-credit systems to help millions of families break into the middle-class.The Wall Street Boom
Alongside consumerism, a larger share of the middle-class population also became interested in the stock market, as those who invested saw consistent and large returns throughout the 1920s. Even those with little understanding of how markets worked could make a small fortune, and involvement was not limited to those on Wall Street; brokerage firms popped up across the country to facilitate this interest, using stock tickers connected by telegraph lines to find out the latest developments on Wall Street and to relay stock purchases.A bull market, i.e., a market experiencing continuous growth, emerged in October 1923 and lasted for almost six years. Stock prices rose drastically throughout this time, and banks gradually assumed more risk when lending, while brokers required less collateral when buying - this created a scenario where a large share of the money invested in Wall Street was borrowed or immaterial. Many of the people who understood the markets were able to abuse the system to become richer - they would buy large quantities of cheap stocks in order to drive up public interest, and would later resell the stocks at a much higher price. Those who cautioned of possible collapse were either ignored or silenced in fear that their warnings would cause stock prices to fall. Eventually, uncontrolled price growth and a stock market based on a foundation of credit and speculation rather than actual capital led to the largest financial crash the world had ever seen.
The Wall Street Crash
Price drops had appeared as early as March 1929, but it was not until September where the crash began. Stock prices fell and investors began dumping in bulk. The London Stock Exchange also crashed on September 20, which cast an ominous shadow over Wall Street and saw many Americans withdraw their investments from overseas. In the U.S., October 24, now known as Black Thursday, saw selling escalate further: Stock tickers around the country fell hours behind Wall Street, leading many people to panic buy or sell stocks with no idea what the current prices were. Panic selling peaked on October 29, Black Tuesday, which is when the reality of the crash set in for many. The majority of Americans could not understand why the market was crashing, as this had gone against what most brokers, economists, and even the president, had assured; whatever faith in the market remained quickly collapsed thereafter.Immediate aftermath
Initially, those who lost the most from the crash were from the middle class; poor people remained poor, while the wealthy had more capital and tangible assets to fall back on; much of the middle class, however, defaulted on their debts. People tried to offload their cars and luxury items they had bought on credit in order to alleviate this pressure, but buyers were scarce. In an attempt to restore faith in the market, President Hoover made assurances that recovery would be swift, while wealthy individuals such as John D. Rockefeller (America’s first billionaire) publicly bought stocks, but to no avail. Although Hoover had assumed office that year, his perceived inaction and empty promises of recovery saw many Americans blame him for the crash and depression - historians consider Hoover's economic management to have been the worst in history.Price slides and selling frenzies continued into early November, and it was not until November 14 when recovery began. This recovery, however, was short-lived, and stock prices fell further from April 1930 to June 1932, when they reached their lowest point. A deep, nationwide depression would set in by around October the following year, a quarter of the workforce was unemployed by 1933, and it would take 25 years from the crash before stocks reached their mid-1929 levels once more.
