Speculation and Collapse: The Wall Street Crash of 1929

The American stock market grew spectacularly through the second half of the 1920s, with the Dow Jones index multiplying many times over between 1921 and its September 1929 peak. Buying shares 'on margin' -- using borrowed money to cover as little as 10 to 50 percent of a stock's price -- became widespread, amplifying both potential gains and systemic risk, while banks and brokers extended credit freely and a growing number of ordinary middle-class investors joined traditional professionals in the market. Public-utility companies and investment trusts saw particularly speculative growth disconnected from real economic fundamentals, foreshadowed by the smaller speculative Florida real-estate boom of 1925-26, which had already collapsed before the wider bubble burst.