- 23 - -
CRASH AND DEPRE SSIO N
In theheartofNewYorkCitylies a narrowst reet
enclosedbythe wallsofhigh office bui ldings.Irs
nam eis Wall Street.O neT hursd ayafternooninOctober1929 ,a
workmanoutsideanupperfloorwindowo f a Wall
Sneerofficefoundhimselfstaringintotheeyeso f
fourpolicemen.Theyreachedourtocatchholdo f
him."Don'tjump!"shoutedoneofthepolicemen.
" It'snotthatbad.'"Who'sgoingtojur np>'asked
th e surprisedworker."Tmjusrwash ingw in dows!"
Tounderstandthisincident wenee dtoloo k atwhat
had beenhappeningInWall Street in the rnonrhsand
yearsbeforethatOctoberafternoonin 1929.
Wall Streetisthehomeofrhc NewYo rk Stock
Exch an g e.Heredealerscalled stockbrokersb uyand
sell valuablepiecesofpapcr.Thepieces of pap er are
sh arece rt ificates.Each certificaterepr esent sa certai n
am ountofmoneyInvestedin acompany.
E very year in the 192 Usthesalesofcars,radi osand
other cons u m ergoodsro se.Thismeantbigger
p ro fits fo r the firmsw hichmadethem. T h isin turn
sentu p thevalueofsharesinsuchfirms.
Owning sharesIIIa b us inessg ivesyou the righttoa
sh are of its pro fits.But you can mak em on ey fro m
sh aresin ano therway.Yo u canbuyth em at one
price , th en ,ifrhc com panydocswell,sell themlater
at ahigh ero ne.
M o reand mo r e peo ple wereeager[0get so meofthis
easym o ney. B y 1929 buyi ngandselli ng
sh ares -"playi ng th e m ark et" - had beco m ealm ost a
n ation alhobb y. Yo u cou l d secth isfro mth e risei ll
thenumberofshareschanging:hands.In 1923 the
n u m ber was 236m illio n;by192Mit hadg ro wn to
1, 125 millio n.
Lik emost ot h erthingsinthe Un ited Statesin the
192 0s,youcouldbuyshareso n cred it. A hund red
dollars cashw o uld"buy"a tho usand dollars'worth
ofsh aresfromanystockbroker.Manypeople
borrowed largeamountsofmoneyfromth e banks to
buy sh aresin thisway-"onthemargin",as it w as
called.96
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",.:...' ')IWallSlrul.".,of " mfr,,1ill(o, ly()(f,,/tv1929.11rjj(on ,,,,,,a«u,ouly
p,(dicudIh(j/lJlkm ..r/:(f(rod,11'''1("xuff(dIlrrccu'r(b1..laMostofth ese"onthem argin "sharebuyersw er e
reallygam b lers. T heiridea wasto spot shares that
wouldquic kl y riseIIIvalue,b uythemat o nc pri ce
and thenresell at a higher o nea fcwweekslat er.
Theycouldth enpayback the bank, having made a
quick pro fit.Bythe fall o f 1 92 9 theurgeto buy shareshad
b ecom e asortoffcver. P rice s wentu p and u p. O ne
visito rtoWall Street wasrem indedofa srrcc r fight ,
asstockbro ke rs pu shedand scram bledto buysha res
for t h eircusto me rs.Yet som e peo pl ebeganto han'doubts. The true
val ue of sha resin a businessfirmd ep end s upo nits
profits.Bythefallof 1929 th e pro fitsbeingmadeby
man y Americanfir m s had been decreasingforsome
time.Ifprofitswere falling.thought mo re caut ious
inves to rs, thenshareprices.too,wouldSOOI1fall.
Slo wly ,suchpeoplebeganto selltheirshares.Day
b y d aytheir nu m be rsgrew.Soon somanypeople
weresellingsharesthatp ricesdidstarttofall.