4.2 A Decade of Prosperity Ends

A Decade of Prosperity Ends

The year 1928 was a record setter in the number of stock shares traded. It was the greatest bull market in history and eager purchasers drove markets to new highs. No one knows exactly what caused the wave of speculation that boosted the stock market to dizzying heights. Money to fuel the market had become plentiful. From 1922 to 1929, some $900 million worth of gold flowed into the country. The money supply expanded by $6 billion. Over the decade corporate profits grew by 80%.

The wonder of the stock market permeated popular culture in the 1920s. Although it was released during the first year of the Great Depression, the 1930 film High Society Blues captured the speculative hope and prosperity of the previous decade. “I’m in the Market for You,” a popular musical number from the film, even used the stock market as a metaphor for love: You’re going up, up, up in my estimation / I want a thousand shares of your caresses, too / We’ll count the hugs and kisses / When dividends are due / ’Cause I’m in the market for you. But just as the song was being recorded in 1929, the stock market reached the apex of its swift climb, crashed, and brought an abrupt end to the seeming prosperity of the Roaring Twenties. The Great Depression had arrived.

Black Thursday and the Great Crash

On Thursday, October 24, 1929, the gallery of the New York Stock Exchange was packed with visitors. Trouble was in the air. The day before, a sharp break downward had capped a week of falling prices. At the opening bell, a torrent of sell orders flooded the Exchange. Prices plunged as panic set in. By the end of “Black Thursday” nearly 13 million shares had been traded – a record. Losses stood at $3 billion; another record.