The Stock Market Crash Of The 1920's

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The roaring twenties were an exciting time full of colorful cars, rising prices and crazy spending. Many individuals opted to live the “American dream” lifestyle which consisted of making purchase after purchase while lacking the necessary funds to do so. They lived this way because at the time it was exciting and fun to buy whatever was desired and just pay using credit. This way of life increased society's well being and gave this period an identity. However, the expanses eventually became real to people. Individuals were not only careless with their purchases but their sales too. Manufacturers began to make too many products causing the prices to go down and leaving no profit leftover. The problem of extreme differences in income between …show more content…

They were so blinded by the twenties attitude that they did not work to invest. Purchasing would not have been as harmful to the economy if there was a balance set inplace. According to John T. Raskob if people had “invest[ed] in good common stocks and allow[ed] dividends to accumulate they would at the end of the twenty years have had at least eighty thousand dollars and an income from investments of around four hundred dollars a month.”(Document two) However, they chose to make outrageous purchases day by day without a steady income and eventually had nothing left over. People were capable of being stable but did not do the work necessary because they would rather have fun spending. When people were not buying ridiculous amounts from stores they were gambling. They were looking for amusement over practicality. The money that could have been beneficial in savings or a financial emergency was “wagered on roulette or horse races” (Document five)as stated by Harry J. Carman. It wasn't uncommon or frowned upon to be in debt during the twenties as so many people were taking part in abundant purchases. They put items on credit or installment without worries that their financial state would be heavily impacted. William E. Leuchtenburg informs that “consumers bought goods on installment faster than their income was expanding, it was inevitable that a time would come when they would have to reduce purchases and cutback in buying.”(Document six) While individuals were impacted by throwing all of their money away, the economy as a whole would now fail as well. If people reduce purchases then businesses don't get the money they need to survive and slowly the

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