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Essay / Research Paper Abstract
4 pages in length. Grandiose expectations, dissolving promises and fear make up the reasons why the stock market crashed in 1929, setting the stage for a period in America's history that not only devastated her people but illuminated the utter incompetence of those whose job it was to protect the country's economic standing. Bibliography lists 2 sources.
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4 pages (~225 words per page)
File: LM1_TLCStockMkt.rtf
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devastated her people but illuminated the utter incompetence of those whose job it was to protect the countrys economic standing. Despite a decline in company production costs during the booming
1920s, consumer demand rose and quickly prevented most people from acquiring cars, homes and other durable commodities. The reality of what was happening as this trend continued was cleverly
concealed by drawing Americans attention to the "great bull market" where upward moving stock activity was heralded as a panacea to the countrys growing economic concern. Stock values continued
to rise not because they were any more worthwhile than they had previously been, but because of "greater wealth concentration within the investor class" (Wilkison, 2004). It was not
long after this steady increase that Wall Street begin to exude a "dangerous aura of invincibility" (Wilkison, 2004) that encouraged investors to "ignore less optimistic indicators in the economy" (Wilkison,
2004). Only adding to the smoke-and-mirrors act of an allegedly robust economy was the two-fold approach of stock speculating and over-investing. When the banks finally became involved as
lenders to investors, there was no way to reverse the momentum of an imminent crash. The downward spiral took on great speed when investors were permitted to put up stocks
as loan collateral, which acted much like placing the fox in charge of the hen house: Money was being loaned based upon inflated stock values that were being used to
secure loans. Needless to say, this vicious cycle was the final straw in an already crumbling economy. "If the stocks dropped in value, and investors could not repay
the banks, the banks would be left holding near-worthless collateral. Banks would then go broke, pulling productive businesses down with them as they called in loans and foreclosed mortgages in
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