Things You'll Need:
- Knowledge of American life in the 1920s
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Step 1
Understand that Americans in the 1920s were carefree and overconfident. The post-war United States and its economy appeared to be invincible.
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Step 2
Study the effects of speculation. The number of stock market investors grew dramatically in the late 1920s. They bought stocks and sold stocks at a record pace. Investors often believed they knew when a stock would peak, which led to record buying and selling.
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Step 3
Learn about loaning practices of banks from that era. Banks often loaned two-thirds of a stock's value to investors. By August 1929, $8.5 billion had been loaned, which was more than all the money in circulation in the United States at the time.
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Step 4
Many who were weallthy became bankrupt on Oct. 29, 1929.Read about the panic in October 1929. The stock market began tumbling in September, but the initial crash occurred on Oct. 24. Widespread panic took over on Black Tuesday, Oct. 29. Investors lost millions as they simply couldn't sell their stocks.
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Step 5
Realize that The Stock Market crash was not a one-day event. It lasted into the following year, at which time the general economic malaise took hold and led to The Great Depression.
