Before the stock market crash of 1929, stock prices were sky high. People were making millions of dollars overnight. In 1925 the total value of the New York Stock Exchange was $27 billion. As companies were making profits and expanding, the stock market value had reached $87 billion by 1929. The average stockholder would have more than tripled their money, and Americans were investing like crazy, driving stock prices even higher. So how could people afford to invest so much? Many in the 1920’s were buying stock on margin. This allows the investor to borrow money from stock brokers and banks to purchase stock. They would then have to pay back the loan with interest. Brokers were so confident in the market, they allowed this practice against the warnings of the Federal Reserve.

So why did stock prices fall? When investors have confidence and are willing to pay for shares of stock, prices rise. If traders believe the value of a stock will go down, they want to sell the stock at its highest price to make a profit. If everyone sells at once and no one is buying, the value of the market goes down. October 24, 1929 was known as “Black Thursday.” People began selling their shares to make a profit. By late afternoon wealthy men like J. P. Morgan began to buy stock to stop the inevitable. The market crashed on Tuesday, October 29. Stock prices fell, and there were still no buyers. Traders and business owners were in a panic. They began taking their money out of the banks, who then ran out of money and couldn’t give people their savings. Suicide and despair swept America, which led to the time known as the Great Depression.

When the market crashed on October 29, 1929, 90% of Americans had never owned a share of stock, so did the crash lead to a nationwide depression? Several consequences contributed. Those traders who had bought on margin could no longer afford to pay back the banks who lent them money. This led to bank failures across the nation. A family who had their money in a failing bank would lose everything. People had less money to purchase goods and services. Also those who had bought new conveniences in the 1920s on installment plans could no longer afford to make their payments. Businesses were losing money and began to lay off workers and cut wages.

As the unemployment rate skyrocketed to an unprecedent 25%, the economy continued to slow. People had less money to spend. Laborers were suffering wage cuts up to a third of their previous salary. Soup kitchens and food pantries could not keep up with the demand for food. Those desperate for income performed odd jobs like selling produce on the street and driving taxicabs. People were growing their own gardens and vegetables and making their own clothes.

Oklahoma was hit particularly hard by the Depression. To make matters worse, they were experiencing a terrible drought. Heavy winds were sweeping through, kicking up dust, giving the nickname the Dust Bowl. This Dust Bowl forced thousands to migrate west. The Great Depression lasted for years, as discontent with the political system grew in the minds of Americans.