d increased gains. In 1929, the Federal Reserve made a series of aggressive rate hikes that that dramatically hurt investors confidence. (Reed) When rates go up capital usually goes down, as investors decide not to weather the risk. Then the adverse happens, new ventures, companies and factories growth slows or declines, and as job cuts are made unemployment increases. This is usually used to slow growth and decrease the chance of overheating of the economy. When this happens money usually flows back into banks, bonds, and more stable investments. This did not happen. Investments for the most part continued, especially among individual investors and institutions.With the economy on a tare and the stock market rising close to twenty fold in under a decade, everyone wanted to get in on the wealth making machine. Gains increased and virtually everyone was making money. Investor sentiment rose to unprecedented highs and so did the investing. In order for the economy to keep it’s pace, the lower income level income population had to participate, and participating they did.The participation was done through a new mass marketing method of buying on credit. The concept was very popular and caught on quickly. The idea was simple. You could buy something and pay it back in installments over a period of time while paying a borrowing fee of interest in return. By the end of 1929, sixty percent of cars were bought on credit as well as 80 percent of radios. Between 1925 and 1929 the total amount of installment credit more than doubled from 1.38 billion to around 3 billion. (Alexander) People began to bypass savings for material objects and debt As the President’s Committee on Social Trends noted, “Installment credit allows one to telescope the future into the present.” (Davis 1) Telescoping they did do to Wall Street as speculation became common place.It was not long until the credit principle spilled into Wall ...
