long prosperity of the 1920s that"The business of America is business." Despite the seeming business prosperity of the1920s, however, there were serious economic weak spots, a chief one being a depressionin the agricultural sector. also depressed were such industries as coal mining, railroads,and textiles. Throughout the 1920s, U. S. banks had failed--an average of 600 per year--ashad thousands of other business firms. By 1928 the construction boom was over. Thespectacular rise in prices on the stock market from 1924 to 1929 bore little relation toactual economic conditions. In fact, the boom in the stock market and in real estate, alongwith the expansion in credit (created, in part, by low-paid workers buying on credit) andhigh profits for a few industries, concealed basic problems. Thus the U. S. stock marketcrash that occurred in October 1929, with huge losses, was not the fundamental cause ofthe Great Depression, although the crash sparked, and certainly marked the beginning of,the most traumatic economic period of modern times. The enormous amount of unsecured consumer debt created by this speculation leftthe stock market essentially off-balance. Many investors, caught up in the race to make akilling, invested their life savings, mortgaged their homes, and cashed in safer investmentssuch as treasury bonds and bank accounts. As the prices continued to rise, some economicanalysts began to warn of an impending correction, but they were largely ignored by theleading pundits. Many banks, eager to increase their profits, began speculating dangerously with their investments as well. Finally, in October 1929, thebuying craze began to dwindle, and was followed by an even wilder selling craze. On Thursday, October 24, 1929, the bottom began to fall out. Prices droppedprecipitously as more and more investors tried to sell their holdings. By the end of the day,the New York Stock Exchange had lost four billion dollars, and it took exchange cle...
