A new industry of brokerage houses, investment trusts, and margin accounts enabled ordinary people to purchase corporate equities with borrowed funds. Ordinary men and women invested growing sums in stocks and bonds. Automobiles, telephones, and other new technologies proliferated. The financial boom occurred during an era of optimism.

(Source: FRED, (graph by: Sam Marshall, Federal Reserve Bank of Richmond) Enlarge The index did not reach the 1929 high again until November 23, 1954. The index declined until July 8, 1932, when it closed at $41.22. As shown in the figure, the index peaked on September 3, 1929, closing at 381.17. Minor tick marks indicate the first trading day of the year. Chart 1: Dow Jones Industrial Average Index daily closing price, January 2, 1920, to December 31, 1954. The Dow did not return to its pre-crash heights until November 1954. The slide continued through the summer of 1932, when the Dow closed at 41.22, its lowest value of the twentieth century, 89 percent below its peak. By mid-November, the Dow had lost almost half of its value. On the following day, Black Tuesday, the market dropped nearly 12 percent. On Black Monday, October 28, 1929, the Dow declined nearly 13 percent. The epic boom ended in a cataclysmic bust. After prices peaked, economist Irving Fisher proclaimed, “stock prices have reached ‘what looks like a permanently high plateau.’” 1 The Dow Jones Industrial Average increased six-fold from sixty-three in August 1921 to 381 in September 1929. Share prices rose to unprecedented heights. The Roaring Twenties roared loudest and longest on the New York Stock Exchange.

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