General Interest
Stock Market Crash
October 1929

The tremendous increase in stock market prices during the 1920s was largely based upon value. This was especially true of such issues as communications and the automobile industry where companies were profitable and worker productivity steadily increased. Many Americans were convinced that everyone, regardless of one's station in life, could become rich. By early 1928, warning signals began to sound in the economy, but the so-called "greater fool theory" held fast — the recognition by an investor that he may have been foolish to have paid too much for a stock, but he would find a "greater fool" who would be willing to pay even more.

In the summer of 1928, President Hoover expressed the feelings of many, saying "We in America are nearer to the final triumph over poverty than ever before in the history of any land. The poorhouse is vanishing from among us." A little more than a year later, the United States would be rocked by a stock market panic and a worldwide depression that persisted into World War II.

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