Investing and Financial Markets
History of the United States
Stock Market

How many individual investors invested in stocks before the crash of 1929?

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May 06, 2008 9:11AM

== == One of the significant contributing factors to the "crash of 1929 " was the large number of individuals who were buying stocks "on margin" with not enough actual cash to cover their buys. People who had small incomes, such as labourers and cooks and blue collar workers were " plunging " into the stock market, spending more than they could afford to spend. By buying on "margin " they only had to pay 10 percent of the actual price, but when the stock share went down in value, they couldn't meet the price required to pay it off, and they went bust. Multiply that by millions of investors, and it is ONE of the reasons for the crash. The same thing happened with millionaires, who were " over extended " and couldn't pay their "calls ". It can't happen today, as all the major stock exchanges in the world have automatic controls that will not allow it to happen. The rules have changed, for the better.