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The very high Dow in 1929 encouraged banks into investing heavily into stocks. Even many individual investors got into investing with the hope of fully exploiting this situation. When it began falling, people pulled their money out and even put cash "under the mattress". That started a domino effect. Things began to recover but it began slipping once more three years later and that was a worse loss. Over 30% were without jobs. It wasn't until WW2, that things began to recover with our entry into the war and large increase in government spending.

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Q: Were there any symptoms during the 1920s that the stock market boom was unsustainable?
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