AI Tutor
Imagine putting 10intoaspecialgamemachineonMonday,andbyFridayithandsyouback10 into a special game machine on Monday, and by Friday it hands you back 50 without you doing any chores at all.
During the 1920s, millions of Americans thought the stock market was that exact kind of magical money machine — until the whole machine suddenly broke.
How did a country that felt so rich plunge into the hardest economic crisis in its history?

The Borrowing Craze

A share of stock is a tiny piece of ownership in a real company, like a car factory or a department store.
In the 1920s, everyday people started speculation, which means gambling that stock prices will keep climbing higher and higher so you can sell fast for quick cash.
Most buyers engaged in margin buying, putting down as little as 10% in cash and borrowing the remaining 90% from brokers who borrowed from commercial banks.
Borrowing worked like magic while prices climbed, but what would happen if company stock values started dropping instead?

Factories Make Too Much

While stock prices soared, deep economic imbalances developed, driven by overproduction as factories and farms produced far more goods than consumers could afford to purchase.
Assembly line wages failed to keep pace with productivity, causing warehouses to fill with unsold goods and sending crop prices falling for struggling farmers.