During the mid 1920s the stock market underwent rapid expansion. The Dow Jones Industrial Average went from a low of 191 in early 1928 to a high of 300 in December 1928 and peaked at 381 in September 1929. Due to the anticipation

of continued increases in earnings and dividends, price/earnings ratios rose from a conservative 10 or 12 to 20, and higher for the market's favorite stocks. On October 3 the Dow Jones began to drop and declined throughout the week of October 14. One method investors used to borrow money was margin buying. The investors only had to put up a certain percentage of the amount invested and the bank or institution would give the rest. If the price of stock went down the investor would get a margin call and be required to put up more money. The night of October 21,1929, margin calls were heavy, and numerous Dutch and German sell calls came in overnight for the Tuesday morning opening. On Tuesday morning, out-of-town banks and corporations called in $150 million of loans, and Wall Street was in a panic before the New York Stock Exchange opened. On October 24, 1929, people began selling their stocks as fast as they could. Sell orders flooded market exchanges. On a normal day, only 750 to 800 members of the New York Stock Exchange started the Exchange. However, there were 1100 members on the floor for the morning opening. The Exchange also directed all employees to be on the floor since there were numerous margin sell orders placed overnight. Even extra telephone staff was arranged at the members' boxes around the floor. The Dow Jones Industrial Index closed at 299 that day. October 29 was the beginning of the Crash. Within the first few hours the stock market was open, prices fell so far as to wipe out all the gains that had been made in the previous year. The Dow Jones Industrial Index closed at 230. Since the stock market was viewed as the chief indicator of the American economy, public confidence was shattered. Between October 29

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