Buying on the Margin
- To buy on margin is to borrow money from a bank and use it buy stocks with it. After the stock goes up, one would sell the more highly priced stock and then save the money made after repaying the bank.
- This lead to the stock market crash because the stocks went quickly down and left many people in debt. Because of the success and opulence of the 1920s, people were unthinking of the possibility of the stock market falling.
Subjunctive Question: Some say that the Depression was a combination of many factors; the drought and overproduction of agriculture, etc. But what if restrictions were placed on the banking systems in regard to this method of borrowing money. Would the depression still have occurred.
|
|