Question

During the 1920, why did many average Americans risk investing a signicant portion of their money in the stock market?

• A. The illusion of permanent prosperity was a popular notion during the decade.
• B. They had plentiful disposable income to spend on such ventures.
• C. Unscrupulous stockbrokers misled their clients throughout the decade about the health of the markets.
• D. Public access to stock purchases had only become available in the post-WWI era.
• E. Their employers, especially Ford Motor Company and General Motors, offered cheap stock options to their industrial employees.

Answer 1

The correct option is A The illusion of permanent prosperity was a popular notion during the decade.

The period from 1920 to 1929 is known as the Roaring Twenties. Those years were exciting, fascinating, and entertaining for the U.S. population, whose sons had just fought and won World War I (1914–18), the war that had promised to end all wars. Everyone was enthralled with the new gasoline automobiles that Henry Ford (1863–1947) had made affordable. Women had gained the right to vote, and some had acquired new electric machines that made life easier, such as washing machines and vacuum cleaners. Every day more Americans brought a radio into their homes; the radio brought music and news that thrilled listeners. The new moving pictures captivated audiences in palace-like movie houses. Businesses and manufacturing industries continuously expanded. The prices of their stocks steadily increased through the 1920s, going on a wild ride upward between 1926 and October of 1929. Stock prices went far beyond realistic values and had little basis in the health of the companies. These skyrocketing stock prices signaled trouble for the U.S. economy.