Buying on Margin
The process of buying stock with money you don't own
It was believed that Buying on Margin was profitable once the debt had been payed back
It was believed that Buying on Margin was profitable once the debt had been payed back
Summary
Before the stock market crash in 1929, the American people were borrowing money from banks in order to put money into the stock market. It was hoped that stocks would rise, and those who had bought their stocks with borrowed money would be able to pay back their debts and keep the difference. Unfortunately, as the stock market began to fail people's shares began to decrease in value, and the banks could not even be repaid for money they had lent out. As a result many banks in American were closed.