September 20, 1928

Knock Knock Knock. Sam rapped his knuckles against the sturdy oak door in this familiar rhythm. The only response was a decrepit creaking, and the pitter patter of rain falling on the New York City pavement. Sam paused to consider whether the unthinkable had happened. No, I would have heard something, Sam thought to himself. The seconds stretched by like rubber bands, the tension almost palpable, when a single word, nay, the ghost of a word, drifted through the crack between the door and the frame:

“password?”

Sam whispered his reply, “snake juice.”

There was a metallic rattle, the sound of a bolt being drawn back. Then, the ancient door swung open, like a gate to the New York Underworld. Sam slipped the surly bouncer a crisp $2 bill, and was greeted by the phrase,

“Welcome to Steve’s Speakeasy.”

Smooth jazz music emanated from the corner of the cozy, dimly lit pub. Nearly 100 people were packed into the room, a sure sign that business was booming. Steve’s Speakeasy probably broke every fire code ever written, but that wasn’t its worst crime. No, its worst crime sat in countless bottles, labeled with varying amounts of Xs. Perhaps a little background information would be helpful. The year was 1928, in the midst of Prohibition. Under federal law, the manufacture and sale of alcohol was illegal. Sam’s friend, Steve, was running an illicit bar, commonly referred to as a speakeasy, out of an old warehouse. Sam strode confidently into this peculiar establishment, sat down at the old oak bar, and ordered a drink.

“Well, well, well, if it isn’t my favorite customer!”

Sam swivelled on the rickety wood stool.

“Hey Steve. How’s business?” Sam asked politely. He already knew the answer, but he asked nonetheless.

Steve responded with a grin. “Business has never been better. Thanks to the feds, the demand for quality alcohol has never been higher! How’s the stock market thing going?”

“Very well!” Sam replied.

Sam had quit his job at the Highland Park factory a few months ago to become a full-time stock investor. The stock market was booming; the value of stocks soared, and Sam’s confidence grew. He was certain that his investments were a one-way ticket to a life of luxury.

“To the stock market!” Sam declared, raising his now-empty glass.

His toast was echoed by many others in the bar. In the Roaring Twenties, nearly every American had the opportunity to achieve success and prosperity, with a little hard work and determination. People like Sam were truly living the American Dream. Unfortunately, like with any other dream, they would eventually have to wake up.

There’s an old saying that you have to spend money to make money. Well, Sam must have taken this advice to heart, because he spent a LOT of money. In fact, he spent so much money, he quickly ran out. In order to continue buying stocks, Sam began to borrow money, assuming that he would be able to pay off his debts later. That was when the problems started.

“What’s it going to be today?” Ben inquired from behind the pristine marble desk. Ben was a banker, and an acquaintance of Sam’s. The bank he worked at was called The American Union Bank, and it was quite small.

“I’d like to take out a loan,” Sam stated.

Ben gave Sam a long, hard look.

“Well, I have your record in front of me, and it says here that you took out a loan just last month. . . I would advise against borrowing any more money until you pay off existing debts.”

“C’mon Ben, you know I’ll have the money soon. The stock market is booming! This is a golden opportunity. I just need one more loan, and then I’ll be set. Trust me.”

Ben sighed, and slowly slid an application across the desk. It only took Sam a few minutes to fill it out. After all, he had plenty of practice.

The New York Stock exchange in 1928 was a chaotic and confusing place, even for the people that frequented it. Therefore, a basic explanation of the stock market is in order. Firstly, “stocks” can be defined as small units of ownership of a company, which can be bought and sold. If you were to buy stocks in General Motors, for example, you would own a very small part of that company. If General Motors’ profits increased, the value of your stocks would increase; if the company’s profits decreased, then the value of your stocks would decrease. During the 1920s, the economy was booming, company profits were increasing, and stock prices were rising rapidly. Therefore, stock investors like Sam could purchase stocks at a certain price, then sell their stocks later (when they are worth more) for a profit.

Everyone was investing in the stock market, since soaring stock prices provided Americans such as Sam with an opportunity to earn money quickly, with little to no work required.

A black and white picture cannot quite capture the raw chaos of the New York Stock Stock Exchange in 1928, so allow the following words to paint a more colorful picture. The first thing that struck Sam when he approached the stock exchange was the sound. The crowd of thousands emitted a deafening buzz, which reverberated through Sam’s bones and burrowed deep into his skull, persisting for hours. In order to reach the stock brokers with whom he wished to trade stocks, Sam needed to traverse a surging sea of humanity. The stock exchange was flooded with thousands of excited investors, pooling around the most successful stock brokers. Sam was forced to wait in countless lines, each of which seemed to stretch on for eternity. Sam eventually reached his first stock broker, a man selling stocks in Standard Gas.

“I would like to buy $600 worth of stock on margin,” Sam declared.

The man simply nodded, and handed Sam a form. Buying on margin was a fairly common practice at the time. The term, “buying on margin” refers to the act of buying stocks with borrowed money. Nearly 90% of stocks in the 1920s were purchased on margin. When Sam bought stocks on margin, he paid 10% of the value of the stocks as a down payment. He planned on paying the rest of the price of the stocks later, in monthly installments. Keenly aware of the impatient crowd behind him, Sam quickly signed the form and made the transaction, then continued on his way. When he had finally left the New York Stock Exchange, Sam had stocks in Standard Gas, General Electric, and American Copper. Unfortunately, unbeknownst to Sam, the market was approaching its peak. Soon, it would plunge downward, and life in America would be forever changed.

“Any other items?” the cashier inquired from behind the counter of the convenience store.

“Nope, just the radio,” Sam replied.

“That will be 88 dollars please.”

“I’d like to purchase the radio on credit.”

The shopkeeper nodded. Buying expensive items on credit was commonplace in the 1920s. Nearly 75% of the radios sold during the Roaring Twenties were bought on credit.

Sam’s hand disappeared into his pocket, and when it returned, it

was clutching a wad of $1 bills. He counted off ten, and laid them on the counter. He planned to pay off the rest of the money in weekly installments. However, the economy had other ideas.

Black Tuesday, October 29, 1929.

A date that will live in infamy. Sam woke up twice that day. First, he got out of bed, got dressed, and took a stroll down to the local cafe to a get a copy of the newspaper. Then, he woke up from the American Dream. Inscribed on the cover of the paper, in ink the color of midnight, were the following words: WALL STREET IN PANIC AS STOCKS CRASH. Sam felt a terrible sinking feeling in his stomach, and his heart jumped in his chest. All of the money he had invested, gone. Gone. The hundreds of dollars of debt he had accumulated weighed him down, as if his arms were suddenly filled with lead. Sam had dug himself into a hole with his reckless spending, and now he would have to lie in it.