Portfolio Reflection

Kayanna Dennis

Dr. Zuccarini

History 153

15 December 2017

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Those who cannot remember the past are condemned to repeat it.

-George Santayana

During the earlier centuries, there was a lot of flops, fumbles, and fails. As well as a lot of

achievements, accomplishments, and successes. Either way, there is something to learn from and

to apply to our own roles. Rather it is to learn how greed will destroy you or how simply

standing up for something you believe in could put you in the history books. So, the best way to

learn is from history itself. History is a lesson: a lesson of intentions, movements, experiments,

and human production; a lesson that builds integrity and character within our children,

(ascd.org)1. During this semester, we have learned about numerous of historical creations and

contributions towards society that we still use today. The most innovative out of all were the

economical creations and efforts to keep the economy stable that came from our memorable

predecessors. For example, the creation of credit, advertising, and the stock market crash

contributed towards society.

In the 1920s and 30s there were a lot of new inventions. For instance, electric

refrigerators, washing machines and irons were being marketed to cut down the burden of

chores. Yet, for the single-income family, all these new conveniences were impossible to afford

at once. Department stores opened generous lines of credit for those who could not pay up front

but could demonstrate the ability to pay in the future. Similar installment plans were offered to

buyers who could not afford the lump sum, but could afford "twelve easy payments." Over half
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of the nation's automobiles were sold on credit by the end of the decade. America's consumers

could indeed have it all, if they had an iron stomach for debt. Consumer debt more than doubled

between 1920 and 1930.

Fueling consumer demand were new techniques in advertising. This was not a new

business, but in the increasingly competitive marketplace, manufacturers looked to more and

more aggressive advertising campaigns. One major trend of the decade was to use pop

psychology methods to convince Americans that the product was needed. The classic example

was the campaign for Listerine. Using a seldom heard term for bad breath, halitosis, Listerine

convinced thousands of Americans to buy their product. Consumers might not have known what

halitosis was, but they surely knew they did not want it.

Advertisers were no longer simply responding to demand; they were creating demand.

Radio became an important new means of communicating a business message. Testimonials

from Hollywood film stars sold products in record numbers. The advertising business created

demand for the gadgets and appliances being manufactured by American factories.

Before the infamous stock market crashed, it was a powerful source for trading and

buying stocks. In fact, because if stocks, many millionaires were made overnight. Although the

1920s were marked by growth in stock values, the last four years saw an explosion in the market.

In 1925, the total value of the New York Stock Exchange was $27 billion. By September 1929,

that figure skyrocketed to $87 billion, (schoolcraft.edu)2. So, the average stockholder tripled the

value of the stock portfolio he/she was lucky enough to possess. Fueling the rapid expansion was

the risky practice of buying stock on margin.

A margin purchase allows an investor to borrow money to buy a greater amount of stock.

Stockbrokers and even banks funded the reckless gambler. Borrowers were often willing to pay
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over 10% of interest rates on loans, being dead certain that the risk would be worth the rewards.

The lender was so certain that the market would rise that such transactions became

commonplace, despite warnings by the Federal Reserve Board against the practice. Clearly, there

had to be a limit to how high the market could reach. Although the workings of the New York

Stock Exchange can be quite complex, one simple principle governs the price of stock. When

investors believe a stock is an excellent value they are willing to pay more for a share and its

value rises. When traders believe the value of a security will fall, they cannot sell it at as high of

a price. If all investors try to sell their shares at once and no one is willing to buy, the value of

the market shrinks.

On October 24, 1929, "Black Thursday," this massive sell-a-thon began. By the late

afternoon, wealthy financiers like J.P. Morgan pooled their resources and began to buy stocks in

the hopes of reversing the trend, but the bottom fell out of the market on Tuesday, October 29. A

record 16 million shares were exchanged for smaller and smaller values as the day progressed.

For some stocks, no buyers could be found at any price. By the end of the day, panic had

erupted, and the next few weeks continued the downward spiral. In a matter of ten short weeks

the value of the entire market was cut in half. Suicide and despair swept the investing classes of

America.

After the Stock market crashed few Americans believed that a decade long depression

was underway. After all, only 4 million Americans had money invested on Wall Street. 90% of

American households owned precisely zero shares of stock. President Herbert Hoover quickly

addressed the nation, professing his faith in the soundness of the American economy, but

soothing words were clearly not enough to stop the shrinking of a deeply flawed national

economic system. The stock market crash had many short-term consequences.
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Banks that improvidently lent money to futures traders to buy stock on margin found that

many of those loans would go unpaid. Consequently, a rash of bank failures swept the nation.

This had a tremendous ripple effect on the economy. If a working-class family was

unfortunate enough to have their savings held in trust by a failed bank all their money was lost.

As Americans saw banks close and savings disappear, less money was spent on goods and

services. Many consumers who had bought the new conveniences of the Golden Twenties on the

installment plan were unable to make their payments. Businesses began to lay off workers to

offset new losses. Many manufacturers had overproduced and created huge inventories.

Finally, in 1932, Herbert Hoover signed legislation creating the Reconstruction Finance

Corporation. This act allocated half billion dollars for loans to banks, corporations, and state

governments. Public works projects such as the Golden Gate Bridge and the Los Angeles

Aqueduct were built because of this plan.

Hoover and the RFC stopped short of meeting one demand of the American masses

federal aid to individuals. Hoover believed that government aid would stifle initiative and create

dependency where individual effort was needed. Past governments never resorted to such

schemes and the economy managed to rebound. Clearly Hoover and his advisors failed to grasp

the scope of the Great Depression. After Hoovers term ended, Franklin Roosevelt slowly turned

the depression around.

Historical knowledge is no more and no less than carefully and critically constructed

collective memory, (historians.org)3. I as a historian can learn from my ancestors mistakes and

apply them to my own life. Even now we are faced by new developments which portray various

new Gardens of Eden from which we have fallen, and thus new future paradises or apocalyptic
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calamities we must plan for in the present, (acedemia.edu)4. For Instance, if I wanted to invest

in stocks, I do not have to put all my savings in at once just to try to become a millionaire. I can

put money to the side just in case a second great depression happens. Also, taking advantage of

advertisement would be a great idea. With all the opportunities to create a new device, learning

the proper way to advertise and which consumer market to advertise to would be a broad

experience. In similarity, being careful with the use of my credit and with purchasing items

through credit. Seeing how fast a market can crash and financial problems can occur, it would be

best to learn how to either by something when I have the money to pay for it or putting money

away so even in a finical crisis I would still be able to pay for my items.
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Annotated Bibliography

1. Postma, Micheal. What Can History Teach Us Today? ASCD Express 6.22 - What

Can History Teach Us Today?, 2011, www.ascd.org/ascd-express/vol6/622-

postma.aspx. This source helped me with why I should learn from history.

2. Contemporary America - US History. HIST 153,

bbaddins.schoolcraft.edu/addins/hist153/etext/m6_economy.html. This source helped

with the background information.

3. Mcneill, William H. Why Study History. Why Study History? (1985) | AHA,

www.historians.org/about-aha-and-membership/aha-history-and-archives/historical-

archives/why-study-history-(1985). This source was great for explaining why

historians are needed.

4. Hodges, Blair. Hodges- Final Essay, On Rhetorical Uses of History to Understand

the Present. Academia.edu, www.academia.edu/1539830/Hodges-

_Final_Essay_On_Rhetorical_Uses_of_History_to_Understand_the_Present. This

source helped me grab a different understanding of many things.