NARRATOR: In the world of finance, we are often quick to forget the tragedies of the past. Yet valuable lessons are to be had by exploring their causes and effects. After all, in a world of ever-changing rules, products, and services, history is the one constant that can guide us through the ambiguity. So let's take a five-minute history lesson on today's Plain Bagel.

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The year is 1918. And after four years of conflict, the First World War is finally over. America has emerged as one of the victors and is about to enter a period of economic prosperity and cultural change known as the roaring '20s.

Things start off pretty strongly as the post-war economy has seen a boost. Troops are back from the war, delayed projects are starting up again, and, hey, more women are entering the workforce, meaning that more people have a salary to spend. And companies are looking for a piece of the money pie.

So, in 1920, we see our first radio advertisement. And it seems to be working. Recent inventions like the vacuum cleaner and the electric washing machine are becoming hot commodities. And, hey, since things are looking pretty good, the banks are giving out loans to everybody, meaning that even more people can buy the latest and greatest gadgets.

Before you know it, everyone's getting a car, too-- Henry Ford's T-Model, to be exact. And with it, life is becoming a lot easier. Now you can do the Charleston across town and be home for your evening smoke.

All of this is making companies very rich. And the average American is making good money themselves. In fact, people are starting to look for things to do with their newfound wealth-- buy another laundry machine? Nah. A new car? Don't need it.

Oh, wait. What about investing? Yeah, that's it. After all, why be rich when you could be more rich? So the stock market becomes a pretty popular practice.

And with so many people buying, investors are finding it very easy to make money on stocks. Soon enough, everyone thinks they're a 1920s Warren Buffett. And I mean everybody. Cooks, shoeshines, taxi drivers, you name it-- everyone is trading like a Wall Street tycoon, pouring their life savings into whatever security is hot that day.

In fact, there's so much money to be made people are taking out loans to invest even more. And banks are happily collecting the interest. By the way, those same banks are looking to invest more money, too. And, soon enough, they begin [COUGHS] borrowing money from customer bank accounts to buy stocks. But since things are looking up, no one's noticing.

And overall, things are going pretty well in America, financially, anyway. And as we experience flapper culture, prohibition, and the rise of jazz music, people are making good money on the markets. By 1929, America's total wealth has doubled, and investments are up 218% since 1922.

In fact, stocks are rising so fast, companies are having a hard time keeping up and justifying their stock price. Wait, that's not good. And hold on-- production actually seems to be slowing down. Henry's not making as many T-Models, and people aren't buying as many things.

It looks like companies may have overestimated their growth, and now wages are falling. And all that easy-to-access debt? Well, people have taken out quite a bit. And uh-oh-- interest rates are starting to rise.

But wait a minute. The stock market is still up. That doesn't seem right. Even though the economy is looking worse for wear under the hood, investors are more or less ignoring these problems and buying and selling as if everything were exceptional.

Sure, we see a few shakeups and close calls. But things are still largely positive, and people are still gambling on the markets. But, over time, the voice of reason is getting louder. And investor uncertainty is increasing, which brings us to October 24, 1929, Black Thursday as it's called-- the theorized start of the Great Depression.

[BELL RINGS]

Investors have been royally spooked with headlines reading, "Prices of stocks crash in heavy liquidation." And when markets open, they start to sell. And I mean, sell. 12.9 million shares to be exact, a new record. On that opening bell, things fall 11%.

People are selling so much that price tickers can't keep up with the volume. So people don't even know what their selling price is. And all of this selling is dragging the stock market down, erasing large chunks of America's wealth. And things are about to get worse.

While markets recovered later that day, come Black Tuesday, it's an outright panic. The Dow Jones falls 12%. And that record we set last Thursday-- yeah, we just broke it again. The markets lose $14 billion in one day. Some shares are now worthless.

People have lost their life savings. And Americans who borrowed to invest are absolutely crushed. And so, friends, here we are, the Great Depression, the worst economic downturn in the history of the industrialized world.

The Dow Jones falls for another three years after this, losing 90% of its value from its high in 1929. Many lose their jobs as companies shut down. And it's not just investors that are hit.

Remember that money the banks borrowed? Well, a bunch of it is lost in the markets, too. And people are only getting back $0.10 for every dollar they had in their account.

WOMAN: Sorry.

NARRATOR: Banks across the country shut down. And unemployment reaches its highest level in US history-- 24.9%. By this point, bread lines, soup kitchens, and homelessness are common sights. Whether you invested, borrowed money, or even just held money in a bank account, the Depression found a way to hurt you financially.

Times would be tough throughout the 1930s. And fiscal intervention from Franklin D. Roosevelt would do little to boost activity. In fact, it wouldn't be until the rise of the Third Reich in Germany that we would see an end to the crisis. You see, the Great Depression wasn't just felt in America. Rather, with recent globalization, its effects were felt around the world. And in the darkness, we saw the rise of Hitler who used the despair of the German people as a rallying call, ultimately leading to the creation of the Nazi party and the start of the Second World War in 1939.

The war created jobs in America. Ironically, ending one tragedy with the start of another. Experts can't agree on why the Great Depression was as bad as it was, but there were valuable takeaways from the hardship. It demonstrated just how powerful the greed and, alternatively, the fear of the markets can be when they get out of control, while demonstrating the destructive potential of speculation and debt.

Laws would later be introduced to safeguard financial institutions and deposits. And during his time in office, Franklin D. Roosevelt would introduce the Federal Deposit Insurance Corporation and the Securities Exchange Commission, institutions targeted at protecting the wealth of Americans that still exist to this day. Few are left who remember the hardships of the depression, but we'd be foolish to forget the lessons it provided. After all, fear, greed, and speculation are far from dead.

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