- Historic Sites The Days Of Boom And Bust As the twenties
roared on, a market crash became inevitable. Why? And who should
have stopped it? August 1958 | Volume 9, Issue 5 And since
capital gains were what counted, one could vastly increase his
opportunities by extending his holdings with borrowed funds—by
buying on margin. Margin accounts expanded enormously, and from
all over the country—indeed from all over the world—money poured
into New York to finance these transactions. During the summer,
brokers’ loans increased at the rate of $400,000,000 a month. By
September they totaled more than $7,000,000,000. The rate of
interest on these loans varied from 7 to 12 per cent and went as
high as 15. This boom was also inherently self-liquidating. It
could last only so long as new people, or at least new money,
were swarming into the market in pursuit of the capital gains.
This new demand bid up the stocks and made the capital gains.
Once the supply of new customers began to falter, the market
would cease to rise.