Herbert Hoover could not have been more wrong.

Easy Money

With stock market prices continuing to skyrocket, an overwhelming sense of optimism ruled over the country in the late 1920s. But no one realized how fragile that optimism really was.

Investing in the stock market had never produced such large profits. Here is how it worked.

When a company needs money, it goes public and sells shares of stock in the company. Each shareholder becomes part owner of the company. The number of shares are limited and governed by the law of supply and demand.

If a company is doing exceptionally well, people will pay inflated prices for each share of stock. For example, someone could buy 10 shares of stock at $100 each, and then turn around and sell those 10 shares for $200 each and make a profit.

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