As the main antecedent of the stock crisis, Galbraith's spectacular development located in the housing market in Florida (USA), especially after 1925. Thus, Galbraith mentions the participation of Carlo Ponzi, known creator of the scheme that bears his name (a type of pyramid scam economica) on sale of land near Jacksonville (Florida).
Galbraith extends this overview to the field full of stock speculators, backed by successive records in terms of Wall Street stock indices (for which use the index of The New York Times on 25 industrial values, rather than the more usual Dow Jones) and of shares traded on the market (in 1928: 3.9 million shares on March 9 5.1 million on June 12 6.6 million November 16).
The author also highlights another important factor as the unbalanced use of the trading period with a guarantee, by which an investor can apply for a bank loan to purchase shares in the bag, depositing as collateral the shares acquired. These credits are subject to an interest of between 5 and 12 percent (much lower than usual in the bag upgradings in those years). This not only caused many Americans made to speculate on the stock exchange, but carries many savers (both individuals and companies, domestic and foreign) to offer their savings to banks on Wall Street with the sole purpose of financing the speculation.
In Montreal, London, Shanghai and Hong Kong were heard murmuring about these fees. Everywhere, affluent men themselves were told that 12 percent was 12 percent. A flowing river of gold began to lead Wall Street, with the virtuous intention of helping the Americans to support the purchases of shares through forward transactions with confidence. ( ') Some companies decided to go to Wall Street: instead of producing goods, as many headaches involved, willingly confined themselves to the financing of speculation.
Chapter 1