The Stock Market Boom and Public Investment

January 1, 1925

Report Outline
Causes of Wider Stock Distribution
Source of Funds for Working Class Investment
Effect of Shifts in Ownership
Special Focus

The extent and duration of the rise in stock prices, combining to make the post election boom one of the most remarkable in the financial history of the United States, are generally attributed to the existence of a large and increasing demand for corporate securities on the part of the general public. The fact that there was no profit taking during the first two months of the boom on a scale sufficient to produce a general set back is taken as an indication that the bulk of the public buying has been for investment rather than speculation.

Throughout the first quarter of the present century there has been a tendency toward greater diffusion of the ownership of the large American corporations which has been pointed out by economists as one of the most significant trends of the period. This tendency has shown a remarkable acceleration since the war and seems likely, when the statistics become available, to show an important climax in 1924–25.

Some measure of the tendency toward wider distribution of corporate stocks is given by the following table, showing the increase in numbers of corporation stockholders since 1900, and the steady reduction in the average number of shares held.

Year Total capital stock of all U. S. Corporations Estimated Number of Stockholders in U.S Average Number of $100 Shares per Stockholder
1900 $61,831,955,370 4,400,000 140.1
1910 64,053,763,141 7,400,000 86.3
1913 65,038,309,611 7,500,000 87.0
1917 66,584,420,424 8,600,000 77.3
1920 69,205,967,666 12,000,000 57.3
1923 71,479,464,925 14,400,000. 49.7

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Jan. 01, 1925  The Stock Market Boom and Public Investment
Investment and the Stock Market