For many like Harding, the great attraction was that you didn’t need money to take part. You could buy on margin—purchasing, say, $100 worth of shares for a down payment of $10, with the balance borrowed from your broker, who in turn borrowed from his bank. From the bankers’ point of view, the arrangement could not have been more pleasing. Banks borrowed from the Federal Reserve at 4 or 5 percent and lent it on to brokers at 10 or 12 percent. They were, as one writer put it, “in the position of being handsomely paid simply for existing.”
