This page gives a graphic explanation of the relation between investors and corporations that issue stock. Students should start at the top, where the fictional "Acme Products Corporation" is described as needing money to start or expand a business. 
   The company prepares the stock certificates, or shares, that it will send to the people who invest money in the corporation by buying shares of stock.
   The graphic also describes how people who have saved money can invest it in a corporation.

   Students should understand why this is an important financial system for creating progress.  It allows people with good business ideas but not enough money to get together with people who have extra money but no business plans of their own.
   (Notice that the graphic deals only with the initial selling of stock by the corporation, and not with later sales of that stock by one investor to another.  It is also somewhat simplified - normally banks, brokers, and business consultants all play roles.)

   The bottom half of the page explains how investors make money from their investment.  It shows a woman receiving a dividend check - her share of the profits of the company.  It also explains that investors can sell their stock certificates to other investors.  Such sales make up most of the action in the stock market.

   Students will need a color pencil to complete the line graph on this page.  Red is a good choice.
   Students should study the table, then neatly place dots for the data and connect the dots with straight lines.

What the Chart Shows

   The chart shows a steady run-up of stock prices during the 1920s after a slight dip early in the decade.  During the last few years of the 1920s, the index of stock prices shows the pattern of an investment "bubble."  That means investors were buying shares of stock at prices far higher than business conditions could really justify. 
   Bubbles are driven by greed and a kind of mass frenzy.  Investors keep buying shares at very high prices because they think they will be able to sell later at an even higher price.  But at some point the bubble breaks.  That happened in 1929, and the chart shows the crash of stock prices that resulted. 
   Keep in mind that this is a year by year chart, not a month by month or day by day chart.  If a student asks why the drop appears to start right at 1929, instead of in October or November of that year, point out that the data for 1929 is for the full year.  A much more detailed chart would have to be made to show month by month changes in the stock index.