1929 Stock Market Crash and the Great Depression
On October 29, 1929, Black Tuesday hit Wall Street as investors traded
some 16 million shares on the New York Stock Exchange in a single day.
Billions of dollars were lost, wiping out thousands of investors. In the
aftermath of Black Tuesday, America and the rest of the industrialized
world spiraled downward into the Great Depression (1929-39), the deepest
and longest-lasting economic downturn in the history of the Western
industrialized world up to that time.
1929 Stock Market Crash
During the 1920s, the U.S. stock market underwent rapid expansion,
reaching its peak in August 1929, after a period of wild speculation. By
then, production had already declined and unemployment had risen,
leaving stocks in great excess of their real value. Among the other
causes of the eventual market collapse were low wages, the proliferation
of debt, a struggling agricultural sector and an excess of large bank
loans that could not be liquidated.
Stock prices began to decline in September and early October 1929, and
on October 18 the fall began. Panic set in, and on October 24, Black
Thursday, a record 12,894,650 shares were traded. Investment companies
and leading bankers attempted to stabilize the market by buying up great
blocks of stock, producing a moderate rally on Friday. On Monday,
however, the storm broke anew, and the market went into free fall. Black
Monday was followed by Black Tuesday (October 29), in which stock
prices collapsed completely and 16,410,030 shares were traded on the New
York Stock Exchange in a single day. Billions of dollars were lost,
wiping out thousands of investors, and stock tickers ran hours behind
because the machinery could not handle the tremendous volume of trading.
1929 Stock Market Crash and the Great Depression
After October 29, 1929, stock prices had nowhere to go but up, so there
was considerable recovery during succeeding weeks. Overall, however,
prices continued to drop as the United States slumped into the Great
Depression, and by 1932 stocks were worth only about 20 percent of their
value in the summer of 1929. The stock market crash of 1929 was not the
sole cause of the Great Depression, but it did act to accelerate the
global economic collapse of which it was also a symptom. By 1933, nearly
half of America’s banks had failed, and unemployment was approaching 15
million people, or 30 percent of the workforce.
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