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The Wall Street Crash of 1929, also called the Great Crash or the Crash of '29, is the stock-market crash that occurred in late October, 1929. It started on October 24 ("Black Thursday") and continued through October 29, 1929 ("Black Tuesday"), when share prices on the New York Stock Exchange (NYSE) collapsed. However, the days leading up to the 29th had also seen enormous stock-market upheaval, with panic selling and vast levels of trading interspersed with brief periods of recovery. Black Monday (1987) on the Dow Jones A stock market crash is a sudden dramatic loss of value of shares of stockin[corporation]]s. ...
1929 (MCMXXIX) was a common year starting on Tuesday (link will take you to calendar). ...
October 24 is the 297th day of the year (298th in leap years) in the Gregorian Calendar, with 68 days remaining. ...
October 29 is the 302nd day of the year (303rd in leap years) in the Gregorian Calendar, with 63 days remaining. ...
New York Stock Exchange (June 2003) The New York Stock Exchange (NYSE), also nicknamed the Big Board, is the largest stock exchange in the world (by dollar volume) and second largest by number of listings. ...
"Anyone who bought stocks in mid-1929 and held on to them saw most of his adult life pass by before getting back to even."—Richard M. Salsman [1]
Timeline of the Crash
September The Dow Jones Industrial Average ("the DJIA" or "the Dow") reached a high of 381.17 on September 3, 1929. The Dow Jones Industrial Average (DJIA) is one of several stock market indices created by Wall Street Journal editor and Dow Jones & Company founder Charles Dow. ...
"In September, the tariff bill reached the Senate, the same month stock prices peaked." [2] The Hawley-Smoot or Smoot-Hawley Tariff Act raised US tariffs on over 20,000 imported goods to record levels, and, in the opinion of many economists, protracted or even initiated the Great Depression. ...
The Smoot-Hawley Tariff Act eventually "imposed an effective tax rate of 60% on more than 3,200 products and materials imported into the US. Tariff rates had quadrupled." [3]
October
Monday, October 21 "On October 21, an amendment to impose tariffs only on agricultural imports was defeated. Three days later..." [4]
Black Thursday: Thursday, October 24 "Three days later the stock market suffered its first one-day crash." [5] A then record of 13 million shares were traded.
The market was crashing and the floor of the NYSE was in a state of panic. By noon on Black Thursday, there had been eleven suicides of fairly prominent investors. New York Stock Exchange (June 2003) The New York Stock Exchange (NYSE), also nicknamed the Big Board, is the largest stock exchange in the world (by dollar volume) and second largest by number of listings. ...
It has been suggested that Suicide and culture be merged into this article or section. ...
At 1:00pm, several leading Wall Street bankers met to find a solution. The group included Thomas W. Lamont, acting head of Morgan Bank; Albert Wiggin head of the Chase National Bank; and Charles E. Mitchell, president of National City Bank. They chose Richard Whitney, vice president of the Exchange, to act on their behalf. With the bankers' financial resources behind him, Whitney placed a bid to purchase a large block of shares in U.S. Steel at a price well above the current market. As amazed traders watched, Whitney then placed similar bids on other "blue-chip" stocks. Thomas William Lamont (1870-1948) was a American banker. ...
JPMorgan Chase & Co. ...
Albert Henry Wiggin, Time magazine cover August 24, 1931 Albert Henry Wiggin (February 21, 1868–May 21, 1951) was an American banker. ...
The Chase Manhattan Bank was formed by the merger of the Chase National Bank and the Bank of the Manhattan Company in 1955. ...
Chinatown Citibank branch (New York City, USA). ...
Richard Whitney (August 1, 1888 - December 5, 1974), was an American financier, president of the New York Stock Exchange 1930-1935, and a convicted embezzler. ...
The United States Steel Corporation (NYSE: X) is an integrated steel producer with major production operations in the United States and Central Europe. ...
A blue chip stock is the description of the stock of well-established companies having stable earnings and no extensive liabilities. ...
Although a similar such tactic had ended the Panic of 1907, this action halted the slide that day and returned stability to the market only temporarily. The Panic of 1907 was a relatively serious economic downturn in the United States caused by a New York credit crunch that spread across the nation and led to the closings of banks and businesses. ...
"Five days later, October 29..." [6]
Black Monday: Monday, October 28 Over the weekend, the events were dramatized by the newspapers across the U.S. On Monday, investors decided to get out of the market and the slide continued with a record 13% loss in the Dow for the day.1
Black Tuesday: Tuesday, October 29 "Five days later, October 29—amid rumors that U.S. President Herbert Hoover would not veto the pending tariff bill—stock prices crashed even further.” [7] For the pop band, see Presidents of the United States of America. ...
Herbert Clark Hoover (August 10, 1874 – October 20, 1964), the 31st President of the United States (1929-1933), was a successful mining engineer, humanitarian, and administrator. ...
The Smoot-Hawley Tariff Act raised US tariffs on over 20,000 dutiable items to record levels, and, in the opinion of many economists, protracted the Great Depression. ...
William C. Durant joined with members of the Rockefeller family and other financial giants to buy large quantities of stocks in order to demonstrate to the public their confidence in the market but their effort failed to stop the slide. William Crapo Durant (December 8, 1861-March 18, 1947) was a leading pioneer of the United States automobile industry, creating the system of multi-brand holding companies with different lines of cars. ...
The Rockefeller family (originally Roggenfelder), founded by John Davison Rockefeller (1839-1937) and his brother William Rockefeller (1841-1922), is an industrial family of German origin, that made a fortune in the oil business during the latter part of the 19th century primarily through their Standard Oil Company. ...
The DJIA lost 12% with 16.4 million shares traded (a new record, surpassing the one set only the previous Thursday). The Dow Jones Industrial Average (DJIA) is one of several stock market indices created by Wall Street Journal editor and Dow Jones & Company founder Charles Dow. ...
"As late as April 1942, US stock prices were still 75% below their 1929 peak and would not revisit that level until November 1954—almost a quarter of a century later." [8]
The stock market took 25 years to recover its 1929 high value.
What caused the huge crash?
Boom-bust theory Keynesian, Monetarist, and Austrian economists agree that the Crash followed an alleged speculative boom that had taken hold in the late 1920s, which had led millions of Americans to invest heavily in the stock market, even borrowing money to buy more stock. Banks lent heavily to fund this share-buying spree. Keynesian economics, or Keynesianism, is an economic theory based on the ideas of John Maynard Keynes, as put forward in his book The General Theory of Employment, Interest and Money, published in 1936 in response to the Great Depression of the 1930s. ...
Monetarism is a set of views concerning the determination of national income and monetary economics. ...
Speculation involves the buying, holding, and selling of stocks, bonds, commodities, currencies, collectibles, real estate, derivatives or any valuable thing to profit from fluctuations in its price as opposed to buying it for use or for income ( via dividends, interest etc). ...
The 1920s were a decade sometimes referred to as the Jazz Age or the Roaring Twenties, usually applied to America. ...
Leverage is using given resources in such a way that the potential positive or negative outcome is magnified. ...
A bank is an institution that provides financial service, particularly taking deposits and extending credit. ...
This investment drove share prices up to artificially high levels; the rising share prices encouraged more people to invest, as they hoped the shares would rise further, thus fueling further rises, and creating an economic bubble. On October 24, 1929 (with the Dow just off its September 3rd peak from at 381.17), the bubble finally burst and panic selling set in. 12,894,650 shares were traded in the space of one day, as people desperately tried to dispose of their shares before they became worthless. See stock (disambiguation) for other meanings of the term stock In financial terminology, stock is the capital raised by a corporation, through the issuance and sale of shares. ...
Currier & Ives print on economic bubbles, 1875. ...
The Dow Jones Industrial Average (DJIA) is one of several stock market indices created by Wall Street Journal editor and Dow Jones & Company founder Charles Dow. ...
Over the following few days another thirty million shares changed hands and share prices collapsed, ruining many investors.
The banks which had lent heavily to fund share buying found themselves saddled with debt, which caused many banks to fail. Debt is that which is owed. ...
Notice of closure stuck on the door of a computer store the day after its parent company, Granville Technology Group Ltd, declared bankruptcy (strictly, administration - see text) in the UK. Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. ...
While millions of people lost their savings, businesses lost their credit lines and were forced to close, causing massive unemployment. The term credit can have several meanings in different contexts. ...
Dorothea Langes Migrant Mother depicts destitute pea pickers in California during the Great Depression. ...
The crash dramatically worsened an already fragile economic situation, and was a major contributing factor to the Great Depression. There is a good deal of controversy among economists and historians about the nature of that contribution, though. Some hold that political over-reactions to the crash, such as in the passage of the Smoot-Hawley Tariff Act through the US Congress, caused more harm than the crash itself. Dorothea Langes Migrant Mother depicts destitute pea pickers in California, centering on Florence Owens Thompson, a mother of seven children, age thirty-two, in Nipomo, California, March 1936. ...
The Hawley-Smoot or Smoot-Hawley Tariff Act raised US tariffs on over 20,000 imported goods to record levels, and, in the opinion of many economists, protracted or even initiated the Great Depression. ...
The Congress of the United States is the legislative branch of the federal government of the United States of America. ...
Explanation from supply-side economic theory Many commentators view the Smoot-Hawley Tariff Act as a consequence of the Crash, since the act was not signed by President Hoover until June of 1930. However, supply-side economists (and others) argue that stock-market prices anticipate future profits. The Crash reflected investors’ rational expectations that tariffs would raise prices for U.S. consumers (both final consumers and manufacturers that used the imported products as inputs) and reduce firms’ future profits. The Hawley-Smoot or Smoot-Hawley Tariff Act raised US tariffs on over 20,000 imported goods to record levels, and, in the opinion of many economists, protracted or even initiated the Great Depression. ...
Supply-siders also blame two tariff laws for the earlier, sharp recession of 1920-21.
The Crash of 1929 and the subsequent Great Depression were in part longer and deeper for three reasons: [9] Dorothea Langes Migrant Mother depicts destitute pea pickers in California, centering on Florence Owens Thompson, a mother of seven children, age thirty-two, in Nipomo, California, March 1936. ...
- The Smoot-Hawley Tariff Act applied tariffs to more than 3,200 products (many more than the previous tariffs).
- The tariff rates were very high — averaging 60%.
- Other countries responded by enacting their own tariffs against U.S. goods in retaliation.
Official investigation of the Crash In 1931, the Pecora Commission was established to study the causes of the crash. Based in part on the Commission's findings, the United States Congress passed the Glass-Steagall Act in 1933, which mandated a separation between commercial banks, whose activities involved the taking of deposits and making loans, and investment banks whose role was the underwriting, issuing, and distributing stocks, bonds, and other securities. The Pecora Commission is the name commonly referred to by the public and the United States Center for Legislative Archives, for the commission established on March 4, 1932 by the United States Senate Banking and Currency Committee with a mandate to investigate the causes of the Wall Street Crash of...
Congress in Joint Session. ...
Two separate laws are known as the Glass-Steagall Act. ...
A commercial bank is a type of financial intermediary and a type of bank. ...
Investment banks assist public and private corporations in raising funds in the capital markets (both equity and debt), as well as in providing strategic advisory services for mergers, acquisitions and other types of financial transactions. ...
After the experience of the 1929 crash, stock markets around the world instituted measures to temporarily suspend trading in the event of rapid declines, claiming that they would prevent such panic sales. However, the crash of Monday, October 19, 1987 was even more severe than the Crash of 1929. On Black Monday of 1987, the Dow Jones Industrial Average fell 22.6%, the largest one-day decline before or since. Dow Jones (19 July 1987 through 19 January 1988) FTSE 100 Index (19 July 1987 through 19 January 1988) Black Monday is the name ascribed to Monday October 19, 1987. ...
The Dow Jones Industrial Average (DJIA) is one of several stock market indices created by Wall Street Journal editor and Dow Jones & Company founder Charles Dow. ...
Footnotes - ^ Salsman, Richard M. "The Cause and Consequences of the Great Depression, Part 1: What Made the Roaring '20s Roar" in The Intellectual Activist, ISSN 0730-2355, June, 2004, p. 16.
- ^ Salsman, Richard M. "The Cause and Consequences of the Great Depression, Part 2: Hoover's Progressive Assault on Business" in The Intellectual Activist, ISSN 0730-2355, July, 2004, p. 15.
- ^ Ibid.
- ^ Ibid.
- ^ Ibid.
- ^ Ibid.
- ^ Ibid.
- ^ Salsman, part 1, p. 16. [Emphasis original.]
- ^ Salsman, part 2, p. 15.
Ibid (Latin, short for ibidem, the same place) is the term used to provide an endnote or footnote citation or reference for a source that was cited in the last endnote or footnote. ...
See also
See also The Hawley-Smoot or Smoot-Hawley Tariff Act raised US tariffs on over 20,000 imported goods to record levels, and, in the opinion of many economists, protracted or even initiated the Great Depression. ...
Dorothea Langes Migrant Mother depicts destitute pea pickers in California, centering on Florence Owens Thompson, a mother of seven children, age thirty-two, in Nipomo, California, March 1936. ...
Further reading - John Kenneth Galbraith (1954), The Great Crash, 1929.
- Jude Wanniski (1978), The Way the World Works.
- Salsman, Richard M. “The Cause and Consequences of the Great Depression” in The Intellectual Activist, ISSN 0730-2355.
Mr. Salsman argues that the Great Depression was fundamentally caused by statist government policy, and ended only when government policy became less statist and more laissez-faire. John Kenneth Galbraith John Kenneth Galbraith, OC, Ph. ...
Jude Thaddeus Wanniski (June 17, 1936, Pottsville, Pennsylvania – August 29, 2005, Morristown, New Jersey) was an economist, journalist and conservative commentator. ...
Dorothea Langes Migrant Mother depicts destitute pea pickers in California, centering on Florence Owens Thompson, a mother of seven children, age thirty-two, in Nipomo, California, March 1936. ...
Statism is a term to describe an economic system where a government implements a significant degree of centralized economic planning or intervention, as opposed to a system where the overwhelming majority of economic planning occurs at a decentralized level by private individuals in a relatively free market. ...
Laissez-faire is short for laissez faire, laissez passer, a French phrase meaning to let things alone, let them pass. First used by the eighteenth century Physiocrats as an injunction against government interference with trade, it is now used as a synonym for strict free market economics. ...
- “Part 1: What Made the Roaring ’20s Roar”, June, 2004, p. 16-24.
- “Part 2: Hoover's Progressive Assault on Business”, July, 2004, pp. 10-20.
- “Part 3: Roosevelt's Raw Deal”, August, 2004, pp. 9-20.
- “Part 4: Freedom and Prosperity”, January, 2005, pp. 14-23.
Herbert Clark Hoover (August 10, 1874 – October 20, 1964), the 31st President of the United States (1929-1933), was a successful mining engineer, humanitarian, and administrator. ...
Franklin Delano Roosevelt (January 30, 1882 – April 12, 1945), 32nd President of the United States, the longest-serving holder of the office and the only person to be elected President more than twice, was one of the central figures of 20th century history. ...
Wikiquote has a collection of quotations related to: New Deal The New Deal is the name given to the series of programs implemented under President Franklin D. Roosevelt with the goal of stabilizing, reforming and stimulating the United States economy during the Great Depression. ...
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