Black Tuesday Stock Market Crash
On October 29, 1929, the worst stock market crash in history occurred, marking the start of the decade-long Great Depression.
The early 1920s was a time of great economic prosperity for America. Industry was booming, and Americans wanted to be a part of this economic surge. To accomplish this, they bought common stock on the open market, often borrowing money to do so.
Wealthy American businessmen increased their wealth by investing in the stock market rather than putting profits back into their industries. As a result, job growth was minimal, the gap between the rich and poor grew, and stocks were priced artificially high.
The average cost of each share more than doubled between 1925 and 1929, and market speculation increased. People purchased stock in hope of future price increases. The first clue that the market was overloaded came on October 24, 1929, now known as Black Thursday. Prices began to enter a slump, and investors became suspicious of a panic.
Prices held Friday and Saturday, but fell again Monday. Then on Tuesday, October 29th, the day of the stock market crash, more than 16 million shares changed hands. Investors sold stock at far less than they had paid. Some witnesses said that shares might have even been given away.
It was almost impossible to add up all the losses, as stunned brokers watched stock prices plummet. In fact, stocks were traded so fast that by the time the final bell sounded at three o’clock, the ticker was four hours behind. By the end of the day, trading had stabilized, but not in time to save billions of dollars. That day became known as Black Tuesday. Stock values would continue to fall steadily for the next three years. Fortunes were lost overnight, and many banks closed their doors forever.
Meanwhile, President Herbert Hoover who’d taken office earlier that year, had predicted a possible economic downturn years earlier when he was secretary of commerce. He’d hoped that communities could save themselves without government intervention. He even met with business leaders to encourage them not to lower workers’ wages. But over the coming months they laid off workers instead as the economy continued to suffer.
In February 1930, Hoover announced the worst of the Depression was over. He was wrong. Unemployment increased dramatically, so people could not pay their mortgages and became homeless. To aid European nations still recovering from World War I, Hoover suspended their payments of war debts, which brought even less money into the U.S. to help those in need.
Hoover didn’t want to use Federal money for social welfare programs and soon many blamed him for the state of America. He lost his bid for re-election to Franklin Roosevelt who promised Americans a “New Deal.”
One of Roosevelt’s first moves as president was convincing Congress to pass his National Recovery Act. Roosevelt and his advisors blamed part of the cause of the Depression on unrestrained competition. The legislation authorized FDR to regulate industry in order to raise prices after severe deflation and stimulate the economy. Leading businessmen and trade associations were called upon to draft the specifics of the plan, which focused on fair trade and labor practices. A second title in the National Recovery Act established the Public Works Administration, outlining the public works the bill would fund. In 1935, the act was found to be unconstitutional by a unanimous Supreme Court decision. The Works Progress Administration ultimately replaced this.
The sudden closing of banks during the Great Depression left many people penniless, and those who did have money were hesitant to deposit it in banks for fear of losing their assets. Created as a result of the Banking Act of 1933, the Federal Deposit Insurance Corporation (FDIC) attempted to renew confidence in banks by insuring money deposited in member banks, up to $5,000 per account.
Roosevelt’s New Deal would make great progress toward rebuilding the economy. By the early 1940s, America had recovered from the Depression and programs such as the Works Progress Administration had employed some 8.5 million people.
Click here to see what else happened on This Day in History.
The depression ended at 8:01 AM Hawaii Standard Time December 7, 1941.
It was not due to anything that FDR did. Unemployment was still far too high
at that late date. Now the Government had to gear up for a war economy
and millions were either donning uniforms or now working in war plants.
Many of the “New Deal” programs helped but wealth was not being created
as private company jobs were still scarce. Government run economy never works.
Ask the former Soviet Union.
So true Ken…you beat me in saying pretty much what you just stated. I’m afraid that the majority of the people of this great country do not believe this.
Another opinion not a fact.
fact, Tom and the policies continue under the horrible Obama Biden administration. High unemployment, 2o trillion dollar deficits, trillion dollar trade imbalance, health care costs that are unaffordable because of AHCA, and on and on
Ernest…I did not make myself clear, most Americans believed that FDR saved the U.S. after the Great Depression, when in reality, in my humble opinion it was World War II (I think that’s what Tom was saying also). I remember my Father back in the 50’s and 60’s saying; “what we needed was another War”. I never agreed with him, but can understand how his generation might have felt that way. I don’t think anyone really knows what can get us out of this “funk” we are in now, but the entitlement mentality of the average American is not helping. We are going to have to pay the piper down the road…again, just my opinion. By the way, good article Mystic…sometimes you forget that these articles are being written to increase interest in Stamp Collecting.
I made this comment last week after another post about the Depression and World War II. It wasn’t World Wart per-say that ended the Depression, it was the massive federal government spending on defense brought on by the war. This could have been done during the 1930’s but the political will wasn’t there. And actually, it did have something to do with FDR, because he saw the need for America to re-arm even before the attack on Pearl Harbor.
You must be voting for crooked Hillery
No, although I held my nose and voted for Trump, I would never vote for crooked Hillary.
David and Dennis, why do people like you always have to pivot to anti-Obama and anti-Hillary comments. Going to be a rough four years for you while Hillary Clinton is addressed as Madam President.
If criminal Clinton becomes dictator she’ll have a rough 4 years defending her scandals and investigations till they lock her up.
Yes it is a fact that is exactly what happened
The email that took me hear stated “This Day in History marks the works stock market crash in history.” I think they meant “the worst” not “the works”. So much for proof reading.
By the way, today is National Cat Day, and today’s Caturday.
Reply to Frank Doyle: You are so far off the scale that it’s a little hard to reply to you. I think that you have been listening to Trump so much that you have lost your senses. Fortunately, the majority of the American people have a little better grip on reality. So as the late journalist, Edward R. Murrow used to say, “Good night, and good luck.”
Mr. Snyder: Your comment is not discussed or even mentioned in schools.Over the years, the only thing teachers present is the “heorism” o FDR and the “obviously effective” policies of the New Deal.
David, that’s just nonsense. I taught high school and college history for 38 years, and I can assure you the role of World War II and federal defense spending had in ending the Depression are fully covered. Roosevelt’s New Deal did not end the Depression, but many of the laws and programs of the New Deal reduced suffering and provided a road map to provide what Roosevelt referred to as economic security.
Sounds like the housing bubble problem. What is the next event we don’t expect? Maybe someone crashes today:)
You guys are all partially right and partially wrong. While the Depression (note the capital D) did indeed end as a result of the war, it did not officially conclude until the Japanese surrendered in 1945. While most History books do not specify it, this History professor does, because of the employment and housing boom which was a direct result of the war. Come on, folks, read a little more!!
Loved the comments. Sad but true history is not taught in schools today. Revised History should be the course title.
G. Crawford, our understanding of history and the teaching of history are constantly being revised. To give you a quick example, in the high school history books of the 1950s, African Americans were generally depicted as contented slaves, women seldom appeared except as wives of famous men (i.e. Martha Washington), Indians were depicted only as enemies of the advancing Americans, and Hispanic Americans were completely ignored. So yes, today’s schools teach “revised history,” and it’s a good thing.
Actually, the New Deal had made good progress by 1938 when FDR, at heart something of a fiscal conservative, and Henry Morganthau, his Sec. of the Treasury, drastically reduced govt spending and cutting back a number of employment programs. That produced a recession that wiped out many of the gains made by then. FDR then reversed course and resumed spending. About then the build up for WWII also commenced that truly did lift us out of the depression. Still, as late as 1945 the main concern was that once the war ended we would fall back into the depression. My own mother told me that was her main concern as the war wound down that year. It was another govt program, the GI Bill, that helped us to avoid that fate and also helped to set off the greatest economic boom in our history. That was another of FDR”s legacies.
Perhaps it would have been better to have not instituted those programs of the New Deal. But then what about those people who had been waiting for the empty promises of the Hoover administration to come true–prosperity never seemed to be around those “corners” that the President was promising. But with a reduced population that would have resulted from starving and bad nutrition that comes from not getting enough to eat would have lowered our population enough so that only those “better off” would have been ready to be in military service in WWII. We might have lost the War but we wouldn’t have had so many entitlement programs that really only help those not willing to work. That would have solved a lot of problems for us now. Maybe a “tRumpian” President would have resulted in the 1940’s and 1950’s who would have made us the Superman state Donald wishes for now. Maybe we would have a white population which would always say yes to “every man for himself.” We can only hope for that now. Then there will be no illegal aliens since there is no reason to come to a country where only the better off survive.