On a grim Tuesday in October 1929, Wall Street was hit with a crash and exchanged 16 million shares on the New York Stock Exchange in one-day billions of dollars was lost, clearing out thousands of investors. This market crash was considered the worst economic event in the world. In the wake of Black Tuesday, America and the industrial world went into a downward spiral into the Great Depression that would last ten years, the longest-lasting economic decline in the Western industrialized world’s history up to that time.
What Caused the Crash?
Throughout the 20s, the U.S. stock market experienced rapid growth and expansion, reaching its peak in August 1929 after a time of wild speculation throughout the roaring twenties. By then, production had gradually started to decline, and unemployment had risen, leaving stocks in a significant surplus of their real worth. Amid the other causes of the stock market crash of 1929 were low wages, increased debt, a struggling farming sector, and an excess of large loans that could not be settled.
October 29, 1929: Black Tuesday
Stock prices began to decline in September and early October 1929, and on October 18, the fall started. Panic and alarm started to set in, and on October 24, Black Thursday, a record 12,894,650 shares were traded. Investment businesses and leading bankers endeavored to stabilize the market by buying up great stock blocks, creating a reasonable rally on Friday. On Monday, however, the storm broke again, and the market went began to drop. Black Monday was followed by Black Tuesday (October 29, 1929), stock prices fell, and 16,410,030 shares were traded on the New York Stock Exchange in one day. Billions of dollars were wasted, wiping out thousands of investors, and stock tickers ran hours behind because their devices could not manage the tremendous trading volume.
The Great Depression
After the crash, stock prices had nowhere else to go but up, so there was considerable recovery during succeeding weeks. Overall, though, prices continued to plummet as the U.S. fell into the Great Depression, and by 1932 stocks were now worth only about 20 percent of their original value in the summer of 1929. The stock market crash of 1929 was not the only cause of the Great Depression, but it did serve to hasten the economic breakdown worldwide of which it was also a manifestation. By 1933, nearly half of America’s banks had collapsed, and unemployment was nearing 15 million people or 30 percent of the workforce. African Americans were hit particularly hard, as they were the “last hired, first fired.” During the Great Depression, women fared somewhat better, as traditionally female jobs of the era like teaching and nursing were more insulated than those who depended on the markets.
Life for the average household during the Great Depression was tough. Storms and a relentless drought in the Southern Plains ravaged crops “Oakies,” as fleeing residents were called, relocated to big cities in search of work. The relief and support measures in the “New Deal” enacted by the administration of President Franklin D. Roosevelt helped reduce the worst impact of the Great Depression; however, the U.S. economy would not entirely turn around until after World War II.