Economic Depression: The 1929 Wall Street Crash

The Wall Street Crash of 1929, also known as the Crash of ’29, was one of the most devastating stock-market crashes in American history. It consists of Black Thursday, the initial crash and Black Tuesday, the crash that caused general panic five days later. The crash marked the beginning of widespread and long-lasting consequences for the United States. Though economists and historians disagree on exactly what role the crash played in the ensuing economic fallout, some regard it as the start of the Great Depression. Most historians, however, agree that it was actually a symptom of the Great Depression, rather than a cause. The crash was also the starting point of important financial reforms and trading regulations.At the time of the crash, New York City had grown to be a major financial capital and metropolis. The New York Stock Exchange (NYSE) was the largest stock market in the world. The roaring twenties were a time of prosperity and excess in the city, and, despite warnings of speculation, many believed that the market could sustain high price levels. In the words of Irving Fisher, "Stock prices have reached what looks like a permanently high plateau." The euphoria and financial gains of that great bull market were shattered on 24 October 1929, Black Thursday, when share prices on the NYSE collapsed. Stock prices fell on that day and they continued to fall, at an unprecedented rate, for a full month.In days leading up to Black Thursday the market was unstable. Periods of panic selling and high volumes of trading were interspersed with brief periods of rising prices and recovery. After the crash the Dow Jones Industrial Average (DJIA) recovered early in 1930, only to reverse again, reaching a low point of the great bear market in 1932. The market did not return to pre-1929 levels until late 1954, and was lower at its July 8, 1932 nadir than it had been since the 1800s.
“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.”