It was a fateful Thursday in 1929 that many businesses took a hit and the stock market fell a shocking 11%, which left many businesses struggling. The crash only lasted four days, but its effects were legendary and still to this day referred to as, Black Thursday. On October 24, 1929, bankers quickly bought up stocks in order to prevent the stock market crash of 1929. Unfortunately, their efforts were in vain, and the collapse of the stock market ensued.
Black Monday and Tuesday continued the downfall of the stock market, and a total of $30 billion were lost. In today’s economy, that amount would have totaled $369 billion. Modern day, citizens are used to these shocking amounts of money being lost, but back then, it was cause for alarm. The stock market crash of 1929 was an impending sign that the economy would not be healthy again.
Black Thursday was a significant event in the world of Wall Street because people lost their faith in the stock market. Since the year 1922, the stock market has not been steady, changing at a rate of 20% each year. People who did not have cash to buy stocks were allowed to invest “on margin”. These individuals could put down 10% to 20% of the actual costs and the rest of the money was borrowed from stockbrokers.
As the stock market crashed, stockbrokers were left struggling financially and they had to call in the loans. During this time, many people went bankrupt and lost everything. By that time, the ’20s were over and society did not regain its confidence.
The stock market crash of 1929 resulted in what is known today as the Great Depression. During this time, the economy was not only fragile, but unemployment rose 25%. Economic growth, wages and world trade were also affected by the Great Depression, and as a result, prices plummeted 10% each year due to deflation.
The stock market was already in trouble long before the crash of 1929. In fact, early signs were evident as the Hatry Case in late September spooked the markets. Due to a newspaper article written in the U.S., in which reporters quoted Secretary of the Treasury Mellon, the Dow dropped even further.
It was a long week before the actual stock market crash took place. Headlines in New York roared with the possibility of short-selling, margin sellers, and foreign investors exiting. The day before Black Thursday, headlines all over the U.S. were already creating panic and people quickly started to realize that things would never be the same again. By the time that Black Thursday actually hit, shock and panic had set in, getting ready for the worst stock market crash in history.
Meanwhile, the four fateful days in 1929 happened so long ago, it is hard not to see that the U.S. economy has never been the same. The stability of the stock market has always been questionable, and stock market crashes are inevitable in the foreseeable future.