Others note the huge amount of leverage investors had used to buy stocks, and some cite the scandal-ridden recall of British funds invested in the United States and the September 26 spike in the Bank of England's discount rate. For example, many cite the September 1929 passage of the Smoot-Hawley Tariff Act, which placed high taxes on many imported items, as a major contributor to the market's instability.
economy.Īs with many market reversals, the causes are numerous, intertwined, and controversial. Historians often cite the stock market crash of 1929 as the beginning of the Great Depression because it marked not only the end of one of the nation's greatest bull markets but also the end of widespread optimism and confidence in the U.S. Why Does the Stock Market Crash of 1929 Matter? Thousands of banks failed as a result businesses closed, unable to get credit and the nation's disposable income fell precipitously. They had to sell everything to pay back their debts, and many couldn't pay them back at all. The situation influenced what became a major turning point for the American economy because many of these borrowers, who had leveraged themselves considerably in an effort to participate in the bull market, were ruined financially. The days surrounding the stock market crash of 1929 were especially painful for investors who had borrowed money to purchase stocks that had become worthless or close to it. After this dismal week, prices continued to fall, wiping out an estimated $30 billion in stock values by mid-November 1929. This did little more than temporarily stem the tide, however, because from Black Thursday to Octo( Black Tuesday), stocks still lost more than $26 billion of value and more than 30 million shares traded. His confidence encouraged others to begin buying. However, not all was lost: a rally that started when Richard Whitey, then head of the New York Stock Exchange, calmly began buying shares of U.S.
#Stock crack of 1929 windows#
The stock market crash of 1929 is often associated with stories of investors and traders jumping out of windows after losing everything. The Dow Jones Industrial Average closed at 230.07 that day. The Dow Jones Industrial Average closed at 299.27 that day. Some exchanges were so overwhelmed that they closed early. The trading volume got so high that it delayed the ticker tape by over an hour, which created confusion and anxiety. By October 24, Black Thursday, the selling frenzy reached a critical mass and turned to flat-out panic. The selling became intense on Monday, October 23, and the market fell 6.3%. This respite sparked profit taking, and the Dow Jones Industrial Average began falling again amid the selling. Then on October 10, 1929, the Dow Jones Industrial Average closed above 350 for the first time in 10 trading days. Many economists were not sure what to make of the slide, and Irving Fisher, a well-known economist at the time, dismissed it as nothing serious. Prices began falling slightly but steadily, however, as investors began to take profits. The Dow Jones Industrial Average nearly doubled, rising from 191 in early 1928 to 381 by September 3, 1929. Stock prices had risen across the board, even for companies that posted little profit, and investors were very optimistic that the general upward trend of the market and the economy would continue for some time. The years preceding the stock market crash of 1929 were filled with irrational exuberance. How Does the Stock Market Crash of 1929 Work? On just one day (October 24, 1929), panicked sellers traded nearly 13 million shares on the New York Stock Exchange (more than three times the normal volume at the time), and investors suffered $5 billion in losses.
The stock market crash of 1929 is the most famous stock market crash of all time.