Wall Street Crash Wall Street Crash ▼ Primary Sources ▼ Wall Street Crash One way of making money during the 1920s was to buy stocks and shares. Prices of these stocks and shares constantly went up and so investors kept them for a short-term period and then sold them at a good profit. As with consumer goods, such as motor cars and washing machines, it was possible to buy stocks and shares on credit. This was called buying on the margin and enabled speculators to sell off shares at a profit before paying what they owed. In this way it was possible to make a considerable amount of money without a great deal of investment. In an article entitled Everybody Ought to be Rich John Jaskob claimed that by investing $15 a month in stocks and shares it would be possible to make $80,000 over the next 20 years. Another investor, Will Payne, stated in 1929 that it had become so easy to make money on the Wall Street Stock Exchange, that it had ceased to become a gamble. He went on to say that a gambler wins only because someone loses, when you invest in stocks and shares, everybody wins.

On 3rd September 1929 the stock market reached an all-time high. In the weeks that followed prices began to decline. Then on 24th October, over 12,894,650 shares were sold. Prices fell dramatically as sellers tried to find people willing their shares. That evening, five of the country's bankers, led by Charles Edward Mitchell , chairman of the National City Bank , issued a statement saying that due to the heavy selling of shares, many were now under-priced. This statement failed to halt the reduction in demand for shares. On 29th October, over 16 million shares were sold. The market had lost 47 per cent of its value in twenty-six days. Fred Bell was a wealthy businessman but was forced to sell apples after the Wall Street Crash. Although less than one per cent of the American people actually possessed stocks and shares, the Wall Street Crash was to have a tremendous impact on the whole population. The fall in share prices made it difficult for entrepreneurs to raise the money needed to run their companies. Within a short time, 100,000 American companies were forced to close and consequently many workers became unemployed.

As there was no national system of unemployment benefit, the purchasing power of the American people fell dramatically. This in turn led to even more unemployment. It was later discovered that some Wall Street bankers had been partly responsible for the crash. It was pointed out that from September 1929, Albert H. Wiggin had begun selling short his personal shares in Chase National Bank at the same time he was committing his bank's money to buying. He shorted over 42,000 shares, earning him over $4 million. His earning were tax-free since he used a Canadian shell company to buy the stocks. As William E. Leuchtenburg , the author of Franklin D. Roosevelt and the New Deal (1963) pointed out: "At a time when millions lived close to starvation, and some even had to scavenge for food, bankers like Wiggin and corporation executives like George Washington Hill of American Tobacco drew astronomical salaries and bonuses. Yet many of these men, including Wiggin, manipulated their investments so that they paid no income tax at all.

In Chicago, where teachers, unpaid for months, fainted in classrooms for want of food, wealthy citizens of national reputation brazenly refused to pay taxes or submitted falsified statements." Senator Burton Wheeler of Montana argued: "The best way to restore confidence in the bankis would be to take these crooked presidents out of the banks and treat them the same way as we treated Al Capone when he failed to pay his income-tax." Senator Carter Glass of Virginia claimed: "One banker in my state attempted to marry a white woman and they lynched him." The panic increased when Ivar Kreuger shot himself in March 1932. It has been estimated that since the Wall Street Crash he had lost between $50 million and $100 million ($750 million and $1.5 billion in today's currency). The following month it was revealed that he had been a swindler who had forged $100,000,000 in bonds. Soon afterwards the leading utility magnate, Samuel Insull , fled the United States to France. Insull was the chairman of the boards of sixty-five companies that folded, wiping out the life savings of 600,000 shareholders.

When the United States asked French authorities that he be extradited, Insull moved on to Greece, where there was not yet an extradition treaty with the United States. He later moved to Turkey where he was arrested in 1934 and extradited back to the United States. He was defended by famous Chicago lawyer Floyd Thompson and found not guilty on all counts. (1) Frederick Lewis Allen , Only Yesterday (1931) Throughout 1927 speculation had been increasing. The amount of money loaned to brokers to carry margin accounts for traders had risen during the year from $2,818,561,000 to $3,558,355,000 - a huge increase. During the week of December 3, 1927, more shares of stock had changed hands than in any previous week in the whole history of the New York Stock Exchange.

One did not have to listen long to an after-dinner conversation, whether in New York or San Francisco or the lowliest village of the plain, to realize that all sorts of people to whom the stock ticker had been a hitherto alien mystery were carrying a hundred shares of Studebaker or Houston Oil, learning the significance of such recondite symbols as GL and X and ITT, and whipping open the early editions of afternoon papers to catch the 1.30 quotations from Wall Street. (2) Cecil Roberts, The Bright Twenties (1938) The stock market hysteria reached its apex in 1929. Everyone gave you tips for a rise. Everyone gave you tips for a rise. Every was playing the market. Stocks soared dizzily. I found it hard not to be engulfed. I had invested my American earnings in good stocks. Should I sell for a profit? Everyone said, "Hang on - it's a rising market". On my last day in New York I went down to the barber. As he removed the sheet he said softly, "Buy Standard Gas. I've doubled.

It's good for another double." As I walked upstairs, I reflected that if the hysteria had reached the barber-level, something must soon happen. (3) John J. Raskob, Everybody Ought to be Rich (June, 1929) If a man saves $15 a week, and invests in good common stocks, and allows the dividends and rights to accumulate, at the end of twenty years he will have at least $80,000 and an income from investments of around $400 a month. He will be rich. And because income can do that, I am firm in my belief that anyone not only can be rich, but ought to be rich. (4) Alec Wilder was interviewed by Studs Terkel in Hard Times (1970) I knew something was terribly wrong because I heard bellboys, everybody, talking about the stock market. About six weeks before the Wall Street Crash, I persuaded my mother in Rochester to let me talk to our family adviser. I wanted to sell stock which had been left me by my father. He got very sentimental: "Oh your father wouldn't have liked you to do that." He was so persuasive, I said O.K.

I could have sold it for $160,000. Four years later, I sold it for $4,000. (5) New York Times (25th October, 1929) The most disastrous decline in the biggest and broadest stock market of history rocked the financial district yesterday. In the very midst of the collapse five of the country's most influential bankers hurried to the office of J. P. Morgan & Co., and after a brief conference gave out word that they believe the foundations of the market to be sound, that the market smash has been caused by technical rather than fundamental considerations, and that many sound stocks are selling too low. Suddenly the market turned about on buying orders thrown into the pivotal issues, and before the final quotations were tapped out, four hours and eight minutes after the 3 o'clock bell, most stocks had regained a measurable part of their losses. The break was one of the widest in the market's history, although the losses at the close were not particularly large, many having been recouped by the afternoon rally. It carried down with it speculators, big and little, in every part of the country, wiping out thousands of accounts.

It is probable that if the stockholders of the country's foremost corporations had not been calmed by the attitude of leading bankers and the subsequent rally, the business of the country would have been seriously affected. Doubtless business will feel the effects of the drastic stock shake-out, and this is expected to hit the luxuries most severely. The total losses cannot be accurately calculated, because of the large number of markets and the thousands of securities not listed on any exchange. However, they were staggering, running into billions of dollars. Fear struck the big speculators and little ones, big investors and little ones. Thousands of them threw their holdings into the whirling Stock Exchange pit for what they would bring. Losses were tremendous and thousands of prosperous brokerage and bank accounts, sound and healthy a week ago were completely wrecked in the strange debacle, due to a combination of circumstances, but accelerated into a crash by fear. Under these circumstances of late tickers and spreads of 10, 20, and at times 30 points between the tape prices and those on the floor of the Exchange, the entire financial district was thrown into hopeless confusion and excitement.

Wild-eyed speculators crowded the brokerage offices, awed by the disaster which had overtaken many of them. They followed the market literally "in the dark," getting but meager reports via the financial news tickers which printed the Exchange floor prices at ten-minute intervals. Rumors, most of them wild and false, spread throughout the Wall Street district and thence throughout the country. One of the reports was that eleven speculators had committed suicide. A peaceful workman atop a Wall Street building looked down and saw a big crowd watching him, for the rumor had spread that he was going to jump off. Reports that the Chicago and Buffalo Exchanges had closed spread throughout the district, as did rumors that the New York Stock Exchange and the New York Curb Exchange were going to suspend trading. These rumors and reports were all found, on investigation, to be untrue. (6) John D.

Rockefeller , statement (29th October, 1929) Believing that fundamental conditions of the country are sound and that there is nothing in the business situation to warrant the destruction of values that has taken place on the exchanges during the past week, my son and I have for some days been purchasing sound common stocks (7) New York Times (30th October, 1929) Stock prices virtually collapsed yesterday, swept downward with gigantic losses in the most disastrous trading day in the stock market's history. Billions of dollars in open market values were wiped out as prices crumbled under the pressure of liquidation of securities which had to be sold at any price. There was an impressive rally just at the close, which brought many leading stocks back from 4 to 14 points from their lowest points of the day. Efforts to estimate yesterday's market losses in dollars are futile because of the vast number of securities quoted over the counter and on out-of-town exchanges on which no calculations are possible.

However, it was estimated that 880 issues, on the New York Stock Exchange, lost between $8,000,000,000 and $9,000,000,000 yesterday. Added to that loss is to be reckoned the depreciation on issues on the Curb Market, in the over the counter market and on other exchanges. Banking support, which would have been impressive and successful under ordinary circumstances, was swept violently aside, as block after block of stock, tremendous in proportions, deluged the market. Bid prices placed by bankers, industrial leaders and brokers trying to halt the decline were crashed through violently, their orders were filled, and quotations plunged downward in a day of disorganization, confusion and financial impotence. Groups of men, with here and there a woman, stood about inverted glass bowls all over the city yesterday watching spools of ticker tape unwind and as the tenuous paper with its cryptic numerals grew longer at their feet their fortunes shrunk. Others sat stolidly on tilted chairs in the customers' rooms of brokerage houses and watched a motion picture of waning wealth as the day's quotations moved silently across a screen.

It was among such groups as these, feeling the pulse of a feverish financial world whose heart is the Stock Exchange, that drama and perhaps tragedy were to be found. The crowds about the ticker tape, like friends around the bedside of a stricken friend, reflected in their faces the story the tape was telling. There were no smiles. There were no tears either. Just the cameraderie of fellow-sufferers. Everybody wanted to tell his neighbor how much he had lost. Nobody wanted to listen. It was too repetitious a tale. (8) Selected share prices from the Wall Street Journal (1928) Company (9) Frederick Lewis Allen , Only Yesterday (1931) The New York Times averages for fifty leading stocks had been almost cut in half, falling from a high of 311.90 in September to a low of 164.43 on November 13th; and the Times averages for twenty-five leading industrials had fared still worse, diving from 469.49 to 220.95. The Big Bull Market was dead. Billions of dollars' of profits - and paper profits - had disappeared.

The grocer, the window-cleaner, and the seamstress had lost their capital. In every town there were families which had suddenly dropped from showy affluence into debt. Investors who had dreamed of retiring to live on their fortunes now found themselves back once more at the very beginning of the long road to riches. Day by day the newspapers printed the grim reports of suicides. (10) Yip Harburg was interviewed by Studs Terkel in Hard Times (1970) We thought American business was the Rock of Gibraltar. We were the prosperous nation, and nothing could stop us now. A brownstone house was forever. You gave it to your kids and they put marble fronts on it. There was a feeling of continuity. If you made it, it was there forever. Suddenly the big dream exploded. The impact was unbelievable. I was walking along the street at that time, and you'd see the bread lines. The biggest one in New York City was owned by William Randolph Hearst. He had a big truck with several people on it, and big cauldrons of hot soup, bread.

Fellows with burlap on their shoes were lined up all around Columbus Circle, and went for blocks and blocks around the park, waiting. (11) M. A. Hamilton, In America Today (1932) For years it has been an article of faith with the normal American that America, somehow, was different from the rest of the world. The smash of 1929 did not, of itself, shake this serene conviction. It looked, at the time, lust because it was so spectacular and catastrophic, like a shooting star disconnected with the fundamental facts. So the plain citizen, no matter how hard hit, believed. His dreams were shattered; but after all they had been only dreams; he could settle back to hard work and win out. Then he found his daily facts reeling and swimming about him, in a nightmare of continuous disappointment. The bottom had fallen out of the market, for good. And that market had a horrid connection with his bread and butter, his automobile, and his installment purchases. Worst of all, unemployment became a hideous fact, and one that lacerated and tore at self-respect. That is the trouble that lies at the back of the American mind.

If America really is not "different," then its troubles, the same as those of Old Europe, will not be cured automatically. Something will have to be done - but what? (12) New York Times (5th June, 1932) Darwin's theory that man can adapt himself to almost any new environment is being illustrated, in this day of economic change, by thousands of New Yorkers who have discovered new ways to live and new ways to earn a living since their formerly placid lives were thrown into chaos by unemployment or kindred exigencies. Occupations and duties which once were scorned have suddenly attained unprecedented popularity Two years ago citizens shied at jury duty. John Doe and Richard Roe summoned to serve on a jury, thought of all sorts of excuses. They called upon their ward leaders and their lawyers for aid in getting exemption, and when their efforts were rewarded they sighed with relief But now things are different. The Hall of Jurors in the Criminal Courts Building is jammed and packed on court days. Absences of talesmen are infrequent. Why? Jurors get $4 for every day they serve. Once the average New Yorker got his shine in an established bootblack parlor paying 10 cents, with a nickel tip.

But now, in the Times Square and Grand Central zones, the sidewalks are lined with neophyte "shine boys," drawn from almost all walks of life. They charge a nickel and although a nickel tip is welcomed it is not expected. In one block, on West Forty-third Street, a recent count showed nineteen shoe-shiners. They ranged in age from a 16-year-old, who should have been in school, to a man of more than 70, who said he had been employed in a fruit store until six months ago. Some sit quietly on their little wooden boxes and wait patiently for the infrequent customers. Others show true initiative and ballyhoo their trade, pointing accusingly at every pair of unshined shoes that passes. Shining shoes, said one, is more profitable than selling apples - and he's tried them both. "You see, when you get a shine kit it's a permanent investment," he said, "and it doesn't cost as much as a box of apples anyway." According to the Police Department, there are approximately 7,000 of these "shine boys" making a living on New York streets at present.

Three years ago they were so rare as to be almost non-existent, and were almost entirely boys under 17. To the streets, too, has turned an army of new salesmen, peddling everything from large rubber balls to cheap neckties. Within the past two years the number of these hawkers has doubled. Fourteenth Street is still the Mecca of this type of salesmen; thirty-eight were recently counted between Sixth Avenue and Union Square and at one point there was a cluster of five. Unemployment has brought back the newsboy in increasing numbers. He avoids the busy corners, where news stands are frequent, and hawks his papers in the side streets with surprising success. His best client is the man who is "too tired to walk down to the corner for a paper." Selling Sunday papers has become a science. Youngsters have found that it is extremely profitable to invade apartment houses between 11 and 12 o'clock Sunday morning, knock on each apartment door, and offer the Sunday editions. Their profits are usually between $1.50 and $2. (13) Edmund Wilson , New Republic (February, 1933) There is not a garbage-dump in Chicago which is not diligently haunted by the hungry.

Last summer the hot weather when the smell was sickening and the flies were thick, there were a hundred people a day coming to one of the dumps. A widow who used to do housework and laundry, but now had no work at all, fed herself and her fourteen year old son on garbage. Before she picked up the meat, she would always take off her glasses so that she couldn't see the maggots. Stock Market Crash of 1929 - Facts & Summary - HISTORY.com Stock Market Crash of 1929 Stock Market Crash of 1929 Author Stock Market Crash of 1929 URL A+E Networks Introduction On October 29, 1929, Black Tuesday hit Wall Street as investors traded some 16 million shares on the New York Stock Exchange in a single day. Billions of dollars were lost, wiping out thousands of investors. In the aftermath of Black Tuesday, America and the rest of the industrialized world spiraled downward into the Great Depression (1929-39), the deepest and longest-lasting economic downturn in the history of the Western industrialized world up to that time.

Google 1929 Stock Market Crash During the 1920s, the U.S. stock market underwent rapid expansion, reaching its peak in August 1929, after a period of wild speculation. By then, production had already declined and unemployment had risen, leaving stocks in great excess of their real value. Among the other causes of the eventual market collapse were low wages, the proliferation of debt, a struggling agricultural sector and an excess of large bank loans that could not be liquidated. Did You Know? The New York Stock Exchange was founded in 1817, although its origins date back to 1792 when a group of stockbrokers and merchants signed an agreement under a buttonwood tree on Wall Street. Stock prices began to decline in September and early October 1929, and on October 18 the fall began. Panic set in, and on October 24, Black Thursday, a record 12,894,650 shares were traded. Investment companies and leading bankers attempted to stabilize the market by buying up great blocks of stock, producing a moderate rally on Friday. On Monday, however, the storm broke anew, and the market went into free fall.

Black Monday was followed by Black Tuesday (October 29), in which stock prices collapsed completely and 16,410,030 shares were traded on the New York Stock Exchange in a single day. Billions of dollars were lost, wiping out thousands of investors, and stock tickers ran hours behind because the machinery could not handle the tremendous volume of trading. 1929 Stock Market Crash and the Great Depression After October 29, 1929, stock prices had nowhere to go but up, so there was considerable recovery during succeeding weeks. Overall, however, prices continued to drop as the United States slumped into the Great Depression, and by 1932 stocks were worth only about 20 percent of their value in the summer of 1929. The stock market crash of 1929 was not the sole cause of the Great Depression, but it did act to accelerate the global economic collapse of which it was also a symptom. By 1933, nearly half of America’s banks had failed, and unemployment was approaching 15 million people, or 30 percent of the workforce. Relief and reform measures enacted by the administration of President Franklin D.

Roosevelt (1882-1945) helped lessen the worst effects of the Great Depression; however, the U.S. economy would not fully turn around until after 1939, when World War II (1939-45) revitalized American industry. Tags Wall Street Crash of 1929 and its aftermath - History Learning Site Home » Modern World History » America 1918 – 1939 » Wall Street Crash of 1929 and its aftermath Wall Street Crash of 1929 and its aftermath Citation: C N Trueman "Wall Street Crash of 1929 and its aftermath" historylearningsite.co.uk. The History Learning Site, 22 May 2015. 16 Aug 2016. Wall Street Crash of 1929 and its aftermath The strength of America’s economy in the 1920’s came to a sudden end in October 1929 – even if the signs of problems had existed before the Wall Street Crash.

Suddenly the ‘glamour’ of the Jazz Age and gangsters disappeared and America was faced with a major crisis that was to impact countries as far away as Weimar Germany – a nation that had built up her economy on American loans. The huge wealth that appeared to exist in America in the 1920’s was at least partly an illusion. For example the African Americans and the farmers had not benefited in the Jazz Age but neither had 60% of the whole population as it is estimated that a family needed a basic minimum of $2,000 a year to live (about £440) and 60% of US families earned less than this. Almost certainly some of the 60% included those who had gambled some money on Wall Street and could least afford to lose it in the crash of October ‘29. The very rich lost money on Wall Street but they could just about afford it. But the vast bulk could not afford any loss of money. This had a very important economic impact as these people could no longer afford to spend money and therefore did not buy consumer products.

Therefore as there was no buying, shops went bust and factories had no reason to employ people who were making products that were not being sold. Therefore unemployment became a major issue. The Great Depression took a while to get going but by the winter of 1932 it was at its worst. The impact of the Wall Street Crash: 1) 12 million people out of work 2) 12,000 people being made unemployed every day 3) 20,000 companies had gone bankrupt 4) 1616 banks had gone bankrupt 5) 1 farmer in 20 evicted 6) 23,000 people committed suicide in one year – the highest ever There was no system of benefit for the unemployed. Charities such as the Salvation Army gave out free food and shelter. It is known that some people actually starved to death. In some states men deliberately set fire to forests to get temporary employment as fire fighters while farmers killed their animals as no-one could afford to buy them in the cities despite there being great hunger there. What did the government do? The president was a Republican, Herbert Hoover.

He believed that if you were in trouble you should help yourself and not expect others to help you. This he called “rugged individualism”. Therefore he did not do a great deal to help those out of work. “It is not the function of the government to relieve individuals of their responsibilities to their neighbours, or to relieve private institutions of their responsibilities to the public.” Hoover. Hoover did not believe that the depression would last – “Prosperity is just around the corner” is what he said to businessmen in 1932 when things were just about at their worst. Squalid cardboard campsites were created in cities to live in…called “Hoovervilles”. The nick-name of the soup given out by charities for the unemployed was “Hoover stew”. However, Hoover did do some good. Money was used to create jobs to build things such as the Hoover Dam. In 1932 he gave $300 million to the states to help the unemployed (Emergency Relief and Reconstruction Act) but it had little impact as states run by the Republicans believed in “rugged individualism” more than Hoover did and they used only $30 million of the money offered to them.

Many saw Hoover’s attempts as being “too little too late”. In the November 1932 election, Hoover was heavily defeated by the Democrat candidate. This man had promised the American public a “ New Deal “. His name was Franklin Delano Roosevelt . Thirteen years of Republican rule had come to an end. See also: BBC - GCSE Bitesize: Wall Street Crash Next In 1928 the new Republican president Herbert Hoover confidently stated, 'We in America today are nearer to the final triumph over poverty than ever before in the history of any land.' Within a year, all the confidence had ended and America was plunged into the Depression. Wall Street Crash When the Wall Street stock market crashed in October 1929, the world economy was plunged into the Great Depression. By the winter of 1932, America was in the depths of the greatest economic depression [Economic depression: The slowing of economic activity, which usually results in high unemployment, a sharp drop in prices and a fall in production. ] in its history. The number of unemployed people reached upwards of 13 million. Many people lived in primitive conditions close to famine. One New York family moved into a cave in Central Park.

In St Louis, more than 1,000 people lived in shacks made from scrap metal and boxes. There were many similar Hoovervilles all over America. Between 1 and 2 million people travelled the country desperately looking for work. Signs saying 'No Men Wanted' were displayed all over the country. Many children were deserted and left homeless during the Depression By the time of the election in November 1932, Hoover's popularity had reached rock bottom. It was not even safe for him to go onto the streets to campaign. After his heavy defeat, Hoover told his friends, "we are at the end of our string... there is nothing more we can do" . The American economy did not fully recover until the USA entered the Second World War in December 1941. Page: Brief History of The Crash of 1929 - TIME Follow @TIME Seventy-nine years ago this week, the New York Stock Exchange experienced the worst financial panic the country had ever seen. There have been more crashes since  with bigger numbers and bigger losses  but nothing quite rivals the terror and devastation of Black Tuesday: October 29, 1929.

When President Calvin Coolidge delivered his 1928 State of the Union address, he noted that America had never "met with a more pleasing prospect than that which appears at the present time." Americans had a lot to be proud of back then: World War I was thoroughly behind them, radio had been invented, and automobiles were growing cheaper and more popular. Sure, the disparity between the rich and the poor had widened within the past decade, but Americans could now buy goods on installment plans  a relatively new concept  and families could afford more than ever before. Stocks were on a tear: between 1924 and 1929, the Dow Jones Industrial Average quadrupled. At that time, it was the longest bull market ever recorded; some thought it would last forever. In the fall of 1929, economist Irving Fisher announced that "stock prices have reached what looks like a permanent plateau." ( See pictures of the stock market crash of 1929. ) Unsurprisingly, this exuberance lured more investors to the market, investing on margin with borrowed money. By 1929, 2 out of every 5 dollars a bank loaned were used to purchase stocks.

The market peaked on September 3, 1929. Steel production was down, several banks had failed, and fewer homes were being built, but few paid attention  the Dow stood at 381.17, up 27% from the previous year. Over the next few weeks, however, prices began to move downward. And the lower they fell, the faster they picked up speed. In the last hour of trading on Thursday, Oct. 23, 1929, stock prices suddenly plummeted. When the closing bell rang at 3 p.m. people were shaken. No one was sure what had just happened, but that evening provided enough time for fear and panic to set in. When the market opened again the next day, prices plunged with renewed violence. Stock transactions in those days were printed on ticker tape, which could only produce 285 words a minute. Thirteen million shares changed hands  the highest daily volume in the exchange's history at that point  and the tape didn't stop running until four hours after the market closed.

The following day, President Herbert Hoover went on the radio to reassure the American people, saying "The fundamental business of the country...is on a sound and prosperous basis." And then came Black Monday. As soon as the opening bell rang on Oct. 28, prices began to drop. Huge blocks of shares changed hands, as previously impregnable companies like U.S. Steel and General Electric began to tumble. By the end of the day, the Dow had dropped 13%. So many shares changed hands that day that traders didn't have time to record them all. They worked into the night, sleeping in their offices or on the floor, trying to catch up to be ready for October 29. As the story goes, the opening bell was never heard on Black Tuesday because the shouts of "Sell! Sell! Sell!" drowned it out. In the first thirty minutes, 3 million shares changed hands and with them, another $2 million disappeared into thin air. Phone lines clogged. The volume of Western Union telegrams traveling across the country tripled. The ticker tape ran so far behind the actual transactions that some traders simply let it run out.

Trades happened so quickly that although people knew they were losing money, they didn't know how much. Rumors of investors jumping out of buildings spread through Wall Street; although they weren't true, they drove the prices down further. Brokers called in margins; if stockholders couldn't pay up, their stocks were sold, wiping out many an investor's life savings in an instant. So many trades were made  each recorded on a slip of paper  that traders didn't know where to store them, and ended up stuffing them into trash cans. One trader fainted from exhaustion, was revived and put back to work. Others got into fistfights. The New York Stock Exchange's board of governors considered closing the market, but decided against it, lest the move increase the panic. When the market closed at 3 p.m., more than 16.4 million shares had changed hands, using 15,000 miles of ticker tape paper. The Dow had dropped another 12%. In total, $25 billion  some $319 billion in today's dollars  was lost in the 1929 crash.

Stocks continued to fall over subsequent weeks, finally bottoming out on November 13, 1929. The market recovered for a few months and then slid again, gliding swiftly and steadily with the rest of the country into the Great Depression. Companies incurred huge layoffs, unemployment skyrocketed, wages plummeted and the economy went into a tailspin. While World War II helped pull the country out of a Depression by the early 1940s, the stock market wouldn't recover to its pre-crash numbers until 1954. Timeline . The Crash of 1929 . American Experience . WGBH | PBS Page 1 of 2 1653: Early History Dutch colonists construct a wooden stockade across lower Manhattan to protect the north side of their settlement against attacks by the British and Indians. By the turn of the 18th century, the British have taken over the colony and dismantled the barrier, turning it into a paved lane called Wall Street. September 21, 1776 A devastating fire, probably the work of colonial arsonists trying to disrupt the British occupation of the city during the American Revolution, destroys hundreds of structures in the vicinity of Wall Street.

January 14, 1790 In his landmark Report on the Public Credit, the young nation’s first treasury secretary, Alexander Hamilton , proposes a method for the U.S. to handle federal and state debt by issuing government bonds, and establishes the principle of free trade for securities in the marketplace. August 1790 Brokers meet in Philadelphia, where they buy and sell the first major issues of publicly-traded securities: $80 million in bonds issued by the federal government to pay off debt from the Revolutionary War . May 17, 1792 At the Merchants’ Coffee House at the corner of Wall and Water Streets, two dozen New York City stockbrokers and merchants sign the “Buttonwood Agreement,” named after a buttonwood tree under which business has been transacted in the past. The agreement lists rules for securities transactions. 1793 The locus for securities transactions in New York moves to the Tontine Coffee House, across the street from the Merchants’ Coffee House. Business is also transacted on the street.

March 8, 1817 A group of New York brokers formally establish the New York Stock and Exchange Board, an organization that later will be renamed the New York Stock Exchange (N.Y.S.E.). 1829: 5,000 Shares a Day The stock market reaches a trading volume of 5,000 shares a day. December 16, 1835 On a bitterly cold night, a fire starts in lower Manhattan. Raging for two days, it will destroy 700 buildings, including the Merchants’ Exchange. September 12, 1836 The N.Y.S.E. bars its members from conducting business in the streets. March 22, 1837 The N.Y.S.E. starts paying its president a salary. The first paid president, David Clarkson, earns $2000 a year ($31,960 in 2003 dollars). May 24, 1844 Samuel F. B. Morse transmits the first viable telegraph message. Securities brokers quickly adopt the technology to send market quotations.

The telegraph helps expand the stock market by making trades accessible to brokers and investors outside of New York. May 11, 1861 In response to the outbreak of the Civil War , trading of Confederate securities is banned. July 27, 1866 Cyrus Field completes a transatlantic cable, connecting telegraph operators across the Atlantic Ocean. For the first time, London and New York markets can communicate instantaneously. November 15, 1867 Edward Callahan invents the stock ticker, a device that shows current market prices and represents each company on the stock market with symbols based on Morse code . September 24, 1869 Black Friday . A group of speculators led by Jay Gould and Jim Fiske try to corner the gold market, setting off a U.S. financial panic. Library of Congress Wall Street, 1873 September 18, 1873 The brokerage firm of Jay Cooke & Company, a major investor in new railroad construction , collapses, sparking the Panic of 1873 . November 13, 1878 The N.Y.S.E. installs the first telephones on its trading floor.

November 1882: Dow Jones & Company Charles Dow and Edward Jones form Dow Jones & Company and design the first index to measure the activity of the N.Y.S.E. Library of Congress Wall Street, 1884 May 6, 1884 The Wall Street brokerage firm of Grand and Ward fails, leading to a panic and the failure of 15 other stock exchange firms. Grant and Ward is co-owned by Buck Grant, the son of former Union general and president Ulysses S. Grant , and the failure plunges the ex-president into bankruptcy. Desperate for money, he will begin writing his wartime memoirs soon afterward. December 15, 1886 The N.Y.S.E.'s trading volume reaches one million shares a day for the first time. April 8, 1890 Junius S. Morgan, the head of the Morgan banking family, dies. His son, John Pierpont Morgan , will turn the family financial empire into one of the most powerful banking houses in the world. May 26, 1896 Charles Dow reveals his industrial stock average in the first publication of his daily paper — the Wall Street Journal.

Dow Jones creates four averages to measure market performance, including the Dow Jones Industrial Average. January 12, 1906 The Dow Jones Industrial Average closes the day at over 100 for the first time. October 21, 1907 Rumors of financial problems at a leading New York bank trigger investors to run on banks throughout the city, beginning the Panic of 1907. J. P. Morgan devises a plan to return cash to banks, saving the country from its most severe financial crisis to date. February 28, 1913 The Pujo Committee, appointed by Congress to investigate practices of the banking and securities industry, issues a report which leads Congress to create the Federal Reserve System. The Fed is designed to stabilize the nation’s banking structure. July 31, 1914: WWI Begins World War I begins in Europe, leading to sharp declines in world stock prices. The N.Y.S.E. and exchanges throughout the world temporarily suspend trading in order to stop prices from dropping further. April 7, 1917 Following a series of German provocations, President Woodrow Wilson asks Congress for a formal declaration of war. The U.S.

enters World War I . June 8, 1917 A liberty loan rally is held on the trading floor of the N.Y.S.E., where former president William H. Taft encourages Americans to purchase war bonds. Library of Congress Able-bodied men return home from war. November 11, 1918 The United States emerges from World War I as a creditor nation and a rising global force. October 1923 A bull market begins. It will continue growing for nearly six years. April 13, 1928 The N.Y.S.E. introduces new and improved high-speed tickers. The devices can print 500 characters per minute, almost twice as fast as the earlier models. February 1929: 1929 Astrologer Evangeline Adams, who counts Charlie Chaplin , Mary Pickford , and J. P. Morgan among her clients, predicts the market will rise in the coming months. March 15, 1929 Newspapers quote Treasury Secretary Andrew Mellon saying there are bargains to be found in the bond market. Wall Street is in the midst of a buying frenzy.

As the market rises, some begin to fear it will soon collapse. The Federal Reserve Board meets, but does not make any public statements. March 4, 1929 President Herbert Hoover is inaugurated. Nicknamed “The Great Engineer,” the former geologist and mining engineer takes office amid booming prosperity. During the campaign, he has promised: “We shall soon, with the help of God, be in sight of the day when poverty will be banished from this nation.” March 8, 1929 Michael J. Meehan begins one of the most successful brokerage pools in Wall Street history. Over the next ten days, he drives the value of R.C.A. stock up almost 50%. In today’s money, his pool will make the colluding investors $100 million. March 25, 1929 A mini-crash begins as investors start to sell, revealing the market’s shaky foundations. For the many people playing the market with borrowed money, the day is a disaster, as margin calls wipe out their holdings. While the investors seek to borrow more money, interest rates soar to 20 percent.

The New York Daily News calls it a “selling avalanche.” March 27, 1929 Banker Charles Mitchell announces that the national city bank will provide $25 million in credit to stop the market’s slide. His move stops the panic, and call money declines from 20 to eight percent. Senator and former Treasury Secretary Carter Glass calls for Mitchell to resign from his post on the Federal Reserve Board because of his intervention in the market. Spring, 1929 The American economy shows ominous signs of trouble. Steel production is declining, construction is sluggish, car sales are down, and consumers are building up high debts because of easy credit. Yet the stock market continues its upward momentum, heedless of real economic indicators. May 14, 1929 The N.Y.S.E. opens a new bond room, adding 6,000 feet to the trading floor. Summer, 1929 The market continues to rebound, and stocks hit record levels month after month. August 17, 1929 Michael Meehan’s brokerage firm launches a new service: an office aboard ocean liners, including the Berengaria.

This convenience allows transatlantic passengers to buy or sell shares during the weeklong passage between the U.S. and Europe. September 3, 1929: The Market Reaches its Peak After a surge of optimism, the bull market reaches its peak — the Dow Jones Industrial Average closes at 381.17. A newspaper headline trumpets, “Public Demand for Stock Appears Insatiable.” September 5, 1929 Bearish economist Roger Babson gives a speech, saying, “Sooner or later, a crash is coming, and it may be terrific.” He has been delivering this message for two years, but for the first time, investors listen. The market takes a severe dip, which will be called the “Babson Break.” The next day, prices will stabilize, but the collapse has begun. Mid-September, 1929 The market fluctuates wildly up and down. October 24, 1929 “Black Thursday.” The economic bubble finally bursts. Stock prices fall sharply on a day of heavy liquidation. Ticker tape runs four hours later than normal at a volume of 12.9 million shares.

Headlines will report the market’s paper loss at $5 billion. A pool of bankers acts to stem the drop by putting more money into the market, and President Hoover reassures Americans that U.S. business is sound. Within a few days, a headline will read, “Brokers Believe Worst is Over and Recommend Buying of Real Bargains.” October 28, 1929 “Black Monday.” The stock market falls 22.6%, the highest one-day decline in U.S. history. The crash triggers similar declines in markets around the world. October 29, 1929 “Black Tuesday.” Panic sets in as investors all try to sell their stocks at once. Over 16 million shares of stock are sold, setting a record — and the market records over $14 billion in paper losses. Stock tickers cannot keep up with the heavy trading volume. At the end of the day, the market is down 33 points, more than 12.8%. Some of the nation’s financial elite, including General Motors’ William C. Durant and the Rockefeller family , show confidence by buying stocks, but their efforts fail to stem the tide.

November 23, 1929 After weeks in freefall, the market hits its bottom and stabilizes. The New York Times reports, “Regular Schedule to be Resumed, but Trading Will Be Suspended Last Half of Week; Business Nearly Normal.” The market’s daily volume is at 3 million shares with “orderly although irregular” prices. Corbis A desperate man sells his car for $100 January 7, 1931 A report released by the Committee for Unemployment Relief states that over four million Americans are unemployed. 1 What caused the Wall Street Crash of 1929? | Economics Help Home > Economics help blog > economics > What caused the Wall Street Crash of 1929? What caused the Wall Street Crash of 1929? Tejvan Pettinger economics , stock market Readers question: The question is that how did a flawed capitalism of the 1920’s American economy lead to the 1929’s stock market crash? The 1929 Stock Market crash was a result of various economic imbalances and structural failings. These are some of the most significant economic factors behind the stock market crash of 1929. 1.

Credit boom In the 1920s, there was a rapid growth in bank credit and loans in the US. Encouraged by the strength of the economy, people felt the stock market was a one way bet. Some consumers borrowed to buy shares. Firms took out more loans for expansion. Because people became highly indebted, it meant they became more susceptible to a change in confidence. When that change of confidence came in 1929, those who had borrowed were particularly exposed and joined the rush to sell shares and try and redeem their debts. 2. Buying on the margin Related to buying on credit was the practise of buying shares on the margin. This meant you only had to pay 10 or 20% of the value of the shares; it meant you were borrowing 80-90% of the value of the shares. This enabled more money to be put into shares, increasing their value. It is said there were many ‘margin millionaire’ investors. They had made huge profits by buying on the margin and watching share prices rise. But, it left investors very exposed when prices fell. These margin millionaires got wiped out when the stock market fall came.

It also affected those banks and investors who had lent money to those buying on the margin. 3. Irrational exuberance Earning per share rose from 20 (1923) to a peak of 100 (1929). A 400% increase. A lot of the stock market crash can be blamed on over exuberance and false expectations. In the years leading up to 1929, the stock market offered the potential for making huge gains in wealth. It was the new gold rush. People bought shares with the expectations of making more money. As share prices rose, people started to borrow money to invest in the stock market. The market got caught up in a speculative bubble. – Shares kept rising and people felt they would continue to do so. The problem was that stock prices became divorced from the real potential earnings of the share prices. Prices were not being driven by economic fundamentals but the optimism / exuberance of investors. The average earning per share rose by 400% between 1923 and 1929. Yet, those who questioned the value of shares were often labelled doom-mongers.

This was not the first investment bubble, nor was it the last. Most recently we saw a similar phenomena in the dot com bubble. In March 1929, the stock market saw its first major reverse, but this mini-panic was overcome leading to a strong rebound in the summer of 1929. By October 1929, shares were grossly overvalued. When some companies posted disappointing results on October 24 (Black Thursday), some investors started to feel this would be a good time to cash in on their profits; share prices began to fall and panic selling caused prices to fall sharply. Financiers, such as JP Morgan tried to restore confidence by buying shares to prop up prices. But, this failed to alter the rapid change in market sentiment. On October 29 (Black Tuesday) share prices fell by $40 billion in a single day. By 1930 the value of shares had fallen by 90%. The bull market had been replaced by a bear market. 4. Mismatch between production and consumption The 1920s saw great strides in production techniques, especially in industries like automobiles. The production line enable economies of scale and great increases in production.

However, demand for buying expensive cars and consumer goods were struggling to keep up. Therefore, towards the end of the 1920s many firms were struggling to sell all their production. This caused some of the disappointing profit results which precipitated falls in share prices. Rapid growth in Real GDP during the 1920s, couldn’t be maintained In 1929, there were already warning signs from the economy with falling car sales, lower steel production and a slowdown in housing construction. However, despite these warning signs, people still kept buying shares. 5. Agricultural recession Even before 1929, the American agricultural sector was struggling to maintain profitability. Many small farmers were driven out of business because they could not compete in the new economic climate. Better technology was increasing supply, but demand for food was not increasing at the same rate. Therefore, prices fell and farmers incomes dropped. There was occupational and geographical immobilities in this sector, and it was difficult for unemployed farmers to get jobs elsewhere in the economy. 6. Weaknesses in the banking system Before the Great Depression, the American banking system was characterised by having many small to medium sized firms. America had over 30,000 banks.

The effect of this was that they were prone to going bankrupt if there was a run on deposits. In particular, many banks in rural areas went bankrupt due to the agricultural recession. This had a negative impact on the rest of the financial industry. Between 1923 and 1930, 5,000 banks collapsed. Note: If the question was – What caused the Great Depression? the answer would be slightly different. This is because some believe the Stock market crash was only partly to blame for the Great Depression (although it was a significant factor in precipitating it.) Related BBC - GCSE Bitesize: Revision tip and answer preparation Revision tip and answer preparation Revision tip Write a list of the factors that caused the Great Depression. Place the factors in what you consider to be their order of importance. Answer preparation As part of your revision, think about the arguments and facts you would use to explain: Why there was a great depression in America. Why the Depression of 1929 was so sudden and so severe. To what extent the Wall Street Crash was the main cause of the Depression. What the causes and consequences of the Wall Street Crash were. How far speculation was responsible for the Wall Street Crash.

What impact the Crash had on the economy. What life was like in the USA during the Great Depression. What the effects of the Depression were on the American people. What the social consequences of the Crash were. Now try a Test Bite Page:

Question: In which year was the Wall Street Crash?
Answer: 1929