The Day Wall Street Crashed - GreekReporter.com

This week commemorates the anniversary of the catastrophic Wall Street Crash of 1929, an event that triggered the onset of the Great Depression in the United States. The turmoil began on October 24, known as Black Thursday, when stock prices plummeted dramatically on the New York Stock Exchange. This event marked a significant turning point, signaling the end of the lavish lifestyles enjoyed by many during a decade of economic prosperity.

Three key dates stand out in the timeline of this financial disaster: October 24, October 28, and October 29. Each of these days delivered a devastating blow to the once-thriving U.S. stock market, which would soon face severe repercussions.

The collapse of the Greek economy in recent years shares some similarities with the events of 1929, but the rapidity with which the American economy was affected in just a single day is unmatched.

The roaring success of the U.S. stock market in the 1920s came to a sudden halt on October 24. On that day, the Dow Jones Industrial Average saw a staggering decline of 11 percent, starting at 305.85. This sharp drop indicated a significant market correction, with trading volumes soaring to three times the average. In a desperate attempt to restore confidence, Wall Street bankers hastily purchased shares, which provided only temporary relief.

The following day, October 25, the markets appeared to rebound, but the optimism was short-lived. On October 28, dubbed Black Monday, the Dow plummeted again, this time by nearly 13.47 percent, closing at 260.64. The downward spiral continued on October 29, or Black Tuesday, when the index fell an additional 11.7 percent to 230.07. By October 30, panic set in among investors, leading to a frantic rush to sell, resulting in a staggering 16,410,030 shares changing hands in a single day.

While the crash unfolded over a week, the groundwork for this financial catastrophe had been laid for months. By September 1929, the Dow had already experienced a significant decline of 28 percent from its peak. Additionally, the London Stock Exchange began showing troubling signs, with investors in the Clarence Hatry United Steel company suffering massive losses as they discovered the fraudulent nature of the capital used to acquire the firm.

In response to the unfolding crisis, British Chancellor of the Exchequer Philip Snowden characterized the American stock market as “a perfect orgy of speculation,” a remark that proved prescient. The U.S. Treasury Department had begun scrutinizing the markets, and Treasury Secretary Andrew Mellon expressed concern that American investors were behaving as if stock prices would continue to rise indefinitely. This statement seemed to exacerbate the market's decline.

American media outlets also began to voice their apprehensions about the inflated market. On October 23, The Washington Post featured a headline reading, “Huge Selling Wave Creates Near-Panic as Stocks Collapse.” Similarly, The Times reported, “Prices of Stocks Crash in Heavy Liquidation.” Just a day later, the asset bubble, which had inflated by 20 percent annually since 1922, reached its peak and then burst.

The repercussions of the Wall Street Crash of 1929 were devastating, affecting Americans across all socioeconomic classes. Individuals from various backgrounds saw their life savings evaporate almost overnight, leading to a profound loss of faith in the financial markets that would linger for years.

The average wage plummeted by approximately 42 percent, while unemployment soared to 25 percent. Economic growth in the United States fell by 54.7 percent, and global trade decreased by 65 percent. This deflationary period resulted in prices dropping by 10 percent over the subsequent four years.

The Great Depression persisted from 1929 until 1939, although signs of recovery began to emerge in 1933 under President Franklin D. Roosevelt. His New Deal policies played a crucial role in fostering the economic conditions necessary for recovery. Additionally, the Banking Act of 1935 contributed to a positive trend in GDP by 1938. Ultimately, it was the onset of World War II that marked the end of the prolonged economic downturn.