Connect with us

Business

A Detailed Look At The Notorious Stock Market Crash Of 1929

A Detailed Look At The Notorious Stock Market Crash Of 1929

Between October 28 and 29, 1929, the U.S. stock exchange began an unprecedented freefall in value that resulted in it reaching its lowest point ever, just 41.22, on July 8, 1932. This marked the beginning of the Great Depression in the United States, which lasted until the post-war economic boom starting in 1946. During the two day trading period in October 1929, the market lost 23.6 percent of its value. By July 8, 1932 the total market value lost was 89.2 percent.

During the period after the day that came to be known as “Black Tuesday” there were rampant rumors of Wall Street executives and bankers leaping to their deaths from their office windows amidst their losses. This urban legend started almost immediately; Will Rogers quipped the next day that speculators “had to stand in line to get a window to jump out of”. However, the rumors of mass suicide amongst bankers were largely unfounded–though the news was grim, fewer suicides were reported than the urban legend would have us believe.

A Detailed Look At The Notorious Stock Market Crash Of 1929

What Events Precipitated the Stock Market Crash of 1929?

Prior to the events of October 29, 1929, the U.S. stock market was highly unregulated. A huge income and wealth disparity existed between rich and poor. 32 percent of the country’s wealth was held by 0.5 percent of the population, even after efforts in the early 1900s by President Theodore Roosevelt to break up the large corporate trusts that controlled commerce. The stock market reached a high of 381.17 on September 3, 1929 before beginning its descent on October 28th, opening at 295.18 and closing for the day at 260.64.

Much has been written about the causes of the crash, but few pinpoint earlier signs of weakness in the market as warning signs of impending doom. On Monday, March 25, 1929, the market lost 3 percent in value, falling from 306.21 to 297.50. Two days later the National City Bank infused $25 million in capital to help stop the slide, though this action did little to delay the oncoming crash. Interestingly National City Bank head Charles Mitchell, who sat on the Federal Reserve Board, was called on to resign by Senator Carter Glass of Virginia. Glass would later author the Glass-Steagall Act of 1933, which separated investment and commercial banking operations and established the FDIC.

Extension of Credit and Troubling Economic Signals

Although the credit infusion of March 25th helped put the market back on track, the relatively novel idea of extending credit to customers who couldn’t pay all at once, and the over-borrowing that took place as a result, were symptoms of a larger problem. Industrial output was down in 1929 and consumer purchases were fueled by easy credit. These factors, combined with the under-regulated market on Wall Street, helped to accelerate the eventual crash.

Impact of 1929 Stock Market Crash

The market attempted to rebound on October 29, but to no avail. By the autumn of 1930, and continuing through 1931 and 1932, the market had plunged severely, taking with it much of the wealth that had been created during the “Roaring Twenties”.

The Pecora Investigation, established by the U.S. Senate in 1932, investigated the crash and released its findings in 1934. In the 400 page report, banking practices detrimental to consumers were exposed. In addition to the Banking Act of 1933 (Glass-Steagall), Congress passed several pieces of important legislation to address the practices and ethical conduct of investment and commercial banks. Many of these laws remain on the books today in the hopes of preventing another cataclysmic crash.

Byline

Francis Bergstrom is intimately familiar with the financial world and knows how critically important it is to make sure the finance sector is filled with competent, responsible professionals. Those who’d like to make a contribution toward this end should check out the financial planning jobs with moneyjobs.com.

Image credit goes to filipebarreto.

Continue Reading

Recent Posts

Business3 days ago

The Invisible Hands: Unveiling How Food Distributors Influence the Quality of Our Foods

Ever found yourself wondering why the tomatoes in your salad taste particularly fresh or why your preferred brand of coffee...

Marketing3 days ago

Webflow CMS: A Comprehensive Guide

Webflow is a powerful tool that allows you to create and manage dynamic websites without needing to code. It’s a...

Business3 days ago

The Three Most Important Benefits You Should Offer To Your Employees

Offering your employees a range of benefits on top of regular salary increases will really help to show that you...

Business3 weeks ago

Business Tips For Protecting Your Finances During A Recession

In 2024, taking the necessary steps to protect your finances for your business is now more important than ever. The...

Green & Energy1 month ago

Air Conditioning Installation: What You Need to Know

When it comes to getting an air conditioning unit installed, can significantly improve your comfort and home environment, especially during...

Marketing1 month ago

Marketing Tips For A Gym Wear Brand

When starting a gym wear brand, there are a few things you need to do and one of them is...

General2 months ago

Social Media Marketing: What Are All The Types?

Social media marketing is a tool that is a must-have in today’s digital age. it’s very rare that businesses can...

Business2 months ago

How To Become A Property Developer

There are several reasons why an individual will want to become a property developer. One of the main reasons for...

Business2 months ago

Remote Delivery Innovations: Case Studies from Leading E-commerce Brands

People have gone through much change in the past few years when it comes to online shopping. Nowadays, when delivery...

Business3 months ago

Why are Brits turning to online-only banks?

For years, large, conventional banks held all the aces when it comes to citizens’ finances in the UK. HSBC, Lloyds...

5 Important Web Design Considerations to Make For Better SEO 5 Important Web Design Considerations to Make For Better SEO
Tech3 months ago

5 Important Web Design Considerations to Make For Better SEO

Ever since the birth of search engines, practices in optimising websites for better search rankings have changed considerably. Where it...

SEO4 months ago

The Importance of Local SEO for Small Businesses

There are many different types of businesses and all of them will require online marketing however, with a small business,...

General4 months ago

Understanding The Unsung Heroes: Cool Rooms And The Importance Of Regular Repairs

Everybody loves a breath of fresh air when entering a superstore! But have you ever wondered who’s working backstage to...

Home Improvement7 months ago

How To Add More Value To Your Home

If you have some spare cash in the bank, it is likely you would like to spend it on your...

Lifestyle7 months ago

What is a Deep Plane Facelift

Cosmetic surgery is a choice that needs a lot of research and when it comes to thinking about a facelift...

Categories

Archives

Trending