The Stock Market Crash!

The Stock Market Crash on Black Tuesday on the New York Stock Exchange. 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. Partly due to the crash America and the rest of the industrialized world spiraled downward into the Great Depression of the 1930’s. During the mid-to late 1920s, the stock market in the United States underwent rapid expansion. It continued for the first six months following President Herberts Hoovers inauguration in January 1929. The prices of stocks soared to fantastic heights in the great “Hoover bull market,” and the public, from banking and industrial magnates to chauffeurs and cooks, rushed to brokers to invest their surplus or their savings in securities, which they could sell at a profit. Billions of dollars were drawn from the banks into Wall Street for brokers’ loans to carry margin accounts. The spectacles of the South Sea Bubbles and the Mississippi Bubble had returned. People sold their Liberty Bonds and mortgaged their homes to pour their cash into the stock market. In the midsummer of 1929, some 300 million shares of Stock were being carried on margin, pushing the Dow Jones Industrial Average to a peak of 381 points in September. Any warnings of the precarious foundations of this financial house of cards went unheeded.

Prices began to decline in September and early October, but speculation continued, fueled in many cases by individuals who had borrowed money to buy shares—a practice that could be sustained only as long as stock prices continued rising. On October 18 the market went into a free fall, and the wild rush to buy stocks gave way to an equally wild rush to sell. The first day of real panic, October 24, is known as Black Tuesday on that day a record 12.9 million shares were traded as investors rushed to salvage their losses. Still, the Dow average closed down only six points after a number of major banks and investment companies bought up great blocks of stock in a successful effort to stem the panic that day. Their attempts, however, ultimately failed to shore up the market.

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