Although this is the shortest market crash observed, it
was a deadly one. Investors saw almost half their money disappear in just
two months. Often this crash is the worst in most people's minds.
This crash kicked off what we now know as the "Great Depression." You can
read more about this crash by visiting my This crash kicked off what we now
know as the "Great Depression." To learn more about the crash, be sure to
visit my 1929 crash resources.
4th Worst Stock Market Crash :
Date Started: 9/3/1929
Date Ended: 11/13/1929
Total Days: 71
Starting DJIA: 381.17
Ending DJIA: 198.69
Total Loss: -47.9%
1929. With the emotional cycle near its peak and the
physical and intellectual cycles in a downward crossover period, the
country's enthusiam outran its own strength and know-how while headed for
disaster. The result was a crash.
The stock market reached all-time high, 381 on Sept. 3, 1929; on Nov. 13,
it reaches bottom; within a few weeks of "Black Tuesday," unemployment rises
from 700,000 to 3.1 million.
Charles mitchell, of First National City Bank, declares economy sound.
Stock market plummets, 19 million shares are sold.
Market crashes, selling panic continues, billion are lost overnight. Wall
St. hysteria begins on black thursday Oct. 24 and peaked on Tue. Oct. 29.
On sept. 3, the big bull market peaks; on Nov. 13, it reaches bottom;
within a few weeks of Black Tuesday, unemployment rises from 700,000 to 3.1
million.
An estimated 4.5 million people put money into "investment trusts,"
brokerage offerings that speculate for them; there are 70,950 stockbrokers
in the U.S. (26,609 in 1920).
RAW^
Several disquieting features of those boom years were becoming alarming
at the beginning of the Hoover administration: (1) Agricultural profits were
lagging far behind industrial profits; (2) wages of factory workers were
increasing, but not nearly so rapidly as the prices of manufactured goods;
(3) the nation's factories and farms were producing more than American and
foreign consumers were able to buy, while the high tariff was curtailing the
overseas market; (4) consumers were buying an ever-increasing amount of
goods on installment, thereby raising the total of outstanding private
debts; and (5) an extremely large proportion of the annual national income
was being invested in highly speculative manufacturing, mining, and
transportation enterprises.
Hundreds of thousands of Americans were buying securities (stocks and
bonds) on the stock exchange for the first time; and many were acquiring
their shares on credit. In late October 1929, a panic developed in the New
York stock market. Prices of securities dropped with startling speed to low
levels. Over 13 million shares were traded on October 25, soon to be known
as Black Thursday. Five days later more than 16 million shares were sold,
making October 29, soon to be called Black Tuesday, the worst day in the
history of the New York stock market. By November 14 approximately $30
billion in the market value of listed stocks had been wiped out. At no
previous period had so many Americans been directly involved with corporate
securities. The collapse of the New York Stock Exchange, therefore, was the
prelude to economic disaster.
The stock market had already begun to act queerly. On 23 October there
was spectacular drop during the last hour of trading, and the 24th, when
almost 13 million shares changed hands, became known as "Black Thursday."
Spokesmen for bankers and brokers insisted that the worst was over, but 28
and 29 October were even more terrible days, from which there was no
recovery. Stocks reached new lows on 13 November, rose slightly during the
early months of 1930, but in April began a downward slide that continued
with only brief interruptions to rock-bottom in mid 1932.
Whilst the boom of 1926-29 made the stock market crash inevitable, there
was nothing inevitable about the Great Depression that followed. Economic
analysis, a science then in its infancy, failed to discern the serious
faults in American and European economics and their increasing vulnerability
to shock. Among the weak points were the tremendous volume of stock-market,
mortgage, and installment-buying debts; the chaotic American banking system,
precarious European currencies, and the war reparations question, supposedly
but not really settled.
Worst bank failure in American history was that of the Bank of the United
States on 11 December 1930 - nine days after President Hoover in a message
to Congress had stated, "The fundamental strength of the Nation's economy is
unimpaired."
This tailspin of the economy went on until mid-1932 when around 12
million people, about 25 per cent of the normal labor force, were
unemployed. In the cities there were soup kitchens and bread lines. Factory
payrolls dropped to less than half those of early 1929. Shanty towns, were
the jobless gathered to pick over a camp, grew up; bankrupt mills and
garment lofts were reopened by unscrupulous promoters who paid a dollar a
day to men and half that to girls. Small towns in the farm belt were almost
deserted by their inhabitants. Some farmer resisted eviction and foreclosure
by force of arms. On the higher level, New York apartment houses offered
five-year leases for one year's rent, entire Pullman trains rolled along
without a single passenger, hotels and resorts like Miami Beach were empty.
RAW^
In the stock market crash of 1929, in a few weeks stocks lost 40% of
their value; stocks continued an intermittent downward course through 1932.
The crash had come in response to declines in industrial production,
construction and retail sales.
1929 Before the Crash:
"[This] has been a twelvemonth of unprecedented advance, of wonderful
prosperity...If there is any way of judging the future by the past, this new
year may well be one of felicitation and hopefulness." - Herbert Hoover
"If a man saves $15 a week and invests in good common stocks,...at the
end of 20 years, he will have at least $80,000 and...$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." - John T. Raskob, former top
executive, General Motors, and chairman, Democratic National Committee
RAW^
Kala. Chart horizontal
1920