Black Monday - October 28, 1929
Although the market had closed on an upswing on Black Thursday, the low numbers of the ticker that day had shocked many speculators. Hoping to get out of the stock market before they lost everything (as they thought they had on Thursday morning), they decided to sell.
This time, as the stock prices plummeted, no one came in to save it.
Black Tuesday - October 29, 1929
October 29, 1929, "Black Tuesday," is known as the worst day in stock market history. There were so many orders to sell that the ticker quickly fell behind. (By the end of close, it had lagged to 2 1/2 hours behind.) People were in a panic; they couldn't get rid of their stocks fast enough. Since everyone was selling and nearly no one was buying, stock prices collapsed.
Rather than the bankers rallying investors by buying more stocks, rumors circulated that they were selling. Panic hit the country. Over 16.4 million shares of stock were sold - a new record.
The Drop Continues
Not sure how to stem the panic, the decision was made to close the stock market on Friday, November 1 for few days. When it reopened on Monday, November 4 for limited hours, stocks dropped again. The slump continued until November 23, 1929, when prices seemed to stabilize. However, this was not the end. Over the next two years, the stock market continued to drop. It reached its low point on July 8, 1932 when the Dow Jones Industrial Average closed at 41.22.
Aftermath
To say that the Stock Market Crash of 1929 devastated the economy is an understatement. Although reports of mass suicides in the aftermath of the crash were most likely exaggerations, many people lost their entire savings. Numerous companies were ruined. Faith in banks was destroyed.
The Stock Market Crash of 1929 occurred at the beginning of the Great Depression. Whether it was a symptom of the impending depression or a direct cause of it is still hotly debated.
Historians, economists, and others continue to study the Stock Market Crash of 1929 in the hopes of discovering the secret to what started the boom and what instigated the panic. As of yet, there has been little agreement as to the causes. In the years after the crash, regulations covering buying stocks on margin and the roles of banks have added protections in the hopes that another severe crash could never happen again.
