The Stock Market Crash of 1929
The1920′s were know as the roaring twenties for a good reason. The 1920′s experienced growth in industry, technology, wages, consumer spending, and availability of cash (through the many banks that were opening up). These factors supported immense economic growth and a strong confidence in the economy.
Economic growth during the 1920′s was very real–even through 1929. Inflation was low while at the same time real income and production were both rising at over 3% per year. Several companies were increasing their dividend payouts. Leading economists of the day, including John Maynard Keynes, had money invested in the stock market and some even suggested buying after the October 1929 sell-off.
Many people invested all of their savings. Some even mortgaged their homes, cashed in their savings accounts or took out loans on the speculation that the market was going to continue in its rising trend. The stock market reached its peak during the end of August and the beginning of September, 1929 when the Dow Jones (an economic indicator) reached a high of 381 – a rise of 190 points since the beginning of 1928.
October 24, 1929 now known as “Black Thursday” was quite a busy day on the floor exchange. However, it was not until the final two hours of the day that things became overwhelming. The New York Times reported that 2 600 000 shares were sold in the last hour of the day. Confidence in the market was shattered and everyone wanted to sell their stock before they lost everything. On this Thursday there were 12 894 650 shares traded and the Dow Jones ended the day at 299. The exchange clerks worked until five o’clock the next morning in order to get all of Thursdays transactions through. On October 25, 1929 the New York Times reported a paper loss of four billion dollars. The weekend came and the exchanges used this time to catch up on all of the transactions and to recuperate.