Black Tuesday was the last and fourth day of the 1929 stock market crash. It happened on October 29, 1929. 1. 16.4 million investors traded shares. The New York Stock Exchange lost $14 billion, which is equivalent to $206 billion dollars in 2019.
The Dow Jones Industrial Average fell almost 12% on Black Tuesday. It closed at 230. 4
The Dow fell for another three years after the crash. 4 It lost nearly 90% of its value from its peak on September 3, 1929. It didn’t get that high for another 25 years, until November 23, 1955. The Great Depression was a result of the losses from the stock crash.
What happened?
Sellers in panic shouted “Sell!” Sell!” The bell was rung so loudly, no one could hear it. They sold 3 million shares in a half-hour and lost 2 million dollars. 5
The ticker tape, which announced stock prices, was hours behind. Investors didn’t realize how much money they had lost. They called their brokers frantically. They sent telegrams when they couldn’t reach their brokers. Western Union reported that its volume of telegrams had tripled on this day.
Traders used to write orders down on paper. The orders were piled up because there were so many transactions. The traders threw them in trash cans. A fight broke out and one trader fell to the ground. After he had been revived, the trader was returned to work. The NYSE board members were afraid of closing the market, as it could make the panic worse.
The major banks of that time tried to stop this crash. Morgan Bank, Chase National Bank and National City Bank of New York purchased shares of stock. 7 Their goal was to restore the confidence in the market. The intervention had the opposite effect. Investors interpreted it as a sign of panic by the banks.
Causes
Investors’ actions in the 1920s influenced Black Tuesday to a certain extent. Internet access was not instantaneous. A ticker tape machine printed stock prices onto a paper strip. The ticker tapes could not keep pace with the falling share prices. The panic was caused because nobody knew how bad the situation was.
The stock exchange floor was a riot. The buyers roared. Some fell to the ground after receiving bad news regarding a stock’s price. Outside the NYSE, crowds gathered. Police were called in to maintain order.
Another reason for panic was a new way to buy stocks called buying on a margin. The investors could buy huge quantities of stock with just 10% to 20% deposit. 8 This was done by borrowing money from their brokers. Brokers called in loans when stock prices dropped. The repayment of the loans often wiped out people’s entire savings.
What it did to cause the Great Depression
The Black Tuesday losses undermined confidence in the economy. This loss of confidence was the cause of the Great Depression. The stock market then was believed to be the economic indicator. Main Street believed that what was good for Wall Street would be good for Main Street.
The crash in the stock market caused a bank run. The stock market crash caused a bank run. Many banks were forced to shut down because they didn’t keep enough cash. The Federal Deposit Insurance Corporation did not exist to protect savings.
Gold prices soared as a result. Gold prices rose as a result.
It did this by raising interest rates, which reduced liquidity for businesses. The Federal Reserve did this by increasing interest rates which decreased liquidity for businesses. 12 Without funds to grow, however, companies began laying off workers. This spiraled the economy into a downward spiral, which became known as the Great Depression.
Statistics
| DAY | Date | OPEN | CLOSE | Change in Percentage | TRADING IN SHARES |
|---|---|---|---|---|---|
| BLACK WEDNESDAY | October 24, | 305.85 | 299.47 | -2% | 12,894,650 |
| FRIDAY | October 25, | 299.47 | 301.22 | 1% | 6,000,000 |
| SUNDAY | October 26 | 301.22 | 298.97 | -1% | |
| BLACK MORNING | October 28 | 298.97 | 260.64 | -13% | 9,250,000 |
| BLACK TUESDAY | September 29 | 260.64 | 230.07 | -12% | 16,410,000 |
Timeline of the Great Depression
FAQs (Frequently Asked Questions)
What is Black Tuesday?
Black Tuesday was October 29, 1929. On October 29, 1929, 16 million stocks were traded. The stock market dropped by billions of dollars. 1
What is the difference between Black Thursday & Black Tuesday?
Black Tuesday took place on the Thursday prior to Black Tuesday. Black Thursday was the beginning of the stock-market crash that culminated in Black Tuesday.
