It seems that the month of October, especially the end of it, has a bleak history on Wall Street. There have been many moments in world history where events happened that were too disastrous for anyone to imagine the consequences. And for the world of finance, there aren't any that are darker than the October days that kicked off the beginning of the Great Depression.
The Wall Street Crash in October of 1929 was the most devastating stock market crash in U.S. History. The historic crash was the start of a 12 year economic depression that impacted the economies of all the Western countries. The Great Depression lasted until 1941. Historians and Economists both have looked back at the events leading up to the stock market crash, trying to find out the root cause and to determine if the market crash caused the Depression itself or if the market was merely one of the first victims.
During the decade leading up to the Crash, the “Roaring Twenties” there was wealth and extravagance. The stock market was riding on an all time high. The great bull market that had been a sign of the economic high came to a screeching halt on Tuesday, October 29, 1929. The stock market collapsed and prices fell and continued to fall for an entire month. The market had been having problems in the months and weeks prior to the Great Crash. In the beginning of September of 1929, the Dow Jones was at an all time high, but then started dropping. The market recovered most of the losses but went into a steep decline again.
On October 24, 1929 (also known as Black Thursday) stock prices were decelerating at a record pace and the stock market floor was in a panic. In a desperate attempt to stop the stock free fall, the heads of many major banks had an emergency meeting. They pooled their resources and attempted to place bids to purchase large blocks of “Blue Chip” stocks for prices well above the current market price. Their last minute effort stopped the stock market from falling that day, but was only a temporary solution.
On the next Monday, October 28th, more and more investors started pulling out of the market and stock prices continued to fall. On Tuesday, the day of the Great Crash, even more stocks were sold. Many wealthy families like the Rockefellers and others tried to purchase large portions of stocks in an attempt to stabilize the market and demonstrate some market confidence. It didn't work and the Dow lost 12% that day alone. In one day, the market lost $14 billion, bringing the market loss for the week to $30 billion.
Although only an estimated 16% of American families had money invested in the markets, the effects of the stock market crash were felt all around the country. Billions of dollars of wealth were wiped out in less than a week. The banks started to collapse, which caused business's to lose capital and be forced to cut back on its labor force. Housing values fell and unemployment rose. The banks were going out of business and taking investors' money with them. It was a dark period in our nation's history.
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By Melissa Kennedy- Melissa is a 9 year blog veteran and a freelance writer, along with helping others find the job of their dreams, she enjoys computer geekery, raising a teenager, supporting her local library, writing about herself in the third person and working on her next novel.
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