Stock Market Crash of 1929
Economic event in the U.S. that precipitated the Great Depression.The U.S. stock market expanded rapidly in the late 1920s and reached a peak in August 1929, when prices began to decline while speculation increased. On October 18 the stock market began to fall precipitously. On the first day of real panic, October 24, known as "Black Thursday," a record 12,894,650 shares were traded. Banks and investment companies bought large blocks of stock to stem the panic, but on October 29, "Black Tuesday," 16 million shares were traded and prices collapsed. The crash began a 10-year economic slump that affected all the Western industrialized countries.
* * *▪ American historyalso called the Great Crasha sharp decline in U.S. stock market values in 1929 that contributed to the Great Depression of the 1930s. The Great Depression lasted approximately 10 years and affected both industrialized and nonindustrialized countries in many parts of the world.During the mid- to late 1920s, the stock market in the United States underwent rapid expansion. It continued for the first six months following President Herbert Hoover (Hoover, Herbert)'s inauguration in January 1929. The prices of stocks soared to fantastic heights in the great “Hoover bull market,” and the public, from banking and industrial magnates to chauffeurs and cooks, rushed to brokers to invest their surplus or their savings in securities, which they could sell at a profit. Billions of dollars were drawn from the banks into Wall Street for brokers' loans to carry margin accounts. The spectacles of the South Sea Bubble and the Mississippi Bubble had returned. People sold their Liberty Bonds (bond) and mortgaged their homes to pour their cash into the stock market. In the midsummer of 1929 some 300 million shares of stock were being carried on margin, pushing the Dow Jones Industrial Average (Dow Jones average) to a peak of 381 points in September. Any warnings of the precarious foundations of this financial house of cards went unheeded.Prices began to decline in September and early October, but speculation continued, fueled in many cases by individuals who had borrowed money to buy shares—a practice that could be sustained only as long as stock prices continued rising. On October 18 the market went into a free fall, and the wild rush to buy stocks gave way to an equally wild rush to sell. The first day of real panic, October 24, is known as Black Thursday; on that day a record 12.9 million shares were traded as investors rushed to salvage their losses. Still, the Dow average closed down only six points after a number of major banks and investment companies bought up great blocks of stock in a successful effort to stem the panic that day. Their attempts, however, ultimately failed to shore up the market.The panic began again on Black Monday (October 28), with the market closing down 12.8 percent. On Black Tuesday (October 29) more than 16 million shares were traded. The Dow Jones Industrial Average lost another 12 percent and closed at 198—a drop of 183 points in less than two months. Prime securities tumbled like the issues of bogus gold mines. General Electric (General Electric Co.) fell from 396 on September 3 to 210 on October 29. American Telephone and Telegraph dropped 100 points. DuPont fell from a summer high of 217 to 80, United States Steel (United States Steel Corporation) from 261 to 166, Delaware and Hudson from 224 to 141, and Radio Corporation of America (RCA Corporation) (RCA) common stock from 505 to 26. Political and financial leaders at first affected to treat the matter as a mere spasm in the market, vying with one another in reassuring statements. President Hoover and Treasury Secretary Andrew W. Mellon (Mellon, Andrew W.) led the way with optimistic predictions that business was “fundamentally sound” and that a great revival of prosperity was “just around the corner.” Although the Dow Jones Industrial Average nearly reached the 300 mark again in 1930, it sank rapidly in May 1930. Another 20 years would pass before the Dow average regained enough momentum to surpass the 200-point level.Many factors likely contributed to the collapse of the stock market. Among the more prominent causes were the period of rampant speculation (those who had bought stocks on margin not only lost the value of their investment, they also owed money to the entities that had granted the loans for the stock purchases), tightening of credit by the Federal Reserve (Federal Reserve System) (in August 1929 the discount rate was raised from 5 percent to 6 percent), the proliferation of holding companies (holding company) and investment trusts (investment trust) (which tended to create debt), a multitude of large bank loans that could not be liquidated, and an economic recession that had begun earlier in the summer.
* * *
Look at other dictionaries:
Stock Market Crash Of 1929 — A severe downturn in equity prices that occurred in October of 1929 in the United States, and which marked the end of the Roaring Twenties. The crash of 1929 did not occur in one day, but was spread out over a two week period beginning in mid… … Investment dictionary
Stock market crash — A stock market crash is a sudden dramatic decline of stock prices across a significant cross section of a stock market, resulting in a significant loss of paper wealth. Crashes are driven by panic as much as by underlying economic factors. They… … Wikipedia
Stock Market Crash — A rapid and often unanticipated drop in stock prices. A stock market crash can be the result of major catastrophic events, economic crisis or the collapse of a long term speculative bubble. Well known U.S. stock market crashes include the market… … Investment dictionary
Stock market — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond … Wikipedia
Stock market bottom — A stock market bottom is a trend reversal that marks the end of a market downturn and the beginning of an upward moving trend. A bottom may occur because of the presence of a cycle, or because of panic selling as a reaction to an adverse… … Wikipedia
Wall Street Crash of 1929 — Black Tuesday redirects here. For other uses, see Black Tuesday (disambiguation). Crowd gathering on Wall Street after the 1929 crash. The Wall Street Crash of 1929 (October 1929), also known as the Great Crash, and the Stock Market Crash of 1929 … Wikipedia
market — marketer, n. /mahr kit/, n. 1. an open place or a covered building where buyers and sellers convene for the sale of goods; a marketplace: a farmers market. 2. a store for the sale of food: a meat market. 3. a meeting of people for selling and… … Universalium
stock — stocklike, adj. /stok/, n. 1. a supply of goods kept on hand for sale to customers by a merchant, distributor, manufacturer, etc.; inventory. 2. a quantity of something accumulated, as for future use: a stock of provisions. 3. livestock. 4. Theat … Universalium
1929 in Ireland — Events*January 17 All cats from abroad, except Great Britain, are to be kept in quarantine for a period of six months to avoid rabies. *February 8 A Belfast court sentences Fianna Fáil leader, Éamon de Valera, to one month in jail for illegally… … Wikipedia
Market trends — In investing, financial markets are commonly believed to have market trends [ [http://www.investorwords.com/5067/trend.html Investorswords.com] , retrieved 30 May 2007.] that can be classified as primary trends, secondary trends (short term), and … Wikipedia