On this day 82 years ago, the opening bell on Wall Street saw an 11% decline in market value. By day's end, panicked stock holders traded nearly 14 million shares in a selling frenzy that cost investors almost $5 billion dollars. It sparked the end of the Roaring Twenties, and the wide-spread optimism in the US economy.
The decade leading up to this unprecedented loss of wealth was defined by illogical exuberance and excess. People believed that the stock market's value would only go up. In fact, many so were confident that they borrowed funds to further buy into the scheme. By August 1929, brokers were lending investors more than two thirds the face value of the same stocks they were buying. By that point, almost $8.5 billion dollars had been loaned out, more than the entire amount of currency circulating in the United States.
When the panic selling began on the 24th, the bankers on Wall Street went to Richard Whitney, VP of the exchange, for help. He got them to give him some money and began buying US Steel stocks and "blue chip" shares at prices well above the market value. This tactic had staved off the Panic of 1907, and even though it did put an end to the worst of the slide, the measure was only temporary.
Nothing could stop what took place over the next three days. By October 29, the DOW was down 30 points and a total of $30 billion dollars had been lost in more panic selling, bank runs and jittery investors. The Great Depression was on.
Economist Richard M Salsman is noted to have said, "Anyone who bought stocks in mid-1929 and held onto them saw most of his or her adult life pass by before getting back to even."
The stock market crash of 1929 took place over four or five days, each one of them called "Black" in the press. It would forever scar an entire generation (who were still trying to forget the trenches of WWI) leading to wide-spread distrust in banks, the government, and money in general. Even today, you can still find those amongst your elders who will admit, somewhat comically, "My money's buried in a mason jar."
