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Portrait of The Wall Street Crash

History · The 20th century

The Wall Street Crash

24–29 October 1929

Economic collapse — the end of the boom and the onset of the Great Depression

The collapse of American share prices in late October 1929 that ended the boom of the 1920s. The Dow Jones Industrial Average had peaked at 381.17 on 3 September 1929 after years of speculation, much of it on margin. Panic selling on Thursday 24 October saw nearly 13 million shares change hands; a group of bankers steadied prices that afternoon, but the market broke again on Monday 28 October and Tuesday 29 October, when more than 16 million shares were traded and the index fell by roughly a quarter in two days. The slide continued for nearly three years, bottoming at 41.22 on 8 July 1932, a fall of about 89 per cent from the peak. The crash did not by itself cause the Great Depression, but it destroyed confidence and credit, and it led to the Glass-Steagall Act and the Securities and Exchange Commission.

How to spot them

  • ▸Three days in one week nicknamed Black Thursday, Black Monday and Black Tuesday
  • ▸An index that peaked at 381.17 and did not regain that level until 1954
  • ▸Shares bought on margin with as little as ten per cent down
  • ▸A ticker tape running hours behind the trading it was reporting
  • ▸The event that opened the worst economic depression of the industrial age

What happened

The Thursday when bankers led by Richard Whitney strode onto the floor and bid up US Steel (1929)

24 October 1929; the show of confidence held only for a weekend

Sixteen million shares traded in one session as the ticker ran four hours late (1929)

29 October 1929, the worst day of the collapse

Irving Fisher's claim that stocks had reached a permanently high plateau (1929)

Made days before the fall by America's most eminent economist, who lost his own fortune

A journey from 381.17 to 41.22 over thirty-four months (1929–32)

The index did not return to its 1929 peak until November 1954

The 1933 act that separated commercial from investment banking (1933)

Glass-Steagall, alongside federal deposit insurance; it was largely repealed in 1999

The 1934 agency set up to police the exchanges, with Joseph Kennedy as its first chairman (1934)

The Securities and Exchange Commission, created by the Securities Exchange Act

Quick-fire facts

  • •The Dow Jones Industrial Average peaked at 381.17 on 3 September 1929 and bottomed at 41.22 on 8 July 1932
  • •Black Thursday was 24 October, Black Monday 28 October and Black Tuesday 29 October 1929
  • •Herbert Hoover was president; Franklin D. Roosevelt took office in March 1933 and launched the New Deal
  • •Margin buying let investors put down a fraction of a share price, so falling prices forced further selling
  • •The Smoot-Hawley Tariff Act of 1930 raised US duties and is widely blamed for deepening the world slump
  • •US unemployment reached about 25 per cent by 1933 and thousands of banks failed
  • •The story that ruined speculators jumped from windows in numbers is a myth; the suicide rate rose only modestly
  • •J. K. Galbraith's The Great Crash, 1929 remains the best-known short account
  • •Roosevelt declared a national bank holiday days after taking office in March 1933
  • •Richard Whitney, the hero of Black Thursday and later president of the New York Stock Exchange, was jailed for embezzlement in 1938

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Sources