Wall Street, 1929.
11 10 2008If you have been watching or reading the news in the last few days, the current financial situation if often compared to that of 1929, when the Wall Street Crash ruined the American economy.
Here is a short reminder of this historical and economic landmark.
The Wall Street Crash of 1929 was the most devastating stock market crash in the history of the United States, taking into consideration the full extent and longevity of its fallout.
Three phrases—Black Thursday, Black Monday, and Black Tuesday—are used to describe this collapse of stock values. All three are appropriate, for the crash was not a one-day affair. The initial crash occurred on Black Thursday (October 24, 1929), but it was the catastrophic downturn of Black Monday and Tuesday (October 28 and 29, 1929) that precipitated widespread panic and the onset of unprecedented and long-lasting consequences for the United States. The collapse continued for a month.
Economists and historians disagree as to what role the crash played in subsequent economic, social, and political events. The Economist writes, “Briefly, the Depression did not start with the stockmarket crash”. In 1929, the Economist wrote, “Can a very serious Stock Exchange collapse produce a serious setback to industry when industrial production is for the most part in a healthy and balanced condition?” The crash in America came near the beginning of the Great Depression, a period of economic decline in the industrialized nations, and led to the institution of landmark financial reforms and new trading regulations.
At the time of the crash, New York City had grown to be a major metropolis, and its Wall Street district was one of the world’s leading financial centers.The New York Stock Exchange (NYSE) was the largest stock market in the world.
The Roaring Twenties, which was a precursor to the Crash, was a time of prosperity and excess 
in the city, and despite warnings against speculation, many believed that the market could sustain high price levels. Shortly before the crash, Irving Fisher famously proclaimed, “Stock prices have reached what looks like a permanently high plateau.” The euphoria and financial gains of the great bull market were shattered on Black Thursday, when share prices on the NYSE collapsed. Stock prices fell on that day and they continued to fall, at an unprecedented rate for a full month.
In the days leading up to Black Tuesday, the market was severely unstable. Periods of selling and high volumes of trading were interspersed with brief periods of rising prices and recovery. Economist and author Jude Wanniski later correlated these swings with the prospects for passage of the Smoot-Hawley Tariff Act, which was then being debated in Congress. After the crash, the Dow Jones Industrial Average (DJIA) recovered early in 1930, only to reverse again, reaching a low point of the great bear market in 1932. The Dow did not return to pre-1929 levels until late 1954, and was lower at its July 8, 1932 level than it had been since the 1800s.
From Wikipedia, the free encyclopedia.
A few figures:
1) 12 million people out of work
2) 12,000 people being made unemployed every day
3) 20,000 companies had gone bankrupt
4) 1616 banks had gone bankrupt
5) 1 farmer in 20 evicted
6) 23,000 people committed suicide in one year - the highest ever
The 1929 crash was followed by a long and deep recession, which threw millions of Americans on the roads and caused havoc in many parts of the world, particularly in Europe and Japan.
For a complete review of the Wall Street Crash (1929), click here
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