The stock market crash of 1929 was a series of enormous declines in the value of the United States stock markets. The main events started on October 24, 1929 and culminated on Black Tuesday, October 29, 1929. Black Tuesday has become a notorious day in the history of the market, when investors lost enormous amounts of money. After the crash, stock prices continued to fall for the next three years as the United States, and eventually the world, slid into the Great Depression.
In the 1920s, many Americans enjoyed a rising level of prosperity, although wages rose slowly for many and farmers suffered greatly as farm product prices dropped. In the period from 1925 to 1929, the average price of stocks at the New Stock Exchange more than doubled. Rising stock values enticed many Americans into the stock market, buying in and expecting to sell later as prices continued to climb.
Despite concern from some economists, many believed stock prices to be capable of rising indefinitely. One well-respected economist declared that stock prices had reached a "permanently high plateau," shortly before the beginning of the crash. Indeed, stock prices had risen through the summer.
A fall in prices on October 19th worried investors throughout the next two weeks. Black Thursday, October 24, is usually considered the beginning of the stock market crash of 1929. Although prices at first held steady throughout a high volume of trades, panic began to set in by 11 a.m. and lasted until noon. In the early afternoon, news of a move to steady stock prices quickly stopped prices from falling. A phenomenal recovery during the afternoon meant the industrial average lost only 12 points on the day.
Stock prices were mostly level during morning trading sessions held on the 25th and 26th of October. Then, continuous selling on Monday the 28th wiped out billions in share values. Just before the market closed that day, further steep share declines made many wary of what would happen when markets opened Tuesday morning.
When the markets opened on Black Tuesday, panic was widespread, and the floor of the Stock Exchange was frantic. The volume of trades broke the record that had been set on Black Thursday. Billions more were wiped off stock values, ruining many investors and causing others to lose huge investments. Nearly fives times the amount of the United States budget, then $3 billion US Dollars (USD), was erased from the value of the market during the crash.
The stock market crash of 1929 was only the beginning of a much worse, and much more widespread, economic downturn. Stock values continued to fall through the early 1930s. While opponents debate whether the stock market crash of 1929 directly caused the Great Depression, it is often considered the beginning.
