Vanishied hopes and silent apprehension

[Devil Doc]

Today is the anniversary of Black Tuesday, the stock market crash in 1929 that signaled the beginning of the worst economic collapse in the history of the modern industrial world. Few people saw it coming. The stock market had been booming throughout the 1920s. Brokerage houses had been springing up all over the country, to take advantage of everyone's interest in investment. There were stories about barbers and messenger boys who'd gotten rich off of overheard stock tips. Americans who ordinarily couldn't afford to invest their money were taking out loans to buy stock so they wouldn't miss out.

The stock market didn't do so well in September of 1929, but nobody really noticed anything was wrong until October 23, when 2.6 million shares were sold in the closing hour of trading. It looked as though the selling would continue on Thursday, October 24, but a group of the most influential American bankers in the country pooled their money and began to buy up the declining stocks, supporting the market. By the end of that day it seemed like everything would be all right.

But on this day in 1929, the bottom fell out of the market. Three million shares were sold in the first half-hour. Stock prices fell so fast that by the end of the day there were shares in many companies that no one would buy at any price. The stocks had lost their entire value.

The front-page story in The New York Times on this day read, "Wall Street was a street of vanished hopes, of curiously silent apprehension and of a sort of paralyzed hypnosis. ... Men and women crowded the brokerage offices, even those who have been long since wiped out, and followed the figures on the tape. Little groups gathered here and there to discuss the fall in prices in hushed and awed tones."

It was the most disastrous trading day in the stock market's history. The stock market lost $30 billion dollars, more than a third of its value, in the next two weeks.


Doc.

 

[MoeCizlak]

Doc, was that $30 billion loss in today's dollars or in 1929 dollars? Either way it's quite a loss. It truly was a Black Tuesday.

 

[Ernie111]

Doc,
I read Reminiscences of a Stock Operator, a very interesting book that tells some of the story leading up to this historic day.

 

[AVB]

To give you an idea of what started on the Thursday before, the stock market fell from 381.17 that day to a low of 41.22 in July 1932 and didn't recover for 22 years. If not for WWII, it would have been the early 1960's before the market reached the same level as it was at in October 1929. Quite possibly the most profound thing to happen to the country since the revolution itself.

 

[jgohlke]

I worked for a while, for a large investment firm in Boston. They had a room available to the fund managers that was like a library for investing. They had a group of people that worked all day to keep the charts/graphs and data up to date. Fund managers could request info, hold meetings there, do research, etc.

The room was pretty big and on one wall they had a chart that graphed the growth of the stock market from inception until today. The graph was probably 40 or 50 feet long and maybe 12 feet high. It spanned about 100 years. On close examination, you could see it was made up of various lines.

Standing back to take the whole thing in, it looked basically like one jagged line that went from the bottom left corner of the wall to the upper right corner (and on to the ceiling at the time). The overall impression was one of significant and steady growth.

When you stood back 20 or 30 feet so you could see the whole thing, you couldn't see the crash.