ID: Stock Market Crash of 1929
When: October 24, 1929 (Black Thursday), followed by October 29, 1929 (Black Tuesday)
Who:
- Investors: Millions of Americans, many investing on margin.
- Brokers: Who facilitated stock transactions and extended credit.
- Herbert Hoover: President of the United States at the time.
- Federal Reserve: Played a role in monetary policy during the decade.
What:
A devastating collapse of stock prices on the New York Stock Exchange, beginning on October 24th (“Black Thursday”) and culminating on October 29th (“Black Tuesday”). The crash was triggered by a combination of factors including inflated stock values, overproduction, easy credit, and a speculative bubble. Panic selling led to massive losses for investors.
Impact: Why Significant?:
- Beginning of the Great Depression: The crash is widely considered the starting point of the Great Depression in the United States, although it was not the sole cause.
- Economic Contraction: Led to widespread bank failures, business closures, unemployment, and a sharp decline in consumer spending.
- Loss of Savings: Millions of Americans lost their life savings as banks collapsed and stock values plummeted.
- Worldwide Impact: Contributed to the global economic crisis of the 1930s.
- Policy Changes: Led to reforms in financial regulations and the creation of new government agencies to oversee the stock market and banking system (e.g., Securities and Exchange Commission).
- Shift in Government Role: Contributed to a growing expectation for government intervention in the economy to address economic crises, paving the way for the New Deal.