Stock Market Crash of 1929

The American stock market peaked on September 3, 1929, then began to fracture. On October 24 — "Black Thursday" — panicked selling erased billions in value as investors stampeded for the exits. Bankers pooled resources to stabilize prices, briefly succeeding. Then on October 28, "Black Monday," and October 29, "Black Tuesday," the bottom dropped out entirely. The Dow Jones Industrial Average lost nearly 25 percent of its value in two days. The crash did not cause the Great Depression by itself — but it lit the fuse and no one stopped it.

The 1920s had been inflated by rampant speculation on borrowed money. Investors bought stocks on margin, putting up as little as 10 percent of the purchase price and borrowing the rest, betting on prices that seemed incapable of falling. When confidence cracked, margin calls cascaded through the system, forcing mass selling that drove prices lower still, triggering more calls in an accelerating spiral. Banks that had invested depositors' funds in the market began to fail; by 1933, nearly 11,000 of the nation's 25,000 banks had closed or been absorbed, wiping out savings that had taken lifetimes to build.

The crash became the defining economic trauma of the 20th century. It produced a generation's worth of suspicion toward Wall Street and speculation, drove the creation of the Securities and Exchange Commission, and shaped the entire philosophy of the New Deal. The Dow Jones did not recover its September 1929 peak until November 1954 — 25 years of lost ground. For the millions who lived through it, the memory of overnight ruin never fully faded.