On Thursday, October 24, 1929, an unprecedented wave of sell orders shook the New York Stock Exchange. Stock priced tumbled, falling $2, $5, and even $10 between trades. As prices fell, brokers required investors who had bought stock on margin to put up money to cover their loans. To raise money, many investors dumped stocks for whatever price they could fetch. During the first three hours of trading, stock values plunged by $11 billion.
At noon, a group of prominent bankers met at the offices of J.P. Morgan and Co. to stop the hemorrhaging of stock prices. The bankers' pool agreed to buy stocks well above the market. At 1:30 p.m., they put their plan into action. Within an hour, U.S. Steel was up $15 a share; AT&T up $22; General Electric up $21; Montgomery Ward up $23.
Even though the market recovered its morning losses, public confidence was badly shaken. Rumors spread that eleven stock speculators had killed themselves and that government troops were surrounding the exchange to protect traders from an angry mob. President Hoover sought to reassure the public by declaring that the "fundamental business of the country...is on a sound and prosperous basis."
Prices held steady on Friday, and then slipped on Saturday. Monday, however, brought fresh disaster. Eastman Kodak plunged $41 a share; AT&T plunged $24; New York Central Railroad plunged $22. The worst was yet to come. It occurred on Black Tuesday, October 29, the day the stock market experienced the greatest crash in its history.
As soon as the stock exchange's gong sounded, a mad rush to sell began. Trading volume soared to an unprecedented 16,410,030 shares and the average price of a share fell 12 percent. Stocks were sold for whatever price they would bring. White Sewing Machine had reached a high of $48 a share. One purchaser--reportedly a messenger boy--bought a block of the stock for $1 a share.
The bull market of the late 1920s was over. By 1932, the index of stock prices had fallen from a 1929 high of 210 to a low of 30. Stocks were valued at just 12 percent of what they had been worth in September 1929. Altogether, between September 1929 and June 1932, the nation's stock exchanges lost $179 billion in value.
The great stock market crash of October 1929 brought the economic prosperity of the 1920s to a symbolic end. For the next ten years, the United States was mired in a deep economic depression. By 1933, unemployment had soared to 25 percent, up from just 3.2 percent in 1929. Industrial production declined by 50 percent. In 1929 before the crash, investment in the U.S. economy totaled $16 billion. By 1933, the figure had fallen to $340 million--a decrease of 98 percent.
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