Economics: The Wall Street Crash of 1929

by: Alexandra Blume


The amazing strength and power of America’s economy during the early 20^th century came to a sudden halt in October of 1929.

During the 1920’s people trusted the stock market and kept on spending because stock kept on getting higher every day. Since one does not need a whole lot of money to get into the stock, people all around the U.S. would make huge investments but in 1929, so many people were buying on margin, which they had run up a debt of six billion dollars.

Before the Crash, life was good and plentiful for everyone. Parties were thrown every other day, cars and radios were being purchased into almost every household, and people were happy. This was because everyone found that buying stocks could make you rich overnight. The Americans who could not afford buying stocks would buy them at margin, meaning loaning money from a broker. Most would only put down about 10 or 20 percent into the investment, meaning the broker would pay the other 80-90%. When the price of stock fell lower than the loan, the broker would immediately make a margin call, meaning the person would have to pay the full amount of the loan in cash as soon as possible.

By early 1929, Americans were spending every last dime on a stock investment, banks and companies all around the country placed employees’ and customers’ money into the market. But in mid- March the market suffered a mini-crash causing prices to drop, as people started to panic since the margin calls were made and sent out. Though it was quickly recovered and forgotten, many small setbacks occurred throughout the spring, but were ignored by the government and people.


In the summer to come, the stock reached its highest level in history. From the months of June to September, Americas couldn’t be happier with the economy. More and more investors were buying at margin and people were saying, “Stock prices have reached what looks like a permanently high plateau.” Anyone who advised caution was ignored.

On September 3, the market took a sudden drop only to rise again and come back stronger. It dipped slightly once again on October 4 and slowly started to decline when people panicked. On October 21 (now known as “Black Monday”) people tried to sell in order to salvage their loss, but the real panic came on October 24 (known as “Black Thursday”) when a record of 12,894,650 shares were traded and on October 29 (“Black Tuesday”) 16,000,000 shares were sold and the prices collapsed completely. This was The Crash, after the Six Days of Wall Street, the economy continued to decline reaching its lowest in November of that year.


The Wall Street Crash later caused 1 in 20 farmers to be convicted, 12 million people out of work, 12 thousand people made unemployed every day, 20 thousand companies gone bankrupt, 1,616 banks gone bankrupt, and about 23,000 people committed suicide in one year. Thirty billion dollars had been lost (more than twice the national debt). The nation reeled, and slipped into the depths of the Great Depression. 

The decrease in stock before and after the Crash.