The Wall Street Stock Market Crash left the country in debt, left life for American’s stressful, and left the United States in the Great Depression. Black Tuesday “was the most threatening stock market crash in the United States’ history” (“Stock Market Crash – Lesson from 1929 Stock Market Collapse” ¶ 2). It’s known as Black Tuesday because black portrays the color of strong and power which shows Black Tuesday as a strong and powerful day in Stock Market history. Americans were working hard by trying to earn money to help keep up a family. They found multiple ways to earn or borrow money. The money they had acquired was spent mostly on stock, because it was an easy money maker. Margin was one popular attempt on buying stock. “Buying stocks on margin, and making margin loans, made plenty of sense when stocks were rising. But when stock prices started to fall in October 1929, many of the loans started to look risky” (Blumenthal ¶ 10).
On October 29, 1929, Wall Street commodities plunged to very low depths. It collapsed after trading sixteen million shares that couldn’t be afforded anymore (Wukovits 18). The loss of money was bringing businesses and families down and wasn’t going to keep America up for much longer. Investors and traders were in frenzy after the stock market started crashing. During Black Tuesday, window seals were used to take lives. Traders and investors had lost so much in so little time that they would leap from the seals and take their own life (“Black Tuesday – 1929 Crash.” ¶ 7). Layoffs, unemployment, and dropping wages affected families’ living habits. After most companies had to face these problems, America started heading down the drain (“Brief History of The Crash of 1929 – TIME.” ¶8).
Before the crash, the United States had seen positive advances throughout the country. “When President Calvin Coolidge delivered his 1928 State of the Union address, he noted that America had never ‘met with a more pleasing prospect than that which appears at the present time’” (“Brief History of The Crash of 1929 – TIME.” ¶ 2). The airplane had been invented and even the radio had made its debut (“Stock Market Crash – Lesson from 1929 Stock Market Collapse” ¶ 3). The time before the Wall Street Crash was even known as “The Roaring Twenties” and Irving Fisher, an economist, even said that “Stock prices have reached what looks like a permanently high plateau” (Garlant ¶ 1). Dow Jones had even quadrupled its average within five years (“Brief History of The Crash of 1929 – TIME.” ¶ 2). Americans were into new and exciting entertainment since World War I had ended. Stock market was one way to let Americans make easy and fast money (Wukovits 21).
Throughout the country, passion, hopefulness, and assurance spread. The assurance that Americans were feeling helped lead them to risky Stock Market businesses (“Stock Market Crash – Lesson from 1929 Stock Market Collapse” ¶ 4). “Because people could purchase stock using a combination of cash and credit, many who otherwise wouldn’t have had the funds to play the stock market game were able to do so” (Gibson ¶ 4). All of the easily earned money made Americans rich quicker. As they had become richer, the price on new technology didn’t seem so expensive. Radios were affordable and the price of cars was lower thanks to mass production by Henry Ford.
Americans used the money they earned or borrowed on stocks. Two out of every five dollars that was leant from a bank in 1929 was spent on the stock market. People started earning money in any fashion they could. Buying stock on margin became very popular, but it was also very dangerous (“Brief History of The Crash of 1929 – TIME.” ¶ 3 and 7). When an investor put a down payment on stock, they were paying with margin. The investors didn’t owe anything of stock unless the price fell (Blumenthal ¶ 7). When people bought stock; they kept it until the price went up on it and then sold it for what it was worth. For example, if a stock price was worth $56 per share one day and a few weeks later it was worth $103 per share, Americans got rid of it and earned more money than they were spending. Therefore, families had a quick and easy was to make money.
The day where the stock market would fall and life savings would be lost wasn’t supposed to hit the United States this quickly. October 29, 1929 had come and the bells that start the trading during the day are said to have never been heard. The call of “Sell! Sell! Sell!” filled the work area (“Brief History of The Crash of 1929 – TIME.” ¶ 7). Brokers made margin calls to Americans who had borrowed money to buy stock. The brokers had to make calls to investors to ask for more cash up front to cover their loans they had taken out. Customers that weren’t able to give the cash lost their stock and it was sold (Blumenthal ¶ 10). At the end of the day, over “fifteen thousand miles of ticker tape” had been used (“Brief History of The Crash of 1929 – TIME.” ¶ 7).
Dow Jones had had a rough time. On October 10, 1929, their average had “closed above three hundred fify”. But thirteen days later, the Dow Jones stock had gone down 6.3%. When Black Tuesday finally hit, they had gone down 12% closing at 230.07 (“Black Tuesday – 1929 Crash.” ¶ 1, 3, and 4). The United Cigar Company had prices fall from $113.50 per share down to a devastating four dollars in one day. The president of the company took his life by jumping from a ledge of a New York City hotel. The New York Times had lost money as well; they went from 469 down to 220. General Motors was another company in trouble. Their prices fell from $73 a share to $36. The Radio Corporation of America’s prices fell from a whopping $505 to a low $28 per share (Pietrusza 70).
During the crash, life was heartbreaking and complicated. Jobs were being lost and savings were disappearing in the blink of an eye. Families’ incomes were dropping tremendously. In three years, the income of an average American family declined about forty percent from two thousand three hundred dollars a year to one thousand five hundred (Montana ¶ 12). Unemployment had reached 25% of the workforce (Redmond ¶ 3). The money that families had been saving from their previous stock investments was being lost (Stock Market Crash – Lesson from 1929 Stock Market Collapse.” ¶ 9). Margin calls were a big falling point for Black Tuesday. The margin calls let investors watch their savings quickly disintegrate.
As Americans had lost their jobs, savings, and confidence, the government was trying to find ways to help stabilize the economy. Construction opportunities were given to build and repair buildings. The construction job opportunities created the Chrysler building, built the Golden Gate Bridge, and also, the Rockefeller Center (Montana ¶ 15).
When the 1930’s came it took away the “fun-loving decade that had gone before seem like a dream” (Pietrusza 12). Black Tuesday “helped trigger the Great Depression largely because the government, wary of meddling in the economy, failed to take many of the steps that the Treasury and Federal Reserve are now using to try to prop up the hammered financial system” (Jacobs ¶ 2). The United States declined steadily into the greatest depression known in history (“The Great Depression.” ¶ 4). Jobs were scarce because companies had lost most of their money and gone bankrupt. The crash had cost America twenty five billion dollars which is three hundred nineteen billion dollars in today’s money (“Brief History of The Crash of 1929 – TIME.” ¶ 8). Americans were living in poverty, raising families without jobs or money, and were in desperate need of food, clothing, and shelter.
Efforts had been taken to try and help resolve the stock market crash of 1929, but none could resolve the Great Depression. President Herbert Hoover and his administration had passed the Hawlay-Smoot Tariff Act in 1930. This act raised tariffs to earn extra money, but the other nations reacted and raised the price of their tariffs as well. It didn’t affect America as they thought it would (“The Great Depression” ¶ 5). Franklin D. Roosevelt ran for president in 1932 and promoted his idea to help resolve the Great Depression with the New Deal. It proposed a new plan to increase employment and help industrial relief measures (Redmond ¶ 8). He also organized the Agricultural Adjustment Act, Civilian Conservation Corps, Tennessee Valley Authority, and the National Industrial Recovery Act. The AAA was the Agricultural Adjustment Act that was created to help stabilize farmers’ prices and help stop over production (Redmond ¶ 17 ). CCC was the Civilian Conservation Corps that helped promote the love for the environment by getting unemployed men to help conserve the economy (Redmond ¶ 18). The TVA or Tennessee Valley Authority was formed to help rural areas become more advanced. It wanted to build dams on the Tennessee River, and it provided jobs to help build the dams and stretch electricity further (Redmond ¶ 19). National Industrial Recovery Act or NIRA formed the NRA (National Recovery Administration) which was formed to help regulate the output of industrial products and trade prices, but failed (Redmond ¶ 20).
The importance of Black Tuesday is to know the warning signs before it can hit again. America today has recently seen a recession turn into a pre-depression, but not into anything like the Great Depression. People today still use credit to buy many goods and get so caught up in the cycle; they have spent a lot more than they could ever really afford. All of the debt adds up and pushes Americans back. Everything now can be bought on credit and paid for with payment plans like margin was. If the investor can’t make the payments on the product, it’s repossessed and sold to someone else who can afford it like stock was. The plans add interest onto monthly or yearly payments and make the product that is being paid for a lot more than it’s worth. Government today has banks insured by the Federal Deposit Insurance Corporation or the FDIC, for American’s who have over one hundred thousand dollars, to let American’s get their money back if the bank collapses. If Black Tuesday had never happened, then America could be living through the Great Depression today. Luckily, Government has figured ways out to help people keep their money if they can spend it wisely. Jobs have become scarce these past years due to bankruptcy in companies, and credit has played a major role. As Americans are spending their money they don’t have, it’s pushing them back. When their job becomes bankrupt or can’t afford to pay workers anymore they get laid off. After their lay off they get the credit card bills in and realize they aren’t able to afford what they have already spent. History has a way of repeating itself but with the efforts that have been taken to help prevent another Black Tuesday. America should never have to face the fear of it or have to fear another Great Depression.