On October 29, 1929, the day known as Black Tuesday occurred, marked by a record number of 16.4 million shares being sold on Wall Street. During this one day of sales, investors collectively lost 14 billion dollars in inflated stock prices, worth more than 199 billion dollars today. In fact, Black Tuesday was the last day of four, and in total, the DOW dropped 25 percent, and over the four days, $30 million was lost.
During the 1920s, sometimes nicknamed the “roaring 20’s, America underwent rapid change, causing the stock market to grow immensely as well. During a period of incredible speculation, stock prices hit their peak in August 1929, amidst the beginnings of unemployment and production stagnation. Speculation combined with the slowing growth of the industries resulted in stock prices much, much higher than their actual values. When people started selling their stocks, the money stored within these unreasonably high stock prices vanished.
On the day of Black Tuesday itself, the moment the opening bells rang, panicked investors covered the selling floor, causing mass hysteria, and resulting in more and more sales. In fact, this panic was urged on by the fact that stock tickers, used to show the occurrence of stock sales and their prices, were several hours behind. Sellers did not know how much they had lost, but only that stocks were being sold, and sold for diminishing prices. Back then, stocks were traded using paper, and the sheer number of stocks being sold and traded resulted in total mayhem.
While some economists state the Stock Market Crash of 1929 could have had nothing to do with the Great Depression, it definitely caused a shift in mood: from the undefeatable American dream to the idea that misfortune could, and would happen. By 1932, the Great Depression was in full flight, with stocks valued at only 20% of what they were at their peak in August 1929. The Stock Market Crash was definitely not the only cause to the Great Depression, but it sped up America’s eventual economic failure.
https://www.thebalance.com/black-tuesday-definition-cause-kickoff-to-depression-3305819
http://www.history.com/this-day-in-history/stock-market-crashes
http://www.history.com/this-day-in-history/stock-market-crashes
http://www.investopedia.com/terms/b/blacktuesday.asp
It was really interesting to see how the mayhem caused by black Friday was caused by the fact that the tickers were behind. It makes me wonder what would have happened if something so simple hadn't occurred. Additionally, it's ironic how such a event relates to Black Friday, a day where retailers earn a lot of money contrary to the ideas of Black Tuesday. Now, the idea that a "black" day would be a negative one seems very strange.
ReplyDeleteSource : https://www.theatlantic.com/business/archive/2015/11/how-black-friday-got-its-name-workers-hookie/417729/
I agree with Sophia that today it is strange that Black Friday is named so similarly to Black Tuesday, but perhaps it is because so many transaction are made in stores like they were in the stock market. I also think the idea of the economic bubble that had built up in the 20's popping is something very important today. People make risky investments in things that are not backed by anything, thinking that no bad can happen. Examples are Amazon and Bitcoin, which at any moment, the bubble could burst and leave people losing tons of money. While these two examples would not be as devastating as the Black Tuesday, the same principle can be applied and I think it is really important that we try to learn from past mistakes.
ReplyDeleteI find it interesting how the mechanical stock ticker may have contributed to the market crash on Black Tuesday. Because the ticker was running over two hours late, people panicked because they had no idea what was happening in the market. This lack of knowledge caused some people to sell their stocks, and when others heard that they were selling their stocks, they freaked out and sold theirs as well. This ignited a chain reaction of selling, and stock prices plummeted to unprecedented levels. Although there are many different causes of the crash that happened on Black Tuesday, it's intriguing that something as simple as slow technology could have had such a significant effect on the country's economy.
ReplyDeleteSource:
http://www.washington.edu/news/2017/05/02/documents-that-changed-the-world-delayed-stock-market-ticker-tape-october-1929/