The stock market crashes of 1929 and 1987: linking history and personal finance education - Document (2024)

FAQs

What is a brief history of the 1929 stock market crash? ›

On October 29, 1929, "Black Tuesday" hit Wall Street as investors traded some 16 million shares on the New York Stock Exchange in a single day. Around $14 billion of stock value was lost, wiping out thousands of investors. The panic selling reached its peak with some stocks having no buyers at any price.

Among the more prominent causes were the period of rampant speculation (those who had bought stocks on margin not only lost the value of their investment, they also owed money to the entities that had granted the loans for the stock purchases), tightening of credit by the Federal Reserve (in August 1929 the discount ...

One day losses were more in 1987 as the DJIA fell 22.6 percent on October 19, 1987, as compared to 12.8 percent on October 29, 1929. However, the crash of 1929 had a more sustained, negative, and long-term impact (possibly causing the Great Depression) on the US economy than the Crash of 1987.

Those individuals who could not afford to pay found their stocks sold immediately and their life savings wiped out in minutes, yet their debt to the bank still remained. October 29, 1929, or Black Tuesday, witnessed thousands of people racing to Wall Street discount brokerages and markets to sell their stocks.

By then, production had already declined and unemployment had risen, leaving stocks in great excess of their real value. Among the other causes of the stock market crash of 1929 were low wages, the proliferation of debt, a struggling agricultural sector and an excess of large bank loans that could not be liquidated.

Stock market crash: Rising US dollar and Treasury yields, disappointing US retail sales data, falling Indian National Rupee (INR), and rising crude oil prices are some other reasons that have fueled the selling pressure in the Indian stock market.

Several individuals who bet against or “shorted” the market became rich or richer. Percy Rockefeller, William Danforth, and Joseph P. Kennedy made millions shorting stocks at this time. They saw opportunity in what most saw as misfortune.

The stock market crash of 1929 happened because the share prices had been rising at an unsustainable pace in the years prior to the crash. This was due to the overconfidence of the investors in sustained economic growth as well as the practice of buying shares on the margin.

The stock market crash crippled the American economy because not only had individual investors put their money into stocks, so did businesses. When the stock market crashed, businesses lost their money. ... Business houses closed their doors, factories shut down and banks failed.

Black Monday led to a number of noteworthy reforms, including exchanges developing provisions to pause trading temporarily in the event of rapid market sell-offs. In addition, the Federal Reserve's response set a precedent for the central bank's use of “liquidity” to stem financial crises.

What happened in the 1987 stock market crash? ›

Black Monday, Oct. 19, 1987, was a day when the Dow Jones Industrial Average fell by 22% and marked the start of a global stock market decline. The Plaza Accord was a 1985 agreement among the G-5 nations to depreciate the U.S. dollar relative to the Japanese yen and the German Deutsche mark.

The crash affected many more than the relatively few Americans who invested in the stock market. While only 10 percent of households had investments, over 90 percent of all banks had invested in the stock market. Many banks failed due to their dwindling cash reserves.

By 1933 the value of stock on the New York Stock Exchange was less than a fifth of what it had been at its peak in 1929. Business houses closed their doors, factories shut down and banks failed. Farm income fell some 50 percent. By 1932 approximately one out of every four Americans was unemployed.

As stocks continued to fall during the early 1930s, businesses failed, and unemployment rose dramatically. By 1932, one of every four workers was unemployed. Banks failed and life savings were lost, leaving many Americans destitute. With no job and no savings, thousands of Americans lost their homes.

How could the Stock Market Crash of 1929 been prevented? Had the Federal Reserve and other governing bodies established a separation of banks and investment firms, the stock market would likely not have become saturated, especially with borrowed money.

The stock market crash crippled the American economy because not only had individual investors put their money into stocks, so did businesses. When the stock market crashed, businesses lost their money. ... Business houses closed their doors, factories shut down and banks failed.

October 29, 1929

Wall Street Crash of 1929 / End date

Several individuals who bet against or “shorted” the market became rich or richer. Percy Rockefeller, William Danforth, and Joseph P. Kennedy made millions shorting stocks at this time. They saw opportunity in what most saw as misfortune.