The Wall Street Crash of 1929

On October 24, 1929 the United States saw an abrupt stop to the “roaring twenties” with the crash of the New York Stock Exchange. The days leading up to the crash the markets were very unstable with large amounts of stock was being traded, causing the fluctuation of stock prices. On the day which would later be known as “Black Thursday” October 24, 1929 the markets began to take a free fall dropping 11% at the opening bell. (Klein 2001) There was chaos on the trading floor where hundreds of brokers were crowding the floors trying to sell of stock to avoid huge losses. Around mid-day a group of some of the top bankers on Wall Street met to discuss a solution to the chaos. In attendance to this meeting was Thomas W. Lamont head of the J.P. Morgan Bank, Albert Wiggin the head of the Chase National Bank, and Charles E. Mitchell president of National City Bank of New York. They decided they were going to pool a large sum of money together and purchase large amount of stock from major companies like U.S. Steel, to create the illusion that everything was fine. This did suppress the free fall and the stocks began to go back up. The day ended with the Dow Jones down only 6.38 point. (Klein 2001)

This would be only a temporary fix because on the Monday and Tuesday of the next week the markets began to plummet once again dropping 38 points on Monday and another 30 points on Tuesday. (Klein 2001) Wealthy people like William C. Durant and the Rockefeller family bought up large amounts of stock to try and do what the group of bankers had done on Thursday but the markets continued to fall. Over the span of two days $30 billion dollars had been lost in the markets. (Klein 2001) People had gone from being very rich to not having a single asset. The markets would continue to drop until November 13, 1929 where it stayed steady for a couple months, and then the full effects of the Great Depression hit where the markets dropped even further.

There are many theories why the crash in October 1929 occurred. Historians and economists have not been able to pin point the exact cause of the crash which brings up much controversy and debate. Some believe the onus should have been put on the banks which were putting depositor’s money in too much risk by investing it all in the markets. Or some believe that it was caused by small groups of speculators who were insider trading making false stock prices. Or putting the blame on individuals like President Herbert Hoover or bankers like Charles E. Mitchell. Or putting the blame on brokers who were selling large amounts of stock on margin, creating a credit based economy. Or like some economists that believe this was caused by Great Britain to get back at the United States.

In the twenties Wall Street was made up of essentially the stock exchange and a few major banks. These banks had large sums of money that had been deposited by other companies or the common person that