What Happened After Black Tuesday

He's talking about a thousand dollar point. You know, it's just too much. 13, even video now, once again, I'm at 13, even video now, 13 now, sorry, trading right now. All right, guys, sorry about that. There's nothing I can do about that, guys. World War I had ended. The roaring 20s were in full swing, and Josephine Baker grooving the Charleston set the tone of the era. These were the salad days of economic prosperity for America. Then, in late October of 1929, the most devastating stock market crash in the history of the United States took place, and everything went to hell. And not only for Americans, the entire world felt the aftershocks. Today, we're going to discover what really happened immediately after the Black Tuesday stock market crash of 1929. Let's travel back to late October 1929, when the stock market crashed and the Great Depression began. The common misconception about Black Friday is that stockbrokers and the formerly filthy rich were doing triple gainers to their deaths from office buildings after they found out they lost everything in the stock market crash. This wasn't really the case. While suicides did rise immediately after the crash, and some people did leap to their deaths from buildings, the truth is that the American suicide rate had already been climbing throughout the 1920s. The suicide rate didn't suddenly spike the day after Black Tuesday. That said, one death was directly caused by Black Tuesday. JJ Riordan, a New York banker, lost all his personal savings in the crash and took his own life shortly thereafter. He didn't jump from a building, though. He shot himself with a pistol. Most people are uncertain as to how long Black Tuesday lasted. It wasn't just one day. Black Tuesday was really more like Black Week. The fallout began on Thursday, October 24, 1929, until the Friday of the next week. On that day, Wall Street finally closed its doors and stopped all selling for a few days in order to clean up. To be accurate, the massive amount of human activity at the Stock Exchange did require quite a bit of actual cleaning up. Drivers are breaking all the rules, putting the brakes on, and climbing onto the roofs of their automobiles. The police are trying to keep everything under control. They issue warnings and blow their whistles, but no one pays any attention. Pretty soon, the officers give up, shrug their shoulders, and turn their eyes up to the sky to join the watchers. Yes, people, New York has gone crazy. How big was the crash of October 29, 1929? Pretty goddamn big. The value of the stock market had been rising steadily throughout the 20s, and it had hit a truly exponential rate of growth at the end of the decade, doubling in value between the end of 1928 and September of 1929. The bubble was due to burst, however. And when it did, brother, it burst in epic proportions. Between Black Thursday and Black Tuesday, more than $26 billion in stock value was lost. When the damage was tallied the day after Black Tuesday, brokers were shocked to discover that $14 billion had been lost in one day. It would take 25 years for the market to regain the value it had in September of 1929. 25 years, a quarter of a century. While the stock market crash and Great Depression are referred to as an American thing, that wasn't the case. Because the world had become so dependent on the American economy after World War I, other nations suffered from aftershocks when the US went down after the crash. Black Tuesday caused other stock market crashes around the world and a chain of events that helped plunge most of the globe into economic depression. Canada was hit particularly hard, with stock market crashes occurring in Montreal and Toronto shortly after America's Black Tuesday. The sudden and unexpected economic confusion sent everyone with a savings account scrambling to their banks to withdraw their money, which was not great for the banks. For that reason alone, it's no surprise that the industry that got hit the hardest and quickest by the events of Black Tuesday was the banking industry. To make matters worse, in the years leading up to the crash, many banks had been investing their clients' savings in stocks, sometimes with permission, but often without informing their customers. It doesn't take a financial genius to realize that this meant that a lot of the money the clients were trying to withdraw was already gone. As the reality of the crash set in, Many realized they had lost their complete life savings with no way to get the money back. Meanwhile, countless banks shut down for good. Yeah, the banking industry got knocked out after the stock market crash. But it didn't take long for other industries to feel the sting of Black Tuesday. Maybe it was instinct. But almost immediately and without any organizing or planning, Americans stopped making frivolous purchases. The American purchasing freeze that took place wasn't out of protest to get back at the man. It didn't have a political statement behind it. It's just that people became much more prudent and smart about saving what little money they had left. Unfortunately, the 1920s had seen Americans buying goods and services at an all-time high. The immediate transition from spending money and keeping the economy churning to the purchasing freeze caused many businesses, both small and large, to close up shop within a few months. The Depression. The shutdowns had started when the Wall Street bonanza stopped and the well-off folks stopped spending. Plants and payrolls had been financed by selling stock. Now that was over. The confidence was gone. Let's give it up to JD Rockefeller. As one of America's original rich guys, he and his family did their best to stop the country's economic hemorrhaging by purchasing massive chunks of various stocks during the days after Black Tuesday. His idea was to let the public know the Rockefellers were doing this as a sign of encouragement. Rockefeller hoped to use his financial clout to stabilize the market and inspire public confidence in it. And he boldly promised that shares of his own company, Standard Oil, would stay stable while America was on the mend. Sadly, Rockefeller's plan to single-handedly save the US economy didn't work out as planned. Depressions have come and gone. Prosperity has always returned and will again to play our part worthily in building a better world. After the crash, Wall Street put itself on a three-day self-imposed lockdown at the beginning of November in an effort to stop the market from doing any more damage to itself. It reopened for business on November 4, 1929, but with shortened hours. Trading was only permitted for three hours each day. The thought was that with fewer hours on the floor, there would be less time for extreme stock selling, thus preventing the market from completely bottoming out again. Predictably, the only thing the three-day lockdown did was stir the selling frenzy to build up even more, and Wall Street ended up overwhelmed by the volume of business that was attempted in those three hours each day. It's the thought that counts, I guess. Black Tuesday has become an infamous event in American history, but it was far from a one-day catastrophe. The big crash of October 29, 1929, was preceded by an entire week of rapid stock selling. It was then followed by a public financial panic. Sales of stocks and the subsequent tanking of the stock market destroyed an entire decade's worth of growth on Wall Street. The stock market finally bottomed out completely on November 13, 1929, more than two weeks after Black Tuesday. By then, the market sank to less than half the value it had in September of 1929. President Herbert Hoover had only been sitting in the White House for less than a year when Black Tuesday fell into his lap. As you can imagine, it wasn't the greatest way to start his term. To make matters worse, Hoover was a little slow to react to his country's financial collapse. That's why newspaper magnate William Randolph Hearst published an open letter to Hoover outlining how Hearst would go about fixing the economy. Yeah, that was embarrassing for the president. Hoover tried, though. One of his immediate actions was to hold a conference to create work projects to kickstart employment. As we know now, he would ultimately fail at preventing America from falling into the Great Depression. October 28, 1929, also known as Black Monday, was no picnic on the stock market. But it was a good preview as to what was coming around the corner. In fact, the Dow dropped by 13% over the course of that day. And traders were so wiped out by the immense amount of shares trading hands that many of them ended up sleeping on the floor of the exchange or in their offices in preparation for expected chaos the next day. They had good instincts. Given the warning signs that accumulated over the week, the New York Stock Exchange was already in a fevered pitch on the morning of Black Tuesday. It's also rumored that there was so much activity and chaos happening on the morning of October 29, people couldn't even hear the opening bell ring. The traders' shouts of sell, sell, sell drowned it out. 3 million shares changed hands in the first 30 minutes of the day. While the American economy dealt with a slow downturn during the summer of 1929, it wasn't until the following month that things would fully crash into the desperate conditions that created the Great Depression. Although it took a few months for the dust to settle, it didn't take long for the effects of Black Tuesday to really be felt among the American workforce. By 1930, a bit less than 10% of all Americans weren't able to find employment. Three years later, that percentage had more than doubled, and nearly 15 million people were unemployed. Homelessness and hunger rose in tandem with this widespread lack of available employment. It was dire times for America, and a situation that Wall Street has feared a repeat of ever since. Whew, grim, right? Wall Street is so fragile, yet so important to how Americans live their lives. Even if they don't directly have money in the market.