Global financial chaos as Wall Street crashed OCTOBER 23, 1844
We’re still feeling the effects of the global financial crisis of 2007-8.
But economists and historians tend to agree that the Great Depression of the 1930s was worse.
What they can’t agree on is whether it was triggered by the Wall Street Crash but what we can say with confidence is that “Black Thursday” – October 24, 1929 – signalled the start of 12 years of global financial chaos.
The crash carried on until the following week when “Black Tuesday” saw share prices on the New York Stock Exchange collapse.
The Roaring Twenties was a time of wealth and excess, driven by record levels of steel production, construction, retail turnover and cars registered.
People thought the stock market would continue to rise forever and that led to perilous levels of speculation with people borrowing money to buy shares in the belief they would only become more valuable.
More than $8.5 billion was out on loan, more than the entire amount of currency circulating in the US at the time.
Yes, the Dow Jones, the index that showed the health of the stock market, increased in value tenfold but there were signs that this rampant financial optimism was misplaced.
In September, 1929, the London Stock Exchange crashed when many top British investors were jailed for fraud and forgery, and this weakened optimism in American investments overseas.
What had been called a “bull market” for a decade suddenly became brutally unstable.
But as the selling intensified, the creditinspired bubble burst.
Black Thursday saw the NY exchange lose 11% of its value at the opening bell because of heavy trading, and the sheer volume of trading meant the ticker tape in brokers’ offices across the States couldn’t keep up so no-one knew how specific stocks were faring, increasing the panic.
When the stock market reopened after the weekend, more and more investors decided to get out.
More than 16 million shares were traded on Black Tuesday as the panic selling peaked, with some stocks actually having no buyers at any price.
The market lost $14bn on that day alone, and $30bn since the crash started.
The interconnectedness of world financial markets was demonstrated by the near instantaneous falls in share prices in almost every Western industrialised market and, as we saw more recently, many blamed the banks.
It was felt they’d been too eager to risk their deposits on the stock market and more than 4,000 banks and lenders failed, which in turn led to bankruptcies and businesses failing at the rate of 133 a day for a time.
The US stock market would not return to its precrash peak until late 1954.
Millerites awaiting the end of the world and the Second Coming were let down in what’s now known as The Great Disappointment.
The sect was led by Baptist preacher William Miller and it paved the way for the Seventh-day Adventists who contend the date wasn’t meant to see Jesus return, but the beginning of his final work of atonement.