9. The 1929 Wall Street Collapse
From what became known as Black Thursday, October 24, 1929 through Black Tuesday, October 29, 1929, the New York Stock Exchange – the barometer for the American economy – crashed dramatically and catastrophically, ending the period of history known as the Roaring Twenties and ushering in the Great Depression. It also ushered in the era of direct government intervention in the financial lives of citizens (Social Security and other programs) and infrastructure, (the NRA, CCC, TVA, and other agencies). Federal regulation and oversight of banks and financial markets became part of the American culture. Only one month earlier, the London Stock Market had suffered a similar meltdown, with repercussions throughout the British Empire – in other words, across the globe. The entire world, with but few exceptions, entered into a depression, which lasted more than a decade in some cases.
Signs of impending trouble for the economy were visible the preceding spring, but were ignored by investors, including the nation’s banks, who believed that the stock market would continue to rise. In March it was evident that automobile sales and production were in decline. So were farm production, steel production, and construction. Cheaply available credit had eroded personal savings and increased personal debt. Even the collapse of the London Stock Market in September did little to dissuade Americans from investing in stocks and bonds, it merely convinced them to invest in the New York market, rather than overseas. When the NYSE crashed, billions of dollars in speculative profits were lost, as was investment capital, and the wholly avoidable debacle shattered public confidence in the nation’s banking and financial systems.