Black Tuesday, the day that billions of dollars were lost on the New York Stock Exchange, occurred on 29 October 1929. The Dow Jones Industrial Average plummeted nearly 13 percent on Black Tuesday. The stock market crash created hysteria, causing thousands of people to lose their fortunes and even causing some people to take their own lives. Black Tuesday is an event that many historians believe ushered in the start of the Great Depression.
During the 1920s, the United States economy was robust. In early September 1929, the Dow Jones Industrial Average was at a then all-time high of 381. Prices of stocks continued to soar. Near the end of October, however, things began to turn sour for the market. People began selling stocks in a frenzy and on 23 October 1929, the stock market fell more than six percent.
On 28 October 1929, more and more investors began withdrawing their money from the stock market. In an effort to quell the panic, banks and investment companies purchased large blocks of stocks, but the measure did not work. In less than a week's time, stocks declined more than $26 billion, with more than 30 million shares traded.
On Black Tuesday alone, $14 billion was lost on the stock market, as investors sold off stocks while no one was purchasing stocks. That day, the market closed at 230.07. Not helping matters, the trading volume was so intense that that stock tickers lagged behind by more than an hour, causing chaos.
Black Tuesday marked an end to a six-year bull run on the stock market. With so many investors attempting to get out of the market at the same time, a national alarm was sparked. Black Tuesday created a domino effect, as investors who purchased stock with borrowed money could not pay back the money they owed to banks, causing many financial institutions that loaned the money to go bankrupt.
After the crash, the stock market continued to spiral and by November 1929, approximately $30 billion in stock value was lost. It took the United States economy more than a decade to recover from the stock market crash of 1929. The crash ushered in the advent of new programs and laws to create confidence in the United States economy and regulate the stock market. Due to Black Tuesday, the Glass-Stengall Act of 1933 was passed, establishing the Federal Deposit Insurance Company.