On October 29th, 1929, a day that would come to be known as Black Tuesday, several days of panicked selling culminated in America's most devastating stock market crash, ushering in a decade of hard times known as the Great Depression. Here are some of the trivia questions I have put together to see how much you know about one of darkest moments in U.S. financial history.
How Did the Stock Market Perform from 1928 Until the Crash?
The Dow-Jones Industrial Average, a barometer of the economy as well as stock market performance, began the year 1928 at 191 points, not quite double the 100-level it first hit in 1906. Over the next 20 months, the DJIA soared to a new record high, closing at 381.2 points on September 3d, 1929, double its level at the beginning of 1928. The faster the market rose during this period, the more convinced investors became that the good times would last indefinitely. Their optimism led many to borrow money at steep interest rates so that they could buy shares and cash in on the market's dramatic rise. As a result, when the bottom fell out, thousands were left with staggering debts that they could never hope to pay off.
Were There Hints of Trouble Before the Crash?
Concerned at how wild-eyed speculation had artificially inflated stock values, the Federal Reserve Bank on March 25th, 1929, warned of the dangers of excessive speculation, triggering a mini-crash. To halt the stock market slide, Charles E. Mitchell, chairman of National City Bank, stepped in with an infusion of $25 million in credit. Mitchell's intervention succeeded in quieting investors' worries. Despite some ominous signs of economic weakening, speculation resumed, pushing stock prices ever higher. Not long before the crash, economist Irving Fisher sounded an optimistic note that captured the sentiments of the vast majority of stock investors. Fisher said, "Stock prices have reached what looks like a permanently high plateau."
How Many Days Did the Stock Crash Last?
After weeks of high volatility, high-volume selling followed by brief periods of recovery, the crash began with an 11 percent loss at the opening of trading on Thursday, October 24th. Once again, bankers intervened in an attempt to quell the panicked selling. Their efforts blunted the losses on Thursday and fueled a rally that continued on Friday and a half-day of trading on Saturday. However, panicked selling resumed on Monday, October 28th, and the Dow lost more 38 points, a decline of roughly 13 percent. On Black Tuesday, selling accelerated, more than 16 million shares were traded, and the Dow dropped another 30 points, or 12 percent. It is estimated that roughly $25 billion (more than $343 billion in today's dollars) was lost in the 1929 crash in about five days, taking into consideration the half-day of trading on Saturday.
How Long Did It Take for the Dow to Return to Pre-Crash Levels?
Although the stock market crash was hardly the sole cause of the Great Depression, it undermined public confidence in the U.S. economy, at a time when the stock market and the economy were considered by many to be synonymous. Given the hard times of the depression and the effects of World War II on the economy, it took the Dow Jones Industrial Average just a little more than a quarter-century to equal or surpass the 381.2 it had hit on September 3rd, 1929. That day came on November 23rd, 1954, when the DJIA closed at 382.74
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Does That Sound Familiar?
