Lessons: Stock Market Crash of 1929

The 80th anniversary of the collapse of the Stock Market of the 1920s bears an eerie resemblance to the stock market crash of 2008. The 1920s had been years of speculation on Wall Street similar to the current decade. This all came to an end on October 29th, on what became known as "Black Tuesday." By November 13th, the stock market had lost $30 billion in its market value—40 percent of its value. The stock market crash was the first event of the Great Depression. The current stock market crash was the first event of the current "Great Recession."

By early September 1929, the stock market was topping out with many blue chip stocks, such as General Electric, tripling in value. Many investors became convinced that the stock market was a sure thing and borrowed heavily to invest even more. The stock market began its decline in the last week of October. Investors who had paid high stock prices panicked and sold their investments for whatever price they could get, ultimately resulting in the market collapsing on "Black Tuesday." The stock market crash wiped out entire fortunes.

Some investors reacted by committing suicide, while others tried to sell their possessions to put food on the table. The stock market decline continued for another three years before bottoming out in 1932. Businesses responded by cutting investments, production and wages—triggering a recession that turned into the Great Depression.

Students should answer the exclusive SIRS Decades Document Based Question (DBQ) included with this topic (see below). Our DBQs helps to develop student critical thinking. Students should use an essay format in a report of at least 150 words, and cite at least three resources in thoughtfully addressing the question.

Describe public reaction to the stock market crash of 1929 and identify tax, tariff and investment policies during the Harding and Coolidge administrations that redistributed wealth in America and may have led to the crash.

Click the 1920s icon > Stock Market Crash

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