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Transcript of Black Tuesday
By Rad Brosius and Tristan Lapetz
Stock prices were shown on a ticker tape back then rather than digitally like they are now. When the stock market crashed the volume was so large that the tape lagged behind up to an hour due to its inability to print out the numbers fast enough. This caused panic because stock price were lower than what the ticker tape said.
On the day of the stock market crash, $25 billion were lost in today's terms, that $319 billion.
The closing number from the DJI plummeted from 386 to 40. The difference was 346 points.
2 out of every 5 dollars a bank loaned were used to purchase stocks.
After WWI, there were less government regulations on businesses and an overall high moral which led to an economic boom known as the roaring 20's. Inflation was low while income and production were rising. Stocks had more than quadrupled from 1920 to 1929.
Black Tuesday was the beginning of the stock market crash that swept America into the Great Depression.
Many people were buying on margin which is buying stocks with money loaned from their broker. The banks acted as the brokers. When stock prices fell, people could not pay the interest on their margin accounts. Those who tried to pay off these loans found their live savings wiped out.
On Black Tuesday, the rug was pulled out from under the feet of the market. The masses lost faith in the value of stocks and opted to sell. The selling all occurred at the same time. This caused a panic which caused even more selling and a steep fallout of the value of stocks.
A small group of people with inside information on the stock market worked together to sell stocks at their peak in value.
The stock market crash left people nervous that there would be more financial disaster. Spending and investment dropped off which left to less production and fewer jobs. People became extremely anxious causing to "bank runs" where large numbers of people went to banks to withdraw their deposits.
Bank Run Image
Graph of the Stock Market Crash