Black Tuesday: The October 29, 1929 Stock Market Crash

Black Tuesday, October 29, 1929 was the climactic day of the worst week in American financial history. In a single day of frantic trading, more than 16 million shares changed hands — a record that would stand for nearly four decades — and the Dow Jones Industrial Average fell another 11.7 percent, closing at 230. By the close, the great bull market of the 1920s was definitively over, and the Great Depression had begun. The drama played out on the high-ceilinged trading floor of the New York Stock Exchange on Broad Street, while thousands of visitors crowded the galleries to watch.

Setting the Scene: The Week Before Black Tuesday

Black Tuesday did not arrive out of nowhere. It was the third terrible day in a five-day slide that had begun on Black Thursday, October 24. That day, a group of leading Wall Street bankers — Thomas W. Lamont of J.P. Morgan, Richard Whitney, and Charles E. Mitchell of National City Bank — had pooled their resources to buy large blocks of blue-chip stocks in an attempt to stem the panic. The intervention worked for a few hours. The Dow actually closed slightly up on Black Thursday (299.47 vs. 305.85 the previous day, recovering from a midday low after the bankers’ purchases), and headlines that evening suggested the crisis was over.

The respite did not last. On Black Monday, October 28, the market opened lower and never recovered. The Dow fell 12.8 percent — its largest single-day percentage loss in history up to that point — closing at 260. Margin calls cascaded across Wall Street. Brokers were forced to sell customers’ stocks to cover their loans, adding to the downward pressure. By the close of Monday’s trading, it was clear that the bankers’ intervention had been a temporary band-aid, not a cure.

Overnight, the situation worsened. The New York newspapers ran banner headlines. Foreign investors — heavily exposed to U.S. stocks — began withdrawing funds. London markets fell sharply on Tuesday morning, well before Wall Street opened. When the opening bell rang at 9:30 a.m. on October 29, the mood on the floor was grim.

The Opening Bell

The opening bell of the New York Stock Exchange rang at 9:30 a.m. on Tuesday, October 29, 1929. The first trades came in far below the previous day’s close. Within the first hour, the Dow was down sharply, and the volume of shares changing hands was enormous. The ticker tape — the only way most people outside the building could follow the market — was already running hours behind the actual trades.

In the visitor galleries, thousands of spectators crowded the railings. On the floor, brokers in colored jackets shouted orders, scribbled on pads, and fought their way to the posts where stocks were traded. The most famous outsider in the galleries that morning was Winston Churchill, then a member of the British Parliament, who had decided to watch the market. He later described the experience as one of the most extraordinary of his life.

The Bankers’ Pool Fails

By mid-morning, leading Wall Street bankers had assembled at J.P. Morgan’s offices. The group included Thomas W. Lamont of Morgan, Charles E. Mitchell of National City Bank, and William C. Potter of Guaranty Trust. They agreed on a second intervention: each bank would commit up to $40 million — a total pool of perhaps $240 million — to buy blue-chip stocks at above-market prices. At 11:00 a.m., they announced the pool. U.S. Steel, which had been trading at 174, jumped to 182. AT&T, which had been at 197, rose to 200. For a few minutes, it looked as if the intervention might work.

The bounce did not last. By noon, the selling pressure overwhelmed the bankers’ buying. The pace of margin calls was simply too high, and many investors, having watched their portfolios fall sharply, were willing to sell at almost any price. The bankers’ pool, large as it was, was a drop in the bucket.

The Ticker Tape Crisis

One of the most extraordinary features of Black Tuesday was the failure of the ticker tape system — the only way investors across the country could follow the market. By 11:30 a.m., the ticker was running more than an hour behind actual trades. Prices on the tape had little relation to the prices at which shares were actually changing hands. At one point, Exchange officials stopped reporting prices entirely. For almost an hour, no prices appeared on the tape — a silence that was, in some ways, more terrifying than bad news.

The Volume of the Day

The total volume on Black Tuesday was 16,410,030 shares — a record that would not be broken until 1968. To put it in perspective: the average daily volume on the Exchange in 1928 was about 4 million shares. Black Tuesday more than doubled Black Thursday’s record of 12.9 million. The volume was a measure of the panic. Every share represented a sale by an owner who wanted out, often at almost any price. Many of the sales were forced sales by brokers liquidating customers’ accounts to cover margin calls.

The Closing Bell and the Aftermath

The closing bell rang at 3:00 p.m. The Dow Jones Industrial Average closed at 230 — down about 30 points, or 11.7 percent, from the previous day’s close. The total loss of market value on the day has been estimated at about $14 billion — an astronomical sum for 1929, roughly equivalent to the entire federal budget.

In the hours after the close, the full scale of the day’s disaster became clear. The bankers admitted defeat. Lamont told reporters the situation had been “beyond control.” Mitchell would be indicted for financial irregularities within a few years; Whitney would be imprisoned for fraud. The day also produced rumors of suicides — often exaggerated, but the real human toll of Black Tuesday was more lasting: the destruction of life savings, the humiliation of bankruptcy, the loss of jobs and homes in the months and years that followed. By the end of 1929, 14 brokerage firms had failed. By 1932, more than 9,000 American banks would fail, and unemployment would reach 23.6 percent.

Black Tuesday in Historical Memory

Black Tuesday has lived in American memory as the symbolic beginning of the Great Depression — the day the party ended. The image of the panic-stricken crowd on the Stock Exchange floor, the delayed ticker tape, the failed bankers’ pool, the rumors of suicide — all have become part of the standard narrative of the 1929 crash.

In retrospect, Black Tuesday was less the cause of the depression than its first dramatic symptom. The bubble had been inflating for years, and the economic vulnerabilities that would produce the depression had been building for a decade. Black Tuesday was the day those vulnerabilities were exposed.