Markets Collapse on Black Thursday: Panic Grips Wall Street

Wall Street plunged into chaos on October 24, 1929, a day that became known as Black Thursday, when panicked investors sold nearly thirteen million shares in a single session, roughly three times the normal daily volume. The Dow Jones Industrial Average fell sharply in the morning hours as margin calls forced leveraged speculators to dump their holdings at any price. By noon, a group of leading bankers including Thomas Lamont of J.P. Morgan gathered at the Morgan offices on Wall Street and organized a buying pool to stabilize the market, a tactic that had worked during previous panics. The intervention temporarily halted the slide, and the market recovered some losses by the close. But the reprieve lasted only until the following week. On Black Monday, October 28, the Dow dropped another 13 percent, and on Black Tuesday, October 29, it fell an additional 12 percent in the heaviest trading day the exchange had ever recorded. The crash exposed the fragility of a market built on borrowed money: an estimated 40 percent of stock purchases in the late 1920s had been made on margin, with investors borrowing up to 90 percent of a stock's value from their brokers. When prices fell, the margin calls cascaded into forced selling that fed more margin calls, creating a self-reinforcing spiral that destroyed billions of dollars in paper wealth in days. The crash did not cause the Great Depression by itself, but it shattered consumer and business confidence, froze credit markets, and accelerated a worldwide economic contraction that lasted a decade.