Black Monday 1929: Wall Street Crash Deepens

The New York Stock Exchange lost nearly 13 percent of its value on October 28, 1929, a day the newspapers christened "Black Monday," as the fragile calm that had followed Thursday's initial crash dissolved into unrestricted panic selling. More than 9.2 million shares traded, triple the normal volume, and the Dow Jones Industrial Average fell 38.33 points, the largest single-day point decline in its history at that time. The worst, however, was still one day away. Thursday's crash had been partially contained when a consortium of leading bankers, organized by Thomas Lamont of J.P. Morgan and Company, pooled funds to buy major stocks and stabilize prices. Over the weekend, bankers, brokers, and government officials issued reassuring statements. President Herbert Hoover declared that "the fundamental business of the country" was sound. The statements proved disastrously premature. When the market opened Monday morning, sell orders from across the country overwhelmed the trading floor. Unlike Thursday, no banking consortium materialized to provide support. The bankers had concluded over the weekend that further intervention would be throwing good money after bad. Margin calls, demands from brokers that investors deposit additional cash to cover their leveraged positions, forced thousands of small investors to sell at any price, driving stocks further down in a self-reinforcing spiral. The carnage was broad-based. Blue-chip stocks like General Electric and U.S. Steel fell alongside speculative issues. The ticker tape ran hours behind actual trades, meaning investors had no way to know what their holdings were worth in real time. Crowds gathered outside the Exchange on Broad Street. Police reinforcements were deployed. Inside the trading floor, brokers shouted themselves hoarse trying to execute sell orders. Monday's losses wiped out an estimated $14 billion in market value in a single session. But the rout was not over. Tuesday, October 29, would bring even heavier selling, with 16.4 million shares traded and losses that would push the market down nearly 25 percent in two days combined. Together, Black Monday and Black Tuesday triggered the chain reaction of bank failures, credit contraction, and unemployment that became the Great Depression, the worst economic catastrophe in modern Western history.