What Is Black Tuesday?
Black Tuesday was Oct. 29, 1929, and it was set apart by a sharp fall in the stock market, with the Dow Jones Industrial Average (DJIA) particularly hard hit in high trading volume. The DJIA fell 12%, one of the largest one-day drops in stock market history. In excess of 16 million shares were traded in the panic sell-off, which successfully ended the Roaring Twenties and driven the global economy into the Great Depression.
Figuring out Black Tuesday
Black Tuesday flagged the finish of a period of post-World War I economic expansion and the beginning of the Great Depression, which went on until the beginning of World War II.
The United States rose up out of World War I as a major economic power, yet the country's emphasis was on fostering its own industry as opposed to international cooperation. High tariffs were forced on many imported products to safeguard beginning industries like cars and steel. Agricultural prices fell as European production returned subsequent to being closed down during the war, and tariffs were forced to try to safeguard American farmers too. Notwithstanding, their incomes and the value of their homesteads fell, and migration to the industrialized urban areas accelerated.
The boom long stretches of the supposed Roaring Twenties were energized by confidence that the world had battled probably the most legendary war ever, and great times had shown up permanently. Among 1921 and the crash in 1929, stock prices went up almost 10 times as ordinary people bought stock, frequently interestingly. This was filled by lending by brokers that now and again arrived at 66% of the stock price, with the purchased stock filling in as collateral. Income inequality additionally rose. It is estimated that the top 1% of America's population held 19.6% of its wealth.
The 1929 Crash
By the middle of 1929, the economy was making it clear that things are pulling back, drove by declines in purchases of houses and cars as consumers were troubled with debt. Steel production debilitated.
A couple of years sooner, European production of agricultural goods started to recuperate following World War I, which implied American farmers would lose that market to sell their goods. Thus, the U.S. Congress passed a series of bills intended to help American farmers by expanding tariffs (or prices) on imports, including agricultural products. Simultaneously, news from Europe indicated a superb harvest, which implied an increased supply and overproduction, pushing commodity prices lower and shaking the markets.
The U.S. Once more, congress stepped in and passed the Smoot-Hawley tariff act, which increased tariffs on agricultural goods as well as on goods in different sectors too. Numerous different countries had additionally adopted protectionist policies. The impact on global trade was destroying. International trade had diminished by 66% from 1929 to 1934.
In August, the Federal Reserve Bank allowed its New York regional board to raise its discount rate. The monetary policy move made central banks around the world follow suit. The London stock market dropped strongly on Sept. 20 when top investor Clarence Hatry was imprisoned for fraud. Markets gyrated for the next month.
These factors in the long run made the stock market crash. On Black Thursday, Oct. 24, the market fell 11% at the open. Heads of the major American banks contrived a plan to support the market by buying large lumps of stock, and the market closed down just 6 points. In any case, by Black Monday, the 28th, panic and margin calls spread. The market fell 13% and a further 12% on Black Tuesday in unparalleled volume. Efforts drove by the agents and industrialists to support prices couldn't stem the tide of selling. The market lost $30 billion of value in those two days.
The market hit a twentieth century low of 41.22 on July 8, 1932, which was a fall of 89% from its high of 381.17 on Sept. 3, 1929. Economic growth, as estimated by Gross Domestic Product (GDP), shrank by over 36% from 1929 to 1933. The unemployment rate in the United States flooded to more than 25% as workers were laid off after they had been recruited during the boom years.
It wasn't long after President Franklin Delano Roosevelt was chosen that the economy gave indications of taking a turn towards the better. Among his accomplishments is halting the Smoot-Hawley tariffs and laying out the Reciprocal Trade Agreement Act in 1934. All things considered, another high wasn't reached until Nov. 23, 1954.
- Black Tuesday had broad results on America's economic system and trade policy.
- Black Tuesday alludes to a sharp drop in the value of the Dow Jones Industrial Average (DJIA) on Oct 29, 1929.
- Black Tuesday denoted the beginning of the Great Depression, which went on until the beginning of World War II.
- Reasons for Black Tuesday included too much debt used to buy stocks, global protectionist policies, and slowing economic growth.