By: Yasira Smith
Cause:Part of the panic that caused Black Tuesday resulted from how investors played the stock market back in the 1920s. They didn't have as much access to information as they do today. Stock prices weren't on the computer, they were shown via a tickertape machine. As stock prices dropped on Black Tuesday, panic ensued because no one knew how bad it was. The tickertapes literally could not keep up with the pace of falling stock prices.The other reason for the panic was a new way that stocks were bought. Many investors had placed huge stock orders using money they borrowed from their brokers, called buying on margin. When stock prices fell, the brokers called in the loans. Many people found their entire life savings wiped out to pay off the loan.
Characteristics:Black Tuesday lasted four days. It started on October 24, 1929 and ended on October 29, 1929. On October 18, 1929 stock prices fell suddenly. On October 24, 1929 prices kept falling so investors immediately started selling all their stocks. All of these sales made the stock market go down even more. By October 29. 1929 the stock market had officially crashed and wiped out many investors life savings. More than 16 million shares were traded that week.There people were selling their cars,houses,and anything they could find that was valuable. People went homeless and had no food to eat or to feed their families. Black Tuesday was the biggest financial crisis of the 20th century. Over $16 billion was lost in October 1929, an event that threw the entire US economy into chaos. Over 40 percent of all banks (about 10,000) bankrupt in the next two years, and ended up losing over $2 billion. Stocks were decreased more than 80 percent. Unemployment went up to almost 25 percent.
Significance: This day served as the beginning of the Great Depression as financial markets went on a downward trend where the market lost a total of 40% in less than 8 weeks.