Sunday, November 16, 2008

Gobal meltdown and aftermath !! 1929 Crash

The devastation of First World War and technological progression both together offered a great opportunity of investments and employments in 1920s. That ushered great optimism in the Wall Street as well. Most of the American participated in stock market speculations and investments. You could buy the stock at a fraction of their prices, called “buying on margin”, the rest borrowing from brokers. Obviously share prices sky rocketed. Again the old rule “what goes up must come down” worked. Unfortunately; what went up struggling for number of days; came down in three days! That was the crash. It was on October the 24th, 1929 famous as “Black Thursday”; a massive sell off took place. The volume of trading was more than triple. The price came tumbling down. This time again Richard Whtney of J.P. Morgan and company tried to rescue the market, he started buying the shares aggressively. The downfall halted for time being. The market looked up on 25th, the Friday. On 26th, the Saturday (then trading use to held on Saturdays as well) the prices went a little down. The market opened on Monday, October 28th, 1929 and fell by 13%, that Monday is remembered as “Black Monday”. Next day, the Tuesday it fell further by 12%, it took the nick name as “Black Tuesday”. Rockefeller family and C. Durant of General Motors stepped in to boost the market, but failed. That week the market incurred heaviest losses to the tune of $30 billion, more than the amount US paid during First World War.
The down slide continued till 1932, the market dropped hooping 89% and it took almost 25 years thereafter, to recover!
So, this followed the Great Depression; that is another story.

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