Public DomainFrightened investors gathered on Wall Street on Black Tuesday.

On October 29, 1929, the stock market fell by nearly 12%. In a panic, investors sold more than 16 million shares, and countless Americans lost their life savings. This day earned a notorious reputation as Black Tuesday.

The Wall Street crash occurred after several days of uncertainty in the market. The decline had started on October 18, but major banks and large businesses initially managed to avert disaster by buying large amounts of stock. However, by October 29, it was clear that a market crash was inevitable.

In the following weeks, rumors spread that bankrupt investors were jumping from skyscrapers in Manhattan. While these stories were mostly exaggerated, the crash wiped out $25 billion—equivalent to $500 billion today.

Black Tuesday abruptly ended the Roaring Twenties and initiated the Great Depression, affecting the lives of millions of Americans for years.

Events Leading to Economic Catastrophe

Before the Wall Street crash of 1929, it was believed that the prosperity of the Roaring Twenties would last forever. America's wealth had doubled over the decade, supported by industrial growth and the rise of a credit system accessible to the average person.

Between 1921 and 1929, the stock market grew by 600%, and the Dow Jones Industrial Average rose from 63 points to 381 points. This economic boom resulted in increased automobile sales, affordable household appliances, and a growing interest in buying stocks and bonds.

Hulton Archive/Getty ImagesThe Roaring Twenties was characterized by rapid economic growth, unprecedented consumer demand, and the rise of flappers during the Jazz Age.

Just two weeks before the crash, Yale economist Irving Fisher told members of the Purchasing Agents Association that stock prices were at a "permanently high plateau"; The New York Times reported this on October 16, 1929. He also predicted that the stock market would be "much higher than today's level" within a few months.

However, not everything was well in the economy. Many who had cash were investing their money in the market, and this exponential growth encouraged others to borrow money or even mortgage their homes to profit. They bought stocks on credit, planning to sell at a higher price and make a good profit after paying off their debts. This further inflated stock values—but also made the impending crash more devastating.

The 1929 Wall Street Crash

Not all experts agreed with Irving Fisher's optimistic assessment of the market. In September 1929, according to The New York Times, statistician Roger Babson warned participants at the National Business Conference, saying, "Today, the most people in history are borrowing and speculating. Sooner or later, a crash is coming, and it could be terrible."

And it did come. The first signs of trouble emerged on October 18, when the market began to fall. Investors initially tried to scoop up stocks at low prices, but they could never have imagined what was about to happen.

Federal ReserveThe Dow Jones Industrial Average chart from 1920 to 1955 clearly shows the moment of the stock market crash.

On October 24, known as Black Thursday, panic began to set in. The market continued to fall, and that day a record 12.9 million shares were traded as investors scrambled to recover at least some of their money. Companies and banks tried to buy large amounts of stock to maintain market value, so the Dow closed only six points lower, but these efforts quickly proved futile.

When the press questioned President Herbert Hoover about the situation on October 25, he tried to calm the nation's nerves, stating, "The fundamental business of the country, that is, the production and distribution of goods, is on a sound and prosperous basis."

However, the president's words and the banks' efforts to avert disaster could not stop the bleeding. On Monday, October 28, the stock market fell by 12.8%. And the next day, on Black Tuesday, it fell another 11.7%. Investors executed a record 16.4 million stock trades, and a stock record of 15,000 miles was passed. Children in nearby slum areas later collected the paper strips that had been thrown and played in the streets.

Public DomainA cleaner sweeps up crumpled paper and stock ticker tape in the New York Stock Exchange after the Wall Street crash.

On the morning of October 29, the opening bell was not heard because it was drowned out by cries of "Sell! Sell! Sell!" In just 30 minutes, three million shares were sold, and by the end of the day, the Dow Jones Industrial Average had dropped to 198 points, well below its peak of 381 points. $25 billion was lost, and many stockholders went bankrupt because they had bought stocks on credit.

The Roaring Twenties experienced a sudden halt, and the next decade would be very different from the previous prosperous period.

The Devastating Effects of Black Tuesday

As the true scale of the Wall Street crash became apparent, rumors quickly spread that bankrupt investors and overburdened stockbrokers were throwing themselves from the upper floors of office buildings. Following the events of Black Thursday, humorist Will Rogers wrote to the editor of The New York Times, saying, "When Wall Street had that crash, you had to get in line to jump out of a window, and speculators were selling spots for bodies in the East River."

In reality, from mid-October to mid-November 1929, there were fewer suicides compared to the same period the previous year, although a few cases were confirmed. Hulda Borowski, who worked at a brokerage firm on Wall Street, jumped from the roof of the office building, falling 40 stories to her death. Other employees said she had been exhausted from overwork. Ten days later, George Cutler, the owner of a wholesale vegetable company, jumped from a seven-story window after suffering heavy losses in the market.

Public DomainStockbrokers working in the New York Stock Exchange on October 25, 1929.

And on December 7, 1929, a man named Wellington Lytle committed suicide in a hotel room in Milwaukee. According to a TIME article published later that month, his last note read: "[M]y body to science, my soul to Andrew W. Mellon [the Treasury Secretary at the time], and my sympathizers."

Although the effects of Black Tuesday began to diminish shortly afterward, it was clear that these effects would last much longer than the fall of 1929. While the market temporarily recovered, the Dow dropped to just 41.22 points by the summer of 1932; this was the lowest value of the 20th century. The Great Depression had officially begun.

Public DomainDesperate Californians queue for relief checks during the Great Depression. 1937.

Consumers tightened their spending, leading to a drop in demand for goods and services. Production facilities had to lay off workers, and the unemployment rate rose to 25% in 1933; this was the highest level in U.S. history. Banks began to fail, and in a time without deposit insurance, this meant that account holders lost everything. Americans rushed to banks to withdraw their money, leading to more bank closures.

Shantytowns known as "Hoovervilles" spread across the country. Millions of people queued for food stamps. The panic in the market turned into panic across the entire economy of the country. This was further exacerbated by a drought period known as the Dust Bowl, which destroyed crops in the American West. The market would not reach previous peaks again until 1954.

Millions of citizens faced great hardships in the 1930s, and Black Tuesday went down in history as the day marking the beginning of this disaster-laden new era.