The Fall Of Stock Prices In The Summer Of 1929

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At the end of the 1920s there was a huge imbalance between the rich and the poor: 0.1 percent of society earned the same total income as the bottom 42 percent.6 This imbalance, combined with production of more and more goods and rising personal debt, would soon doom our country. When giving his state of the union address in 1928, President Calvin Coolidge remarked that "America had never been met with a more pleasing prospect than that which appears at the present time.”7 The next year, Economist Irving Fisher claimed "stock prices have reached what looks like a permanent plateau."8 These statements were optimistic but misguided. In the summer of 1929, the economy faltered as a result of oversupply in many industries; more goods were being …show more content…
Companies had no choice but to dump their products at a loss. These companies share prices began to fall. On September 3rd, 1929, shortly after Fisher 's statement, the stock market peaked. For the first time in a long time, steel production was down, banks were failing, and less homes were being built. Few people paid attention, but that would soon change.
Over the next few weeks stock prices began to fall, and the lower the fell the more momentum they gained. Near the end of the day on Wednesday, October 23rd, 1929, stock prices dropped abruptly. When the closing bell rang, investors were rattled. Nobody knew what had just happened. That evening the fear set in. The word spread quickly on October 24th: the stock market was in trouble. Thousands of men and women gathered in front of J.P Morgan and Company at 23 Wall Street, looking pale and frightened. Fear and excitement
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When the market opened on Monday, October 28th, prices immediately resumed their free fall. Huge amounts of shares continued to change hands. Large companies like U.S. steel and General Electric, which were previously invulnerable, continued to stumble. By the end of the day the Dow Jones Industrial Average, an average of the value of one share each of thirty of the largest companies in the United States, had dropped 13 percent.13 National businessmen, hoping to halt the crash and protect their companies, attempted to recapture the public 's waning faith. Albert Wiggin, the chairman of Chase National Bank, assured investors that the decline was part of the business of speculation. He asserted that "none of the corporations or institutions I am connected with are selling stock at this time. We are rather buying. I am convinced genuine bargains are available at this moment."14 This was a lie. Since September Mr Wiggin had been selling thousands of Chase stock through a private company he owned, predicting that his own company 's stock would be going down. During the greatest stock market decline in American history, Mr Wiggin would make four million dollars of personal profit, serving as another example of the corruption in the stock market.15 The next day was even worse than Monday, and has come to be known as Black Tuesday. When the opening bell rang investors’ panic could not be contained. In the first 30 minutes of the day, three million

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