Historians call the Stock Market Crash of 1929 the greatest economic calamity in history and it is easy to see why.
Specifically, the Stock Market Crash started the Great Depression; which led to World War II, the most destructive conflict in human history. In addition, World War II led to the Cold War which lasted until the 1990s.
Consequently, the Great Stock Market Crash of 1929 shaped the 20th Century. For instance, World War II drove the development of disruptive technologies including electronics, computers, nuclear weapons, jets, long-range aircraft, missiles, and even frozen food.
How the Stock Market Crash Made Our World
In addition, the American welfare state was born during the New Deal of the Great Depression. Meanwhile, the British welfare state, the German economic miracle, the Japanese economic miracle, and the European Union had their origins in the aftermath of World War II.
Another consequence of World War II was the destruction of the British and other colonial empires. Thus, many countries are independent today, partially because of the Crash.
Finally, modern China began when the Japanese invasion of the 1930s fatally weakened the Nationalist regime. That provided an opening for Mao Zedong’s Communists to win the Chinese Civil War and build a strong Chinese state.
The Japanese military government that invaded China came to power amid the economic turmoil the crash triggered. In fact, the Japanese militarists pretext for invading China was to secure the economic resources Japan needed for recovery. Thus, even China’s recent economic boom owes its origins to the Stock Market Crash.
What You Don’t Know about the Stock Market Crash
Even though it was one of the pivotal events of the 20th Century there is probably a lot you don’t know about the stock market crash. In fact, some of the most important details about the crash are unknown.
Here are few things you may not know about the 1929 Stock Market Crash:
1. The Stock Market Crash began in the City of London, not Wall Street.
In fact, British stocks fell over a month before the American crash began on Black Thursday, October 24, 1929.
Markets in the City began to crash with the arrest of larger-than-life investor; and corporate raider, Clarence Hatry on 20 September 1929. Hatry confessed to selling fraudulent securities to finance a takeover of a British steel company.
The resulting Hatry Crisis sent British stocks trembling and undermined confidence in American markets. In fact, British markets in such chaos that on 26 September 1929 the Bank of England intervened by raising its discount rate to protect the gold standard.
The gold standard was a formula that pegged the Pound Sterling to the price of gold. The Bank was trying to cool overheated markets with increased interest rates.
2. The US Stock Market began to fall several weeks before the Crash
To explain, the Dow; the primary 1920s stock index, fell by 20% between 3 September 1929 and Black Thursday. In addition, there was another smaller crash in March 1929 when the Dow fell by 10% but recovered.
3. The Stock Market Crash took place over four business days
The crash started on Black Thursday, 24 October 1929, when the Dow fell by 11%. However, it recovered slightly by 1% on 25 October 1929 when investment bankers bought stocks to stem the panic.
However, the Dow fell by 13% on Black Monday, 28 October 1929 and 12% on Black Tuesday 29 October 1929. In fact, observers estimate investors sold 16.41 million shares in day on Black Tuesday. Moreover, the Dow lost 36% or over one third of its value in three days, falling from 305.416 on 23 October 1929 to 195.466 less than a week later.
4. Legend has it that John F. Kennedy and Robert F. Kennedy’s father predicted the crash by listening to a shoeshine boy, Business Insider’s “The Daily Reckoning” reports.
To elaborate, Joseph P. Kennedy Sr. pulled all of his money out of stocks, after receiving stock tips from a shoeshine boy. To clarify, the shoeshine boy convinced Kennedy that too many average people were playing the stock market.
5. The Dow eventually lost 90% of its value falling to 41.22 on 8 July 1932.
6. The Dow did not regain the 3 September 1929 high of 381.77 until November 23, 1954. Thus it took stocks 25 years to recover from the crash.
Thus, the 1929 Stock Market Crash was a far greater catastrophe than most people believe. I advise those who want to learn the power of the market to study the Great Stock Market Crash and its aftermath.