Happy Anniversary, Crash of 1929

Here is something to think about over the weekend, after a somewhat panicky day in the markets.

Today is the anniversary of "Black Thursday," which many historians consider to be the first day of the great stock market crash of 1929. On that day, a long stock selloff -- caused by the bursting of a speculative bubble inflated with borrowed money -- accelerated dramatically.

Trading volume spiked that day, to a then-record 12.9 million shares, with the mechanical stock ticker running more than three hours behind the frenzy of selling on the exchange floor.

A bailout, this one arranged by banks coordinated by J.P. Morgan, pledged to stem the losses by bidding above-market prices for blue-chip stocks -- a technique that had quelled the panic of 1907.

But on the following Monday, the panic returned and the Dow Jones Industrial Average fell 13 percent. The next day, it dropped another 12 percent as 16 million shares changed hands -- an astounding number at the time.

By the time the Dow really touched bottom, in July 1932, it stood at 41.22 -- 89 percent below its peak in early September 1929.

Have a nice weekend.

by Mark Stein

Photo by Bettmann/Corbis

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