Four Score and Seven Years Ago

by Matthew Schaefer

This has to do with the Stock Market Crash of 1929.

 

Four score and seven years ago [give or take a year], the America nation was rocked by a

Wall Street, NY NY near the time of the stock market crash. ca. 1929.

Wall Street, NY NY near the time of the stock market crash. ca. 1929.Stock Market CrashStoc

series of crashes in the stock market.  Black Thursday, October 24, 1929, saw the New York Stock Exchange lose 11% of its value in heavy trading.  After a quiescent Friday, the stock market resumed its slide on Monday, October 28, 1929, losing nearly 13%.  The next day was no better, as the market dropped 12% on Black Tuesday.  In less than one week, investors in the stock market lost more than 40%.

For historians and economists looking back, the Stock Market Crash of 1929, is seen as a pivotal point in American history.  While they cannot agree on the weight to assign to the Crash, all agree that it marked the beginning of the Great Depression.  The Great Depression saw unemployment in America rise to nearly 25%, with another 20% working less than full-time; hundreds of banks closed their doors; thousands of homes and farms fell into foreclosure; GDP fell precipitously.  Times got tough.

This was all clear in retrospect.  At the time, especially at the onset, it was not so clear.  Secretary of Treasury Andrew Mellon saw the crash as a needed correction, to remove speculative liquidity from the market.  President Hoover described it as a Wall Street problem, not a Main Street problem.  The Federal Reserve Board had mixed opinions on the importance of the crash.  While many were content to adopt a wait and see attitude, Hoover acted.

In the wake of the crash, Hoover convened the Conference for Continued Industrial Progress in November 1929, bringing together 400 leaders from business, government, labor and banking.  They agreed that the highest economic priority should be jobs.  Thus they focused on preserving full employment, maintaining wages, increasing public works projects, and creating a voluntary committee to provide relief to the temporarily unemployed.  Fixing Wall Street was nowhere to be seen.

Things appeared to turn around by spring 1930.  The stock market recouped nearly all of its losses from the previous October.  Employment was holding steady. Recovery was in the air, so Hoover proclaimed to the U.S. Chamber of Commerce on May 1, 1930: ‘We have passed the worst and with continued effort we shall rapidly recover.’  Later that month he told reporters asking about the Great Depression that they ‘were sixty days too late. The depression is over.’  Not quite.  Bank failures, drought, falling commodities prices, and restrictive tariffs sparked a spiraling world-wide depression that found new bottoms for nearly a decade.

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