Black tuesday

economic-dictionary

Black Tuesday was October 29, 1929, the day there was a 12% drop in the Dow Jones Industrial Average. This index measures the performance of some of the major companies listed on the New York Stock Exchange.

The day of Black Tuesday reported a similar decline to the previous day, Monday, October 28, 1929, when the decline in the New York Stock Exchange was 13%. In this way, the downward trend that had started on Thursday, October 24, continued, when the fall was 11%.

During the trading day of Black Tuesday there was a great wave of stock sales, and many emblematic companies of the US market saw their stocks plummet, as was the case with General Motors.

All these losses in the North American stock market, physically located on Wall Street in the Big Apple, marked the beginning of the Great Depression that lasted until 1932. This was the greatest economic crisis of the 20th century.

What is the Dow Jones?

Origin of Black Tuesday

In the 1920s, several industries began to flourish in the United States, such as the automotive sector. In addition, credit purchases began to become popular, providing greater accessibility to financing.

Another point to take into account is that a large number of people began investing in the stock market in the 1920s. Many of them had acquired the Liberty Bonds.These were debt securities issued by the US government to finance military spending.

What happened is that, by acquiring these government bonds, new investors began to become familiar with the financial markets. Many of these people were even encouraged to speculate on securities such as company stocks. In this way, they sought to increase their wealth.

Black Tuesday and raw materials

Another factor that impacted on Black Tuesday was the fall in the prices of agricultural raw materials in mid-1929. This, in view of a large harvest in Europe that would push prices down.

In addition, a decline in the purchase of real estate and cars began to register, as consumers were already burdened with debt.

With all of the above, a perfect storm was created that gave rise to the Crac of 29.

Crack of 29

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