What actually happened on Black Tuesday
Most people think the 1929 crash was one bad day. It was a week, inside a month, inside a three-year collapse that took the Dow down 89 percent.
Black Tuesday is shorthand for a specific 24-hour period. October 29, 1929. 16 million shares traded on the New York Stock Exchange. The Dow Jones Industrial Average closed down 11.7 percent. Ticker tape ran hours behind actual prices. Many investors did not know what they had bought or sold until the next day.
The larger story is less tidy. The crash had started the previous Thursday and did not really end for three more years.
Five days in October
Thursday, October 24 (Black Thursday): the market opened down sharply. Richard Whitney of Morgan Bank made a widely publicized show of buying US Steel at above-market prices to stabilize things. It worked for the day.
Friday and Saturday: trading on a half-day Saturday session was uneasy but not disastrous. Over the weekend, margin calls went out across the country.
Monday, October 28 (Black Monday): the Dow fell 12.8 percent, which remains the largest single-day decline in percentage terms other than the 1987 crash. There was no organized buying this time. The Morgan partners who had rescued the 1907 panic and the Thursday market were no longer in position to act.
Tuesday, October 29 (Black Tuesday): the day that became the name. A further 11.7 percent drop. Panic selling. A reported suicide from a Wall Street building (almost all of the famous suicide stories from the crash were later shown to be exaggerations).
The three-year floor
The market did not bottom in 1929. It continued falling. The Dow reached its floor on July 8, 1932, at 41.22. From its September 1929 peak of 381.17, that was an 89.2 percent decline over 34 months. Recovery to the 1929 peak took 25 years.
John Kenneth Galbraith's 1954 book 'The Great Crash, 1929' remains the cleanest single account of what happened and why. His main argument is that the 1920s boom was driven by margin lending, investment trusts pyramiding leverage, and a public belief that the market could not fall. All three of those conditions have reappeared in some form in every bubble since. The Federal Reserve established after 1907 was supposed to prevent exactly this and failed spectacularly on its first real test.
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