Era 03 · 1929 — 1933

The Great Depression

Peak to trough

−89% over 34 months

Pulse cycle

4.5s

The Dow peaked at 381 in September 1929. It bottomed at 41 in July 1932 — a decline of 89% over 34 months. Recovery to the 1929 peak took until 1954. Margin lending wiped out the middle class. Unemployment reached 25%. One in four US banks failed. The New Deal, modern securities law, the FDIC, and most of the 20th century's economic institutions exist because of this crash.

Events in this era

Oct 29, 1929

Black Tuesday

The Dow fell 11.7 percent in a single session, following an 12.8 percent drop on Black Monday the day before. 16.4 million shares changed hands on the NYSE, a record that stood for 39 years. Ticker tape ran hours behind real prices because the equipment physically could not keep up with volume. Investors were buying and selling blind, executing orders at prices that were already stale. The Dow peak of 381 set six weeks earlier would not be recovered until 1954. The bottom, at 41 in July 1932, was still almost three years away.

−11.7% in one session; panic begins

Mar 1933

FDR closes the banks

Two days after his inauguration, on March 6, 1933, Franklin Roosevelt declared a national bank holiday under the Emergency Banking Act. Every bank in America was closed for a week while federal examiners sorted the solvent from the failing. Roughly 4,000 banks had already collapsed since 1929. The US abandoned the gold standard the same month. On March 12, Roosevelt delivered the first fireside chat, explaining the rescue in plain language. Deposits flowed back in the following week. Recovery in the real economy began that summer.

End of the banking panic

Jun 16, 1933

Glass-Steagall signed

The Banking Act of 1933 separated commercial deposit-taking banks from investment banks. Passed in the aftermath of over 4,000 US bank failures between 1929 and 1933. The separation lasted 66 years. Its repeal in 1999 is widely identified as a structural precondition for the 2008 crisis, which this chart records two eras later.

Banking firewall stood for 66 years

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