Black Tuesday, Its Causes and How It Kicked Off the Depression

The Worst Day in Wall Street's History

The Great Crash
Pandemonium ruled on the trading floor of the New York Stock Exchange on October 29, 1929. Photo: Photo: Hulton Archive/Getty Images

Black Tuesday was the fourth and last day of the stock market crash of 1929. It took place on October 29, 1929. Investors traded a record 16.4 million shares. They lost $14 billion on the New York Stock Exchange, worth $206 billion in 2019 dollars. 

On Black Tuesday, the Dow Jones Industrial Average dropped almost 12% closing at 230.

After the crash, the Dow continued sliding for three more years. It finally bottomed on July 8, 1932, closing at 41.22. All told, it lost almost 90% of its value since its high on September 3, 1929. In fact, it didn't reach that high again for 25 years until November 23, 1954. Losses from the stock market crash helped create the Great Depression. 

What Happened

Panicked sellers were shouting, "Sell! Sell!" so loudly that no one heard the bell ring. In a half hour, they sold three million shares and lost $2 million.

As the day wore on, the Dow fell to 212.33. The ticker tape that announced stock prices was hours behind. That meant investors didn't know how much they were losing. They frantically called their brokers. When they couldn't get through, they sent telegrams. Western Union said its volume of telegrams tripled that day.

Back then, traders physically wrote orders on pieces of paper. There were so many trades that the orders backed up. Traders just stuffed them into trash cans. Fistfights broke out, and one trader collapsed. Once revived, he was put back to work. Members of the NYSE board were afraid to close the market because it might make the panic even worse. 

The prominent banks of the day tried to stop the crash. Morgan Bank, Chase National Bank, and National City Bank of New York bought shares of stocks. They wanted to restore confidence in the stock market. Instead, the intervention signaled the exact opposite. Investors saw it as a sign that the banks had panicked.


Part of the panic that caused Black Tuesday resulted from how investors played the stock market in the 1920s. They didn't have instant access to information via the internet. Stock prices were printed by a ticker tape machine onto a strip of paper. As share prices dropped the ticker tapes literally could not keep up with the pace. Panic ensued because no one knew how bad it was.

There was pandemonium on the floor of the stock exchange. Buyers roared and screamed. Some collapsed onto the ground when they got bad news about a stock price. Crowds formed outside of the NYSE. The police were called to keep order.

The other reason for the panic was the new method for buying stocks, called buying on margin. Investors could place huge stock orders with only 10% to 20% down. They used the money they borrowed from their brokers. When stock prices fell, the brokers called in the loans. Many people found paying off the loans wiped out their entire life savings.

How It Helped Cause the Great Depression

Black Tuesday's losses destroyed confidence in the economy. That loss of confidence led to the Great Depression. In those days, people believed the stock market was the economy. What was good for Wall Street was thought to be good for Main Street.

The stock market crash created bank runs. People withdrew all their savings at once. Many banks didn't have enough cash on hand and were forced to close. There was no Federal Deposit Insurance Corporation to insure savings.

Investors abandoned the stock market and started putting their money in commodities. As a result, gold prices soared. At that time, the United States was on the gold standard and promised to honor each dollar with its value in gold. As people began turning in dollars for gold, the U.S. government began to worry that it would run out of gold.

The Federal Reserve tried to come to the rescue by increasing the value of the dollar. It did this by raising interest rates, which reduced liquidity to businesses. However, without funds to grow, companies started laying off employees. That created a vicious downward economic spiral that became the Great Depression. 


Day Date Open Close Percent Change Shares Traded
Black Thursday October 24 305.85 299.47 -2% 12,894,650
Friday October 25 299.47 301.22 1% 6,000,000
Saturday October 26 301.22 298.97 -1%  
Black Monday October 28 298.97 260.64 -13% 9,250,000
Black Tuesday October 29 260.64 230.07 -12% 16,410,000

In Depth: Effects of the Great Depression | Timeline of the Great Depression

Frequently Asked Questions (FAQs)

What day was Black Tuesday?

Black Tuesday occurred on October 29, 1929. Some 16 million shares were traded that day as the stock market lost billions of dollars in value.

What's the difference between Black Thursday and Black Tuesday?

Black Thursday occurred on the Thursday before Black Tuesday. It marked the start of the stock market crash that ended with Black Tuesday.

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