The Crash

Though forever entwined, the stock market crash of 1929 and the Depression were distinct. Neither caused the other.

The stock market that crashed in the fall of 1929 was overheated by speculation. The bubble simply burst, as speculative bubbles always do. (What’s amazing is that this lesson of history never seems to keep the next bubble from forming.)

The market stood at 452 on September 3, 1929. On November 13 it bottomed at 224, the end of the Crash. That’s a loss of just about 50% in ten weeks. (I’m relying on the numbers in Galbraith’s The Great Crash and he relied upon The New York Times Industrial index.)

The market was steady after that, rising some in early 1930, then dropping notably in June. From June on the market just kept dropping until the index reached 58 in July 1932. These losses were related to the Depression, a symptom of it, not a cause.