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Welcome to our Wall on the Stock Market Collapse! (Part 1 of 2)

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Welcome to our Wall on the Stock Market Collapse! (Part 1 of 2)

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There have been several stock market crashes in history, but none more prominent than the two we are going to cover.
The 1929 Stock Market Crash (Covered in this padlet) Written by Gabriel Koeder
and
The 2008 Stock Market Crash (Covered in part 2 - the other padlet) Written by Milla Mccagherty

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We chose this because, it provides a wealth of information and numbers on the crisis, even more than the Video #1.
This website provides fantastic commentary on the social climate of Canada at the time too, and gives information on the Prime Minister, his struggles with the situation, and the reactions of Canadians too. The insight given by this article is fantastic and helps to provide further understanding for what causes a stock market crash, but also how it affects the people of the country where the crash took place. It's interesting to note that Canadians heard word about what happened to the NYSE and it caused a ripple effect stretching front New York to Toronto, to Montreal.

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Source: https://www.youtube.com/watch?v=TQUcoSy1yMA
Summary: Economists said they had reached a new level of prosperity - then it crashed. Even in the summer of 1929 there were problems everywhere, "ominous rumblings" they were referred to as. Rising unemployment, loss in automobile sales, farm and crop failures, delirious Wall Street optimism. Wall Street became a speculative bubble, and eventually it popped.  Come fall, the market started to waver, and some big economists warned of the incoming crash. Finally, on October 23rd, the first waves of panic selling began to drive down stocks. In less than 2 hours, $10 billion dollars invested in stocks were wiped out. Hundreds of people watched on in despair, hoping for a miracle. On October 29th, another tidal wave of selling stocks hit, but nobody was there to bail the stock market out. Stock prices collapsed, and 16 million shares were traded that day, setting the record. The market lost 14 billion in value, and the week's loss to 30 billion dollars. In a matter of hours, people lost their life savings, houses, and their dreams.

It would take over a decade to recover from the crash, and it was also followed by the Great Depression. Although, this video claims they had very little to do with each other.

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We chose this video because it provided great visuals alongside great commentary. It covers everything one needs to know about the crash, and it covers it well. Covering information that other videos didn't touch on, like the information on the "ominous rumblings". No other video I found talked about the prelude to the crash in the Summer of 1929. - despite its great importance. This video is from an American perspective, but after researching for a while, we were unable to find any specifically Canadian videos on the 1929 Stock Market crash. Nevertheless, the information it does provide could likely be extrapolated to a Canadian perspective.

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Website #2: Taking stock of the Great Crash

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Website #2: Taking stock of the Great Crash

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Source: https://www.cbc.ca/news/business/taking-stock-of-the-great-crash-1.789940
Summary: This article begins by squashing a few myths, and also going as far as to say that the crash wasn't the cause of the Great Depression. The author claims that it only "marked the eve of the Great Depression" and other factors like: political meddling, protectionism, and panic were what really caused the depression. Also discussed is how the markets were shaky in September of 1929.

Those pre-1929 levels would never return until 1954. Alongside the US crash came its effects on Canada and our markets. Prices fell, orders to sell came in droves, and our economy tanked as well. Apparently it hit people so hard that many resorted to committing suicide over their lost fortunes; and some even found ways to make their suicide look like homicide, so their family could still collect the insurance. The crash was also very much fueled by people buying stocks and funds on credit. Which of course, turned out very poorly when they couldn't cash in on their investments anymore - instead faced with great debt. Some saw the crash coming and sold out beforehand, like the Kennedy family (JFK). They actually profited immensely from it.

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This article stands out amongst the rest by starting with myth busting. Most of the other media I've come across while researching simply starts with saying the same repeated lines about what happened and when. This article is different though, and starts with going against what others say - that the stock market crash didn't cause the subsequent great depression. This article also provides interesting hindsight on the the event. Mentioning the Kennedy family, which I have yet to see anyone ever mention before when it comes to the 1929 stock market crash. This article actually did something new in many ways, didn't reiterate all the info every other new publication has produced for the past 90 years. It was concise, well written, and genuinely interesting from top to bottom. That's why we chose it.

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Website #1: The Great Crash of 1929 in Canada

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Website #1: The Great Crash of 1929 in Canada

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Source: https://thecanadianencyclopedia.ca/en/article/the-great-crash-feature
Summary: Beginning to take shape on the 24th of October, 1929, (later known as Black Thursday) and featured on the front page of the next day's Toronto Globe. The NYSE had suddenly experienced huge declines in wild trading and had a record break 12.8 million shares sold that day. Before anyone could intervene, thousands of people had their bank accounts wiped out. The sense of fear spread quickly to markets in Toronto as well, and practically every stock finished the day down. Despite the severity of Black Thursday, the worst was yet to come.

On Tuesday, 29th of October (became known as Black Tuesday) 16.4 million shares were sold, breaking the record set on Black Thursday by 4 million. All the year's gains were wiped away and in Canada, liquidation records were set. Terrified investors amassed in the financial districts, while brokers and exchange works were beset with mass amounts of paperwork. In Montreal, some 500,000 shares were sold (5x normal); and in Toronto 330,000 got sold (13x normal). Unfortunately, things didn't get any better either, losses continued to climb as stocks continued to decline. Prime Minister R.B. Bennett (Conservatives) used this time to score a victory in the election over the Liberals who held power for a decade up until then. Bennett knew the country was in a terrible economic depression, but the low point came in 1933 because national output and exports were down a third from the late 1920 levels. Close to 1/3 of the workforce became unemployed and Canadians blamed Bennett for everything that happened. Despite his best efforts at stopping the crisis with establishing the Bank of Canada and his New Deal for social service reform in 1935, he lost power in the next election. The economy lagged upwards for a long time until a late 1930s recession destroyed the slow upward trend.

By 1939, there were still hundreds of thousands of Canadians on “the Dole”, with monthly rates for a family of being varying between $19 and $60 dollars. However, with the onset of the Second World War, the great depression ended, and the whole world shifted gears to a new, and even more alarming crisis.

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The wheat glut of 1928 threw the Winnipeg Grain Exchange into a spiral, triggering a depression in Canada's economy.

It began to take shape on 24 October 1929, Black Thursday. "Stock Speculators Shaken in Wild Day of Panic," shouted the front page of the next day's Toronto . The New York Stock Exchange, the accompanying stories reported, had experienced massive declines in wild trading, with a record 12.8 million shares sold. Thousands of accounts were wiped out before leading bankers and industrialists intervened to halt the slump. The dread extended to the Toronto markets, the Globe declared, and "rocked" share prices there. In Montréal, forced selling ran rampant, and practically every stock finished the day down.

"The biggest crash ever recorded," lamented the famed British economist John Maynard Keynes, whose own investments were entirely gone by the end of the year ( see Keynesian Economics).

Tuesday, 29 October - or Black Tuesday - was worse still. On Wall Street, 16.4 million shares were sold, almost 4 million more than Black Thursday's unprecedented totals. The New York Times industrial average plummeted, eliminating a strong year's gains, and the investment giant Goldman Sachs Trading Corporation was reduced to 58 per cent of its worth the night before.

Credit: Library and Archives Canada/C-020594.\r\n

In Toronto and Montréal, liquidation records were set. Horrified investors clogged the financial districts, while employees in the exchanges and the brokerage houses worked themselves to near-collapse in an attempt to corral the paperwork. The Canadian Annual Review of Public Affairs reckoned that "never before the 1929 crash had amounts that ran into billions of dollars been lost on the Canadian Stock Exchanges in so brief a period of time." In Montréal, some 500,000 shares were sold (5 times the usual amount); in Toronto, 330,000 were sold (13 times the usual).

"The singular feature of the great crash of 1929 was that the worst continued to worsen," wrote Canadian-born economist John Kenneth Galbraith in his seminal book The Great Crash 1929 (1954). The markets jumped back to life, but briefly. The setbacks returned and they persisted.

From the peak of the bull market in 1929 to mid-1930, the 50 most active Canadian stocks diminished on average to well under half their market value. Shareholders in International Nickel and Imperial Oil lost more than $500 million each, those in Canadian Pacific Railway over $60 million.

Standard Oil of New Jersey's John D. Rockefeller, the Bill Gates of his day, was caught up in the turmoil. On 13 November 1929, yet another disastrous day for the markets, he put his family's money behind a guarantee that his enterprise's shares would not fall below 50. In early 1932, the price was 20.

Historians and economists debate the importance of the Great Crash. Some claim that it brought on the Great Depression that blighted the 1930s across the industrialized world; others scarcely mention it in their narratives of the decade-long economic ordeal, an international phenomenon with many origins and explanations.

The economic downturn seemed moderate enough when Conservative leader R.B. Bennett hit the election trail in 1930. But Bennett was able to use it to good effect to defeat William Lyon Mackenzie King's Liberals, who'd been in power for nearly a decade and were reluctant to acknowledge the crisis brewing in Canada.

Six months after the election, Prime Minister Bennett realized that the country was in a severe economic depression. The low point came in 1933, when national output and exports - crucial then as now to the Canadian economy ( see Economic Indicators) - were down a third from late 1920s levels. Farms of the West were in crisis ( see Drought). Nearly a third of the workforce was unemployed.

The rich and well-stuffed Bennett was the butt of cruel jokes and the symbol of everything Canadians loathed. Though he tried to turn the tide, establishing the Bank of Canada and presenting his New Deal for social service reform in 1935, it was too little too late. In the next election, Canadians ousted Bennett.

The economy struggled back, yet very slowly, and a late 1930s recession interrupted the upward trend ( see Business Cycles). In 1939, there were still hundreds of thousands of Canadians on what passed for financial relief, with monthly rates for a family of five varying from $60 in Calgary to $19 in Halifax. This was before the rise of the welfare state in the ensuing decades.

Year upon year of economic woe set peoples against one another in a global depression that left few markets unscathed. In response, governments heaped on the tariffs, wanting to protect themselves and punish others ( see Protectionism). Democracies turned in on themselves, selfish and frightened. Capitalism had apparently failed, and its opponents were in fashion. Territory-hungry dictatorships flourished ( see Fascism). In this respect, the Second World War was a child of the Great Depression. Then, in a twist of fate, the economic prosperity of war ended Canada's Depression.

( See also Economic History.)

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The wheat glut of 1928 threw the Winnipeg Grain Exchange into a spiral, triggering a depression in Canada's economy. It began to take shape on 24 October 1929, Black Thursday. "Stock Speculators Shaken in Wild Day of Panic," shouted the front page of the next day's Toronto .

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Source: http://www.investmentreview.com/analysis-research/risk-2-0-a-revisionist-take-on-1929-4661
This image shows clearly an old Canadian Newspaper, and the headline says it all. I can't find a date on this image but considering the word choice of "Erratic" I can assume it was before the real fall. Perhaps it was written on October 24th, 1929 or earlier. Otherwise, it should say something like, "STOCK MARKET CRASH IN NEW YORK". Either way, this presents a good picture of what it may have been like to pick up the daily news back then and read this scary article - unknowing of what's to come.

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Video #1: History Brief: Black Tuesday (The Stock Market Crash)

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Video #1: History Brief: Black Tuesday (The Stock Market Crash)

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Source:https://www.youtube.com/watch?v=ehy2jEeNuWk
Summary: Stocks are shares of corporations that are bought, sold, and traded on the stock exchange. The success and failure of all corporations is based off of the Dow Jones Index. If Dow Jones goes down in value, it means economic hardship; conversely, if the Dow Jones goes up, it means economic prosperity. From 1920 to 1929 the stock market rose continually for 9 years straight until finally in 1929 there were sporadic ups and downs in the markets. Investors were selling more stocks than usual and some economic analysts suggested that the market may soon fall dramatically. Thursday Oct 24th 1929 showed a dramatic shift for the first time and many chose to sell that day; which caused an 11% drop due to the panic that ensued that day. Oct 28th saw yet more activity, the money spiraled further downwards - nobody wanted to buy anything! Oct 29th 1929 became known as Black Tuesday because on that day, the Dow Jones average fell 30 points (losing for than 12% value), more than 16 million shares were traded in one day. Thousands of people lost their personal fortunes in the chaos that ensued. The stock market lost 30 billion dollars in value in 2 days, and it continued to fall until 1931. It left investors with little faith in the American economy. Because of the lack of funds from stocks, expansion and innovation became more difficult. People lost their jobs, companies went bankrupt, and It took a decade to recover. It ended up being a major cause for the great depression.

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History Brief: Black Tuesday (The Stock Market Crash)

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This video provides a brief but informative summary on the Stock Market Crash of 1929. It serves as a great introduction to our wall and delivers information in a brisk and concise manner. It is a great launching point for the discussion around what a Stock Market Crash is, and what it is caused by. This short video under 5 minutes in length gives all the numbers needed for a basic understanding of the situation at hand and the factors at play. It goes day by day and event by event to unravel the exact things that took place to cause the crash on Black Tuesday.

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1. What did you learn about your topic that surprised you the most?
I was most surprised to learn about the numbers featured in these website and videos. The sheer losses were, and are still astounding. Losing billions in hours is absolutely terrifying today, let alone in 1929, when money was worth a lot more.
2. Provide a real-life example of how this topic is relevant or interesting

for you.
This topic provides insight into the current financial crisis that is taking place over COVID-19 concerns. Are we headed towards a crash right now? Perhaps we are, and if that's the case, maybe we can all learn from what happened in October of 1929.

3. If you could pass on your knowledge to a family member or friend, what

do you think is the most important thing to pass on?
That a stock market crash always has signs, and delirious optimism of stock brokers is the last sign before the crash happens. It's important to watch for the signs today, rising unemployment, bad harvests, loss in sales of cars and other merchandise. When you stop and think about it, these are all things that are happening right now aren't they?