view of "Crash" area of exhibit

Crash!

While business figures were astounding, the financial market numbers of the decade bordered on incredible. The financial market had been slowly been increasing from 1920 to 1923. It picked up speed, more than doubling between 1924 and 1926, but in 1927 it spiraled upward at a rate (over 400% by 1929) that baffled economists. The players in the market rode this swelling tide. People with only 100 shares of a certain stock in the early 1920s might have made millions as stock prices rose, split, and rose again seemingly with abandon. Thousands of people borrowed money from banks and lending institutions to buy stocks (called buying on margin) then rushed to read the ticker tape believing they were making easy money.

desk calender from office of Paine Webber

By later in 1929, Americans borrowed billions to invest despite economists’ warnings that the United States economy was not flourishing as the market suggested. In late October 1929 that unstable market crashed, and a decade that had been so profitable, energetic and full of promise ended abruptly. As historian William Leuchtenberg has noted, “Never was a decade snuffed out so quickly as the 1920s."
On Black Tuesday (October 29) the market suffered its greatest drop in history – a record 16 million shares were sold that day, all at a loss. Within a few days, the loss reached $16 billion and two weeks later the market dropped 40% more. A sampling of some stock prices between September 3 and November 13, 1929, shows that Westinghouse dropped from 289 7/8 to 102 5/8, Union Carbide from 137 to 59, General Motors from 72 to 36, and General Electric from 396 ¼ to 168 1/8. Everyone in the market was hurt. Comedian Groucho Marx, after losing $240,000, quipped, “I would have lost more but that was all the money I had.”

black boc type stock ticker machine

People who had borrowed on margin were wiped out, and the banks that made such loans staggered under the weight of worthless notes. In turn, these banks were unable to loan to businesses. The effect on a stagnant economy was devastating.

It was an end to a decade of optimism and opened one of almost unquenchable pessimism.