The Dow Jones Industrial Average recovered, closing with it down only 6.38 points for the day. The largest percentage increases of the Dow Jones occurred during the early and mid-1930s. [27] Such figures set up a crescendo of stock-exchange speculation that led hundreds of thousands of Americans to invest heavily in the stock market. The market rebounded faster after the 1987 crash than it did in 1929, when the Dow took two decades to fully recover. [48], The stock market crash of October 1929 led directly to the Great Depression in Europe. They argued that there must be some setback, but there was not yet sufficient evidence to prove that it would be long or would necessarily produce a general industrial depression. This terrified the public, leading to more people selling shares. [13][14][15][16], On October 29, William C. Durant joined with members of the Rockefeller family and other financial giants to buy large quantities of stocks to demonstrate to the public their confidence in the market, but their efforts failed to stop the large decline in prices. The lessons did take hold, and even with the Lehman Brothers crash of 2008, investors learned to have more faith in the financial markets and understood the best move to make was to remain calm, remain in the market, and allow short-term market gyrations to self-correct. [5] However, the American economy showed ominous signs of trouble:[5] steel production declined, construction was sluggish, automobile sales went down, and consumers were building up high debts because of easy credit.[5]. The Wall Street Crash was also caused by innate weaknesses in the American banking system - in the 1920s America had over 30,000 banks; this meant that many were prone to going bankrupt if they run out of funds. Receive full access to our market insights, commentary, newsletters, breaking news alerts, and more. "[37][38], Together, the 1929 stock market crash and the Great Depression formed the largest financial crisis of the 20th century. An increase in bank failures at the end of the decade triggered a run on deposits. Building on post-war optimism, rural Americans migrated to the cities in vast numbers throughout the decade with the hopes of finding a more prosperous life in the ever-growing expansion of America's industrial sector. : Echoes", "The Stock Market's Valuation Rarely Gets This High", "The Market Turmoil: Past lessons, present advice; Did '29 Crash Spark The Depression? Because of margin buying, investors stood to lose large sums of money if the market turned down—or even failed to advance quickly enough. Within the UK, protests often focused on the so-called means test, which the government had instituted in 1931 to limit the amount of unemployment payments made to individuals and families. ", "Market crash of 1929: Some facts of the economic downturn", "History's Advice During A Panic? Easy access to credit gave people too much confidence in the stock market, leading to more people buying shares. The "Roaring Twenties", the decade following World War I that led to the crash,[2] was a time of wealth and excess. Milton Friedman's A Monetary History of the United States, co-written with Anna Schwartz, argues that what made the "great contraction" so severe was not the downturn in the business cycle, protectionism, or the 1929 stock market crash in themselves but the collapse of the banking system during three waves of panics from 1930 to 1933.