The crash Oct. 29, 1929
Wednesday, October 29, 2008
The bread lines didn't form overnight. The banks didn't buckle all at once. And no one, despite urban legend, is known to have jumped out of a window in sorrow over financial ruin.
Instead, the worst would come later, sometimes months and even years after Oct. 29, 1929, "Black Tuesday." On that date -- 79 years ago today -- few people could conceive that an economic apocalypse was gathering, even as the ominous news soaked in. But the ripples would soon begin.
In 24 hours of trading, starting Oct. 28 and continuing into the next day, some 25 percent of the value of America's biggest companies vanished on the New York Stock Exchange. Coming on the heels of big losses a few days earlier, the reversal was stunning. Just six weeks before, stocks had reached their all-time high.
Still, it was possible at first to view the Crash of '29 as an isolated event. Most people hadn't shared in the rising prosperity after World War I, so most didn't lose money in the Crash. Only about 2 percent of households owned stocks, says historian David E. Kyvig, compared with about 50 percent who have direct or indirect investments in the market today.
A consumer culture was growing -- about 80 percent of households had a radio by the late 1920s -- but the middle class was still small. Soon, they would know. Slowly, in irregular waves, people across the country began to feel that things were different.
In New York, the Crash claimed its first victims within hours. The day after, smaller brokerages in the city folded, driven under by "margin" loans to clients who were wiped out. The undertow drew in a number of smaller banks, which in turn had lent money to the brokerages and to stock market players.
The first bread line appeared in New York in February 1930, according to historian William K. Klingaman. When the images of men lining up for a handout appeared in newspapers and newsreels, they shocked the rest of the nation, which until then had largely been spared. These men -- able-bodied, well-dressed -- didn't fit the stereotype of the destitute, he says.
"We lost everything," a New York clothing seller named Ben Isaacs recalled in Studs Terkel's 1970 oral history of the Depression, "Hard Times." "It was the time I could collect four, five hundred dollars a week [from customers with credit accounts]. After that, I couldn't collect fifteen, ten dollars a week. I was going around trying to collect enough money to keep my family going. It was impossible."
By the middle of 1930, though, the malaise had spread beyond Manhattan. Nine months after the Crash, the national unemployment rate had tripled, claiming more than 10 percent of the nation's 48 million workers. By the time Franklin Roosevelt was inaugurated in March 1933, the figure had risen to more than 25 percent.
Americans of that era still remember their first encounter with the Depression: The day the family switched from electric lighting to cheaper kerosene lanterns. The day that beans were on the dinner table instead of beef. The day that extended family members moved in. The day a relative arrived home, ashamed to report that he'd lost his job.
Neil Schaffner, the proprietor of an acting troupe that barnstormed small towns in Iowa during the 1920s and '30s, told Terkel about how his business seemed to freeze up all at once in early July 1930. "We had heard talk of hard times being back East," Schaffner says. "We couldn't see it. . . . All of a sudden, the plug was pulled out of the bathtub. I have a wife, a baby and a mother-in-law. All I've got to sell is my ability as an entertainer. But it appeared nobody had any money to buy. The audience had become benumbed."
Soup kitchens popped up within months, but didn't become "ubiquitous" in many cities until 1932, says Kyvig, author of "Daily Life in the United States, 1920-1940." The demand was so overwhelming by then, he says, that church and private charities turned to increasingly strapped local governments to keep their programs going.