By early 1929, people across the United States were scrambling to get into the stock market. The profits seemed so assured that even many companies placed money in the stock market. And even more problematically, some banks placed customers' money in the stock market (without their knowledge). With the stock market prices upward bound, everything seemed wonderful. When the great crash hit in October, these people were taken by surprise. However, there had been warning signs.
On March 25, 1929, the stock market suffered a mini-crash. It was a prelude of what was to come. As prices began to drop, panic struck across the country as margin calls were issued. When banker Charles Mitchell made an announcement that his bank would keep lending, his reassurance stopped the panic. Although Mitchell and others tried the tactic of reassurance again in October, it did not stop the big crash.
By the spring of 1929, there were additional signs that the economy might be headed for a serious setback. Steel production went down; house construction slowed; and car sales waned.
At this time, there were also a few reputable people warning of an impending, major crash; however, as month after month went by without one, those that advised caution were labeled pessimists and ignored.
Both the mini-crash and the naysayers were nearly forgotten when the market surged ahead during the summer of 1929. From June through August, stock market prices reached their highest levels to date. To many, the continual increase of stocks seemed inevitable. When economist Irving Fisher stated, "Stock prices have reached what looks like a permanently high plateau," he was stating what many speculators wanted to believe.
On September 3, 1929, the stock market reached its peak with the Dow Jones Industrial Average closing at 381.17. Two days later, the market started dropping. At first, there was no massive drop. Stock prices fluctuated throughout September and into October until the massive drop on Black Thursday.
Black Thursday - October 24, 1929
On the morning of Thursday, October 24, 1929, stock prices plummeted. Vast