Collaborative Task Review: Module 1

What circumstances led to Richard Whitney’s gamble on October 24th 1929 failing,

causing the New York Stock Exchange to collapse?

Answer:

On October 24th, 1929 (“Black Thursday”) the U.S experienced the most horrible crash in

its history. The prices of stocks collapsed; trade off was intensified and the market lost

11% of its value at the opening of the trading. Richard Whitney born in Beverly

Massachusetts on August 1, 1888 became president of the New York Stock Exchange

after being chosen by the leading bankers to resolve the panic.

He placed a bid to purchase a large block of shares in the U.S. steel at a price higher

than the current at the time. He was however watched by a trader who did similar biding

on the “blue chip” stocks. The tactic was in line to the one that ended the 1907 panic.

The Dow Jones Industrial Average recorded, closing with it down only 6.38 points for the

day. The rally continued on Friday, October 25, and the half day session on Saturday the

26th. However, the solution did not materialize as a result of some events that occurred in

the subsequent weeks. The event was covered by the newspaper across the United

States, and on October 28 , the “Black Monday” more investors faced margin calls and

decided to move out the market that led to a continue record loss in the Dow for the
day of 13%. The next day, October 29, 1929, the “Black Tuesday” 16 million shares traded

as the panic selling reached its peak. Some stocks never had buyers on that day.

The cause of the circumstances is certainly the result of low wages and the proliferation

of debt. It was also a result of the struggling agricultural sector and an excess of large

bank loans that could not be liquidated

The volume of stocks traded on October 29, 1929 was a record that was never broken

for nearly 40 years.

Reference:

WQU( 2021): Lecture notes module 1

Onion, A., Sullivan, M. etal (May 10,2010): Stock Market Crash of 1929: Retrieved from

https://www.history.com/topics/great-depression/1929-stock-market-crash#, PP. 1-3

(2020): Essay On the Crash Of 1929: Retrieved from

https://www.bartleby.com/essay/Essay-On-The-Crash-Of-1929-FC2LMPZJU