New York, 1929
In the 1920’s, Europe, on its knees at the end of the First World War, started recovering. By the end of the decade, its manufacturing production surpassed its pre-war level. Even in Germany, things started getting better after the hyperinflation of 1923 had been overcome.
In the United States, the big winners of the war, euphoria reigned, based on the country’s faith in progress and prosperity for all. While just 200,000 people held shares in 1914, this number soared to over 200 million in the late 1920’s. “Stock market shops” sprang up everywhere, inciting citizens to invest …. even if they did not have the money to do so. In 1929, one million people purchased 300 million shares on credit … As often happens when a speculative bubble develops, sectors symbolising growth (the “new technologies” of that period) benefited most: aviation, broadcasting, automotive … Until the bubble burst on Thursday, 24 October 1929 (“Black Thursday”).
The fall continues
Though the New York Stock Exchange collapsed during session on Thursday 24 October 1929, this was not the case when it closed, as a group of bankers had decided to support the market. But they were unable to do anything more in the following days. The market continued to decline slowly for almost 3 years, with the Dow Jones index reaching its lowest level since its creation in 1896 on 8 July 1932!
Banks went bankrupt, credits declined, and unemployment exploded, leading to the Great Depression. The crisis lasted until the Second World War. As far as the Dow Jones was concerned, it took until 23 November 1954 for it to reach its highest pre-crisis peak!
As is clear from reading, the Wall Street events of October did not immedia- tely make the headlines in Europe. News of the American stock market crisis did not spread throughout the world straight away
Front page of the newspapers relating the 1929 stock market crash
Bibliothèque royale de Belgique
The fall-out of the Wall Street crash did not reach the European continent as quickly as it would today. But as in the USA, the whole decade saw a long descent into the doldrums, albeit with a few upturns.
In fact, the European economy only really started deteriorating in 1931, as a result of the protectionist measures taken by the American government and the suspension of its foreign credits, especially in Germany.