History of Money & Markets · Modern crises
1929 crash & the Great Depression
Margin debt, bank failures and policy mistakes turned a crash into a decade of depression.
Step 1 of 4 · Overview15 min read ·
1920s
margin buying, booming stocks
Oct 24 & 28–29, 1929
Black Thursday, Black Monday & Tuesday
1930–33
thousands of bank failures; money supply shrinks
1932
Dow down ~89% from 1929 peak
1933–34
New Deal, FDIC, SEC created
Many investors bought on high margin, so falling prices triggered margin calls and forced selling. The deeper damage came from bank runs and the Federal Reserve letting the money supply contract.
Jesse Livermore was short into the crash and made ~$100M, the same event that ruined many leveraged longs. Leverage cuts both ways.
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