October 28, 1929 "Black Monday" Stock Market plunges 13% - The Great Depression begins

Black Monday, October 28, 1929, marked one of the most catastrophic days in U.S. financial history, triggering a near 13% plunge in the Dow Jones Industrial Average and accelerating the collapse that led to the Great Depression.

On October 28, 1929, the U.S. stock market experienced a seismic shock that reverberated across the globe. Known as Black Monday, this day marked a pivotal moment in the Wall Street Crash of 1929, a financial catastrophe that shattered investor confidence, decimated personal fortunes, and ushered in the Great Depression. While Black Thursday (October 24) and Black Tuesday (October 29) are often more widely recognized, Black Monday was the single-day collapse that signaled the unraveling of an economic boom built on speculation, credit, and fragile foundations.

The Roaring Twenties: A Precarious Boom

The 1920s were a decade of exuberance and expansion. The U.S. economy surged forward with industrial growth, technological innovation, and rising consumerism. The stock market mirrored this optimism, with the Dow Jones Industrial Average climbing from 63 points in August 1921 to a peak of 381.2 in September 1929. Ordinary Americans, lured by the promise of easy wealth, poured their savings into stocks, often using borrowed money through margin accounts. Banks, too, became entangled in the frenzy, investing heavily in equities and lending recklessly.

Yet beneath the surface, cracks were forming. Agricultural overproduction, stagnant wages, and mounting consumer debt signaled economic instability. Despite these warning signs, stock prices continued to soar, detached from the realities of corporate earnings and productivity. Economist Irving Fisher famously declared that stock prices had reached "a permanently high plateau," a statement that would soon be proven tragically wrong.

The Slide Begins: Black Thursday

The first tremor came on October 24, 1929-Black Thursday. Panic gripped the New York Stock Exchange as prices plummeted and trading volume surged to an unprecedented 12.9 million shares. Leading bankers attempted to stem the tide by purchasing large blocks of stock above market value, temporarily stabilizing prices. But the reprieve was short-lived.

Black Monday: The Collapse Accelerates

On Black Monday, October 28, the Dow Jones plunged nearly 13 percent, wiping out billions in market value. The sell-off was relentless, driven by fear and margin calls that forced investors to liquidate their holdings. Trading floors were chaotic, with brokers overwhelmed by the volume and unable to keep pace with the cascading orders. The psychological impact was devastating-confidence evaporated, and the sense of invincibility that had defined the 1920s vanished in a single day.

Black Tuesday and Beyond

The following day, Black Tuesday, saw another 12 percent drop. Over 16 million shares were traded, a record that dwarfed the previous highs. In total, shareholders lost over $14 billion in value on October 29 alone. The market continued its downward spiral, and by mid-November, the Dow had lost nearly half its value. The decline persisted until July 1932, when the index bottomed out at 41.22-an 89 percent drop from its peak.

The Banking System Buckles

The stock market crash exposed the fragility of the U.S. banking system. Many banks had invested directly in the market or extended loans to speculators. As panic spread, depositors rushed to withdraw their savings, triggering a wave of bank failures. With no federal insurance for deposits, millions lost their life savings. The collapse of the banking sector deepened the economic crisis, leading to widespread unemployment, poverty, and social unrest.

Policy Response and Reform

The federal government, initially slow to respond, eventually enacted sweeping reforms. The Banking Act of 1933 (Glass–Steagall Act) separated commercial and investment banking to prevent future conflicts of interest and speculative excesses. The Securities and Exchange Commission (SEC) was established to regulate the stock market and restore investor confidence. These measures laid the foundation for modern financial oversight.

Legacy and Lessons

Black Monday of 1929 remains a stark reminder of the dangers of unchecked speculation, inadequate regulation, and economic hubris. It taught policymakers and investors that markets are not immune to collapse and that financial systems require safeguards to protect against systemic risk. The crash also reshaped American attitudes toward wealth, risk, and government intervention.

While the market eventually recovered-reaching its pre-crash levels in November 1954-the scars of the Great Depression lingered for decades. Families were uprooted, communities devastated, and political landscapes transformed. The events of October 1929, and especially Black Monday, continue to serve as a cautionary tale for generations of economists, investors, and leaders.

Sources:

Financial Express – October 28, 1929: The day the stock market crashed

Wikipedia – Wall Street Crash of 1929

Federal Reserve History – Stock Market Crash of 1929