Stock Market Crash of 1929

panic

panic, crisis in financial and economic conditions, marked by public loss of confidence in the financial structure. Panics are characterized by a general rush of investors to convert their assets into cash, with runs on banks and a rapid fall of the securities market. Bank failures and bankruptcies naturally follow. Students of economic cycles have paid much attention to the process of panics, but without definitive result. Perhaps the earliest panic of modern capitalism occurred during 1720 in France and England. Known as the "Mississippi Bubble," it was touched off by wild speculation in the stock of John Law's colonizing company (see Mississippi Scheme). The first major panic in the United States came in 1819, after the War of 1812. The panic of 1837 was much more severe; it was brought on primarily by irresponsible financial operations in Western lands. Another crisis in 1857 was caused in part by massive European speculation in American railroads. Thus, when the panic struck it affected both Europe and the United States. In 1869 stock manipulations brought on the panic known as Black Friday. In 1873 there was a financial crisis in Vienna, as well as an American panic marking the bitter contest between agrarians (see Populist party), caught by overextended credit, and the financial interests. That conflict continued and was again reflected in the crises that came in the panics of 1893 and 1907. No great panic occurred again until 1929, when the U.S. stock market crash helped to precipitate a worldwide financial crisis. Confidence was not restored until after 1933, and the effects of the panic were felt throughout the Great Depression of the 1930s. Since 1929, central banks have been quick to provide liquidity to falling markets in order to prevent panics. For example, when the New York Stock Exchange dropped over 508 points (22.6%) on Oct. 19, 1987, the Federal Reserve released a large sum of money overnight to meet demands on brokers. In Sept.–Oct., 2008, the Federal Reserve and U.S. Treasury took more drastic and wide-ranging measures to ensure liquidity and stability in a financial system reeling from the effects of a collapsing housing bubble and the resulting credit crunch and accelerating stock market decline.

See M. A. Bernstein, The Great Depression (1989); C. P. Kindleberger, Manias, Panics, and Crashes (1989); C. R. Morris, Money, Greed, and Risk (1999).

The Columbia Encyclopedia, 6th ed. Copyright© 2015, The Columbia University Press.

Stock Market Crash of 1929: Selected full-text books and articles

Why Stock Markets Crash: Critical Events in Complex Financial Systems By Didier Sornette Princeton University Press, 2004
Librarian’s tip: Chap. 7 "Autopsy of Major Crashes: Universal Exponents and Log Periodicity
Wall Street: A History: From Its Beginnings to the Fall of Enron By Charles R. Geisst Oxford University Press, 2004
Librarian’s tip: Chap. 6 "The Booming Twenties 1920-29)"
Wall Street: A History By Charles R. Geisst Oxford University Press, 1999
Librarian’s tip: Chap. 6 "The Booming Twenties"
The Global Impact of the Great Depression, 1929-1939 By Dietmar Rothermund Routledge, 1996
Librarian’s tip: Chap. 5 "The Origin of the Depression in America"
Freedom from Fear: The American People in Depression and War, 1929-1945 By David M. Kennedy Oxford University Press, 1999
Librarian’s tip: Chap. 1 "The American People on the Eve of the Great Depression" and Chap. 2 "Panic"
The Great Depression and the New Deal By Robert F. Himmelberg Greenwood Press, 2001
Librarian’s tip: Chap. 2 "A Decade of Depression, 1929-1941: Theories of Cause and Cure"
Financial Crisis and the Great Depression: A Regime Switching Approach By Coe, Patrick J Journal of Money, Credit & Banking, Vol. 34, No. 1, February 2002
PEER-REVIEWED PERIODICAL
Peer-reviewed publications on Questia are publications containing articles which were subject to evaluation for accuracy and substance by professional peers of the article's author(s).
Prosperity: Fact or Myth By Stuart Chase C. Boni, 1929
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