The great Wall Street Crash, just before the Great Depression of the 1930s, has become a part of North American legend. People often speak of the crash, its causes, and its consequences with great authority, though few truly understand the fundamentals behind it, and even fewer grasp its complexities. This article provides a brief review of the crash, dispels some of the myths surrounding it, and answers important questions, such as why the crash occurred and whether it could happen again.

The crash began on October 24, 1929, and the downward spiral lasted for three business days, ending on October 29, 1929. Contrary to popular belief, the crash did not occur in the 1930s but in the late 1920s. The first day, October 24, is known as Black Thursday, and the final day, October 29, is known as Black Tuesday. The crash was triggered by a wave of nervous investors who panicked and rushed to sell their shares. Over 13 million stocks were sold on that fateful Thursday. In an effort to stop the collapse, several bankers and businessmen banded together and attempted to stabilize the market by purchasing blue-chip stocks, a tactic that had worked in 1909. However, this was only a temporary solution.

During the weekend, while the stock markets were closed, media reports exacerbated investors’ fears. By Monday, October 28, the public, further alarmed by the news, was eager to liquidate their investments. Once again, industrial giants and businesses attempted to restore confidence by purchasing more stock, but the panic was unstoppable.

As with any legendary event, the Wall Street Crash of 1929 has generated several misconceptions. To begin with, the crash did not directly cause the Great Depression. Many financial analysts and historians are still debating to what extent the crash even contributed to the economic downturn. Economic conditions were already deteriorating before the crash, and the Depression affected mostly those who had never even considered investing in the stock market. For many, especially rural communities, poverty stemmed more from poor farming conditions than from the crash itself. Additionally, the widely circulated story of a surge in suicides following the crash is largely exaggerated. While a few investors did take their own lives, the number of suicides was relatively small—far fewer than commonly believed.

So, what caused the crash? The market had been performing exceptionally well, and many Americans began investing—many of whom couldn’t actually afford it. These individuals were buying stocks on speculation, meaning they purchased shares with the hope of selling them later at a higher price. To fund these investments, they borrowed heavily from banks. When stock prices began to fall, investors realized they couldn’t repay their debts, let alone make a profit. As a result, they rushed to sell their stocks as quickly as possible, creating a panic. Today, to prevent such situations, buying on speculation is illegal.