The bringing up of Black Tuesday brings chills to every nation on Earth even in the present. After several days of the The Crash, Black Tuesday occurred on Tuesday, October 29, 1929 and stood as the final day which greatly contributed to the dreaded segue that brought The Great Depression upon us. A new and very popular approach was introduced in stock buying which was called buying on margin. Buying on margin meant a purchase on stock orders was possible by only paying the margin amount which was typically 10-20% and receiving loans from brokers to pay the rest.
Unfortunately, once the crash begun and the prices fell, brokers immediately demanded the loans to be paid back. Since investors initially believed they had time to repay, the sudden requests brought them to use up all of their life savings. For some, the hopelessness of being able to pay drove them to jump out of their windows! Suicide rates grew to an alarming 18.9 per 100,000 people during the year of the crash and remained high until the Depression was over. Due to the crash, people withdrew their savings from the banks and led the banks to close. Unfortunately, due to there not being a deposit insurance, if savings weren’t withdrawn, then they were lost along with the failed bank. Nearly 30 percent of the labour force became unemployed and 50% of banks had become unsuccessful completely. Specifically in Canada, Western Canada was the most affected.
Oddly, the choice of investors to put their money into goods instead of in stocks caused gold prices to skyrocket. The U.S. guaranteed some gold in return of each dollar but way too many people started bringing in money.
This led to a fear that there wouldn’t be enough gold. The solution that the country agreed on was to increase the dollar value by also increasing the interest rates. However, lack of supplies of money greatly decreased jobs once again. From here, the economy had started to drown in a seemingly everlasting panic which we know as The Great Depression, that remained until the outbreak of WW2 brought it to its end.
