History

2019

October 2019

U.S. Census Bureau History: 1929 Stock Market Crash

Arturo Di Modica installed his bronze Charging Bull statue located outside the New York Stock
Exchange on December 14, 1989. The statue has since become a popular attraction in New York
City's financial district and symbol of the "bullish" and hard charging stock market.

Photo of the Charging Bull statue courtesy of Marcy Hargan .

The booming economic prosperity and feverish consumerism that exemplified the "Roaring 1920s" came to a screeching halt when the U.S. stock market suffered its greatest collapse in history between October 24–29, 1929. The collapse was the beginning of a global economic depression that saw the American stock market lose 89 percent of its value between October 1929 and July 1932, and would not see substantial recovery until the beginning of World War II in 1939.

American investors benefited from record growth as the nation's economy expanded following the end of World War I. Unemployment was low and manufacturing was booming. Rising salaries allowed American consumers to buy their first homes, furnish them, and purchase radios, telephones, automobiles, and other goods. Disposable income and the introduction of margin buying allowed the average American to purchase stock with just a 10 to 20 percent down payment. Easy credit and margin buying fueled stock speculation driving 20 percent or greater annual stock market returns. In August 1921, the Dow Jones Industrial Average was 63. By September 1929, it had risen more than 500 percent to close at 381!

Although the stock market hit its pre-crash high on September 3, 1929, the American economy began faltering earlier in the year. During the Spring of 1929, the manufacturing and construction sectors reported slowing growth or declines; automobile sales were falling; farmers continued to struggle through a years-long agricultural recession; and American consumers were struggling under growing debts. Investor enthusiasm cooled in August when the Federal Reserve Bank of New York raised interest rates 1 percent in an attempt to limit market speculation. An overseas investment scandal in September that led to huge declines in the British stock market further rattled American investors. Worried that years of growth had come to an end, investors began selling stock. By mid-October, falling stock prices drove increasingly desperate selling activity. On Thursday, October 24, a record 13 million shares traded on the New York Stock Exchange. Wealthy bankers and investors who hoped to stabilize the market with a series of large stock purchases initiated a late day rally that continued into October 25, followed by a tepid trading session on Saturday, October 26.

Despite the attempts by bankers, government officials, and newspapers to project optimism and calm fears over the weekend, panicking investors sent the market into a free fall when the opening bell sounded on October 28, 1929. The market closed 13 percent lower at the end of the "Black Monday" trading day. The selling frenzy continued on October 29—"Black Tuesday"—with 16 million shares traded. The market dropped an additional 12 percent. Investors who purchased stock on margin scrambled to sell assets and empty savings accounts to repay loans, but many had no assets to liquidate and could not repay lenders. Unable to collect loans and depleted of cash deposits after customers rushed to retrieve their money, nearly half of America's banks failed by 1933.

The 1929 Stock Market Crash and resulting Great Depression affected nearly every American family. In 1929, 3.2 percent of America's civilian labor force was unemployed. Unemployment rose to 8.7 percent in 1930. By 1933, the rate had risen to 24.9 percent. Between the 1930 and 1940 Censuses, population growth was just 7.2 percent—the slowest growth recorded by the census in U.S. history. America's economy began recovering following the outbreak of World War II in 1939—thanks to government spending that financed the war effort. Despite this recovery, the U.S. stock market would not surpass its September 3, 1929, high until November 23, 1954, when the Dow Jones Industrial Average closed at 382.74.

You can learn more about the 1929 Stock Market Crash and the Great Depression that followed using census data and records. For example:

• Philadelphia, PA, was the capital of colonial America's banking and finance. When the Bank of North America—the city's first commercial bank—opened in 1782, Philadelphia's population was 37,800. The Philadelphia Board of Brokers established the nation's first stock exchange in 1790. One year later, the U.S. Congress established the First Bank of the United States there in February 1791. At that time, Philadelphia's population was 28,522. More recently, the 2010 Census ranked Philadelphia as the nation's fifth largest city with 1,526,006 inhabitants. In 2018, the "City of Brotherly Love" was estimated to be home to 1,584,138.
• The origins of the New York Stock Exchange date back to May 1792, when 24 stock brokers signed the Buttonwood Agreement at 68 Wall Street, New York City, NY. At that time, New York City's population was 33,131. Since the first census in 1790, New York City has remained the nation's largest city. Today, the city is home to 8,398,748 and the world's largest stock exchange—New York Stock Exchange—with a market capitalization of more than $28.5 trillion in June 2018.
• Charles H. Dow, co-founder of Dow Jones & Company, established the first stock market index, known as the Dow Jones Transportation Average, on July 3, 1884, to follow the value of 11 transportation companies. On May 26, 1896, he created the Dow Jones Industrial Average (DJIA) to follow the value of 12 publicly traded companies including the American Cotton Oil Company, American Sugar Company, Chicago Gas Company, National Lead Company, and U.S. Rubber Company. Today, the DJIA follows 30 American companies. The DJIA and the broader S&P 500—introduced in 1957 to follow 500 large companies—are two of the most popular gauges of the nation's economic health.
• Following the 1929 Stock Market Crash, Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934 to restore investor confidence. These acts require publicly-traded companies to honestly inform investors about their business, their securities, and potential risks; and insure that people and exchanges selling securities treat investors fairly and honestly. The Securities Exchange Act of 1934 also established the U.S. Securities and Exchange Commission to "protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation."
• In 1929, the U.S. Bureau of Labor Statistics estimated that the total civilian labor force (including agricultural and nonagricultural jobs) was 47,630,000. Total unemployment was 1,550,000. Total employment fell to 45,480,000 and unemployment rose to 4,340,000 in 1930. At its worst, unemployment rose to 12,830,000 in 1933, as total employment fell to 38,760,000.
• The 1929 Stock Market Crash was the beginning of a global economic depression that lasted until the outbreak of World War II in 1939. Following his 1932 Presidential Election victory, Franklin D. Roosevelt began introducing his "New Deal" programs to help the nation recover. On March 12, 1933, Roosevelt addressed the nation in the first of 30 Fireside Chats outlining his recovery plans that included public works projects, financial reforms, and regulations. It was a critical year for the United States as 4,004 banks holding more than $3.6 billion in deposits suspended operations temporarily or permanently due to financial difficulties in 1933, and the nonfarm foreclosure rate in metropolitan communities rose from 3.6 per 1,000 dwellings in 1926 to 13.3 in 1933. In comparison, 5.4 percent of all mortgage loans entered the foreclosure process at the height of the "Great Recession" in 2009.
• The Enumerative Check Census that was part of the 1937 Census of Unemployment was the first attempt to estimate unemployment on a nationwide basis using statistical sampling techniques. The Enumerative Check Census continued as the monthly Sample Survey of Unemployment conducted by the Work Progress Administration in 1940, until transferred to the U.S. Census Bureau in 1942. Renamed the Current Population Survey (CPS) and jointly sponsored by the Census Bureau and U.S. Bureau of Labor Statistics, the CPS is the primary source of the nation's labor force statistics. Data from the July 2019 Current Population Survey indicated that the nation's unemployment rate was 3.7 percent—equal to 6.1 million people.
• The 2012 Economic Census reported that there were 40,298 securities brokerage establishments (NAICS 523120) in the United States employing 310,652. States with the most securities brokerage establishments were California (3,900), Texas (3,314), and New York (2,754). New York led the nation with 46,342 securities brokerage employees.
• In 2012, the economic census collected data about 29 securities and commodity exchanges. In addition to well-known securities exchanges in New York City, NY, like the New York Stock Exchange and Nasdaq Stock Market, the United States is also home to major exchanges in Chicago, IL (trading commodities like grains, butter, milk, ethanol, meat, currencies, and metals) and grain trading in Minneapolis, MN.

This Month in Census History

On October 5, 1978, the "72-Year Rule" became law.

Public Law 95-416 restricts access to decennial census records to all but the individual named on the record or their legal heir for 72 years from the date of the census.

In accordance with this law, the National Archives released the 1940 Census records to the public on April 2, 2012. It will release the 1950 Census records on or about April 1, 2022.

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Stock Brokers

According to the 2012 Economic Census, there were 3,142 investment banking and securities dealing establishments (NAICS 52311) in the United States, with total revenue of more than $104 billion.

These establishments employ brokerage clerks, analysts, and sales agents to advise and assist customers to trade stocks, bonds, and commodities. In May 2018, the U.S. Bureau of Labor Statistics reported there were 55,100 brokerage clerks; 415,890 securities, commodities, and financial services sales agents; and 306,200 financial analysts employed in the United States.

In May 2018, the mean annual wages for these careers ranged from $53,900 for brokerage clerks to $100,990 for financial analysts.

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Financial Capitals

New York City, NY, is often regarded as the finance capital of the world. Many of its 8,398,748 inhabitants work at the city's stock markets; banks; finance, insurance, and real estate establishments; and commodity exchanges.

In addition to New York, many global banking leaders also have the world's largest populations, including: Tokyo, Japan (37.5 million); Shanghai, China (25.6 million); Mumbai, India (20 million); Shenzhen, China (11.9 million); Hong Kong, Special Administrative Region of China (7.4 million); London, England (7.3 million); Toronto, Canada (6 million); Zurich, Switzerland (1.4 million); and Amsterdam, Netherlands (1.1 million).

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