Black Tuesday The dirty thirties, as some may call them, was a time of hopelessness and despair, unquestionably being the most tragic economic disaster to ever strike Canada. The Great Depression was the worst and longest economic slump ever in Canadian history that spread to virtually the entire industrialized world. The over speculation in the stock market added to the build up of the economic disaster. As the effects of the stock market crash lingered on, an untimely disaster that would prove to be beneficial was about to take place. A War that sprouted into existence gave new ground to the fallen economy. World War II had a great effect on the Canadian economy, not only ending the Great Depression but also creating jobs for the numerous unemployed and literally pulling the economy out of the gutter. The times were good during the "roaring twenties" and the Canadian economy was booming. Stock prices had been rising steadily since 1921, but in 1928 and 1929 they surged forward, with the average price of stocks rising over 40 percent (1). The stock market was totally unregulated. Margin buying in particular proceeded at a feverish pace as customers borrowed up to 75 percent of the purchase price of stocks (2). That easy credit lured more speculators and less creditworthy investors into the stock market. The Federal Reserve board warned member banks not to lend money for stock speculation because if prices dropped, many investors would not be able to pay back their debts. No one listened, as the most tragic economic period. The stock market began sliding in early September, but people ignored the warning. Then on “black Thursday” (October 24, 1929) and again on “black Tuesday” (October 29, 1929) disaster struck. More than 28 million shares changed hands in frantic trading. Overextended investors, suddenly finding themselves heavily in debt, began selling their stocks. Many found that no one would buy anything at
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any price. Overnight, stock values fell from a peak value of 87 billion dollars to 55 billion dollars, (refer to Graph #1 for DJIA statistics). GRAPH # 1 The crash was felt far beyond the trading floors. Speculators who borrowed money from the banks to buy their stocks could not repay the loans because they could not sell stocks. This caused many banks to fail. The Federal Reserve Banks insisted on collateral before it would offer any help. It wanted commercial bills, however, which local banks did not have. "Before the Federal reserve was created in 1913, the banks had ...

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