On 28 October 1929, the New York Stock Exchange fell by nearly 13 per cent in a single session, the day that is usually called Black Monday, and the following day, 29 October, the market broke again with record volume. The panic had opened on 24 October, when prices fell on enormous turnover after a long speculative boom, and it ended a decade in which ordinary Americans had bought shares on margin in numbers nobody had seen before.
The mechanics mattered. Buying on margin meant putting down as little as ten per cent and borrowing the rest from a broker, who borrowed from a bank. When prices fell, brokers issued margin calls and clients had to put up cash or sell, and the forced selling pushed prices down further and produced more calls. On 24 October a group of the largest banks, meeting at J. P. Morgan's office, had pooled money and sent Richard Whitney, the exchange's vice president, onto the floor to bid for blue chip shares at above the market, which stopped the slide for a day.
The pool gave up. By 28 October there was no support, and the ticker tape, which was the technology for reporting prices, ran hours behind, so that nobody knew what their shares were worth while they were being sold. Volume on 29 October was over 16 million shares, a record that stood for decades. The Dow had fallen by about 25 per cent in two days and by almost half from its September peak within a few weeks.
The crash did not by itself cause the Depression, and economists argue about the weight to give it. What it did was destroy a large amount of paper wealth, wreck the balance sheets of banks that had lent against securities, and remove the confidence that had been driving investment and consumption. The Federal Reserve, which had raised rates in 1928 and 1929 to curb speculation, then did very little as the banking system contracted, and a series of bank failures between 1930 and 1933 destroyed a third of the money supply. The market bottomed in 1932. The recovery took until the war.