When the New York Stock Exchange Collapsed
A person who understands the financial system understands how unstable it is. This is well illustrated by the example of the New York Stock Exchange, which has repeatedly suffered a serious collapse. The first of these occurred in 1873. The cause of this financial collapse is the panic of traders. This collapse was called “Black Friday” and marked the beginning of the “Long Depression” that took place from 1873 to 1896.
In 1907, the New York Stock Exchange Index collapsed by almost 50%. This happened against the background of a bad economic situation in a country that was in recession. Depositors of banks withdraw funds in bulk. In the end, many banks and enterprises became bankrupt. Significant role in this belongs to the authoritative financier John Morgan. But it is worth noting that not all traders became bankrupt. Jesse Livermore, a famous speculator, then made a legendary deal, earning $ 3 million. By the way, the events of this year served as the basis for the Federal Reserve System to be created later.
In 1929 there was a very strong collapse, since the market in just a week became cheaper in value by $ 30 billion. This is a huge amount! Investors were trying to get rid of stocks before they depreciate. As a result, 12.9% of all securities traded on the market were sold during the day. This have not happened before. The Dow Jones was 11% lower. This situation occurred on Thursday, October 24th, therefore, it was called Black Thursday. But that was only the beginning. A few days later, on October 28 and 29, the stock market was shocked again. During the week, the market fell by 40%. The US government spent less money during the First World War. So the world economic crisis of 1929-1939 went down in history.
In 1987, the Dow Jones broke the record for the fall, because more than 20% of the industrial index was lost in a day. Markets in many countries suffered huge losses. There were no obvious reasons for the events. There were a lot of orders, so computers could not cope with them. The authorities have solved this problem by limited access to trading.
In one day, October 11, on the stock exchange, the ruble fell by 845 points against the dollar. Although it is worth noting that the situation has stabilized in a few days and the course has become almost the same.Despite this, the collapse of the exchange, although very brief, left its mark and entered into the financial history.
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