It’s been 97 years since the Great Stock Market Crash; here’s what it meant for South Dakota.
97 years ago today, October 24, 1929, the stock market began its worst crash of all time. Dubbed Black Thursday, a record-breaking sell-off of stocks lead to the Dow Jones Industrial Average dropping by 11% within the first few hours. But this was just the beginning.
An Associated Press article from the day of the crash referred to it as “[t]he most terrifying panic of selling since the war scare of 1914.”
“All records for wild and frenzied trading were broken . . . closing prices of most leading stocks disclosed severe declines. Many commission houses were reported to have dumped weakened marginal accounts overboard right and left,” the article said.
According to a 1929 article from the Bismarck Tribune, the stock ticker ran 4 hours and 30 minutes late by the time that markets closed due to the speed and volume of stock trades, which broke every record.
However, it wasn’t immediately clear that this was a sign of a greater crash. That very same article notes that “There is nothing in the picture that now indicates a major depression in business.”
On Friday, the market seemed to have stabilized. According to the Associated Press a “banker’s pool” led by J.P Morgan, among others, offered to use their own money to buy up stocks at higher-than-listed prices to help stabilize the market. The market closed with nearly no drop at all that day.
Any optimistic hopes were crushed however, when the market opened up again on Monday. Panic selling drove the market down another 13%, followed by another 12% drop on Tuesday.
According to data from the Federal Reserve, the Dow-Jones continued to fall on average until July 8, 1932, a total 89% drop in value. The market as a whole didn’t return to the value it had in the September of 1929 until 1954.
This crash kicked off the Great Depression, the longest and most severe economic downturn in the history of the United States.
For South Dakota however, the Wall Street Crash of 1929 wasn’t the end to good times, it was simply another point in a long string of trouble.
According to Main Street in Crisis by Catherine McNicol Stock, “Although the majority of Americans recognized ‘Black Thursday,’ 24 October 1929, as the first day of the Great Depression, the people of North and South Dakota could not say exactly when their troubles had begun.”
Due to a string of drought, plagues of grasshoppers, and an already-depressed wheat market, “life in the Dakotas was already so difficult that October’s ‘big event’ seemed curiously irrelevant,” Stock wrote.
This was further reinforced by generally conservative investments by farmers throughout the state.
In neighboring North Dakota, the Bismarck Tribune’s October 24 edition of the newspaper didn’t even list the stock crash as one of the top three stories of the day.
According to By Paula M Nelson in The Prairie Winnows Out Its Own: The West River Country Of South Dakota In the Years of Depression and Dust. “There was no fear, no panic to mark the Depression’s onslaught. Prices began to drop, and work began to disappear, but few understood the implications.”
These implications were severe. While the drop in stock prices didn’t directly impact South Dakotans the same way it did those further east, the subsequent drop in crop prices meant many farmers weren’t able to pay their mortgages and other loans, worsening an already bleak situation.
According to The Dust Bowl: An Illustrated History, the crash, combined with the drought, led many farmers to increase the amount they planted. This excess supply led to crop prices falling even further in a vicious cycle that drove many to bankruptcy.
The years that followed would be little better, with the excessive planting contributing to massive dust storms in what would come to be known as the Dust Bowl.
Today, headlines are filled with worry of a recession. Supply chain issues, interest rate hikes, and multiple quarters of negative GDP growth leave many wondering when the next crash might happen. However, with low unemployment, high corporate earnings, and still-undeterred consumer spending, there is nothing in the picture that now indicates a major depression in business.