The Stock Market Chart 1929: What We Can Learn From the Crash and the Great Depression

As both big and small banks continue to fail, the U.S. national unemployment rate either rises or stubbornly plateaus, private companies and corporations make serious cutbacks, the US dollar falls and the Dow Jones Industrial Average bobs up and down with the rising or lowering confidence of Wall Street investors--not to mention the willy-nilly collapse of foreign governments--it becomes clear that not just the U.S., but the world is in the midst of an economic recession from which it will not soon recover. And as the recession deepens, the question no longer becomes "Is an economic depression looming?" but rather, "Is the Greatest Depression already here? And if so, what can we expect?"

Of interest to investors, scholars, and consumers, then, is any data comparing today's stock market trends with the stock market trends from 1929, when the crash marked the official launch of the Great Depression of the 20th century.

This article was written early 2009 and last updated October 17, 2009. While we by no means have the perspective of hindsight to produce ready answers, I recommend you consider the following questions as you examine the stock market chart for 1929 and other data and compare the trends for yourself.

View the archived data on the Dow Jones that's stored online on the Internet. Examine not just the daily stock market charts for 1929, but the Dow Jones Industrial Average from 1929 and earlier through the 1940's up through 1945. Note the plunges in the stock market in 1904, 1908, 1921, and other key years. Note too the peaks in 1906, 1917, and more. Compare the data with daily stock market charts in modern times, being sure to take into account that the Internet has an accelerating factor on the pace of economic change.

Consider the wild fluctuations in the market that have occurred in 2008 and 2009.  Consider the optimism of the past and the inevitable plunge in the fall.

In interpreting the 1929 stock market chart data and comparing it with other years, consider the numerous factors that may have had an effect on the 1929 stock market crash and Black Tuesday. How did World War I (1914-1918) affect the stock market? Which nations--such as Japan--responded differently to the crash? How did World War II (1939-1945) affect the recovery? The post-war era in the U.S. was a time of rapid change in society as the United States moved into a new economic model of industry and commerce. Ask yourself if, without the existence of a world war, there are any factors that act in a way similar to a world war in today's society.

Study more than just the 1929 stock market charts. Read all you can about the era of the Great Depression.

Read about the investors during the 1929 stock market crash and the Great Depression--where the Wall Street investors made their money, which investors lost money, and what economic opportunities rose and vanished.

Think in particular about the strange duality of extreme economic opportunity co-existing with economic hardship, and about the same thing in our modern times. What might cause this now?

One might speculate that the economic recession and possible depression will end in a restoration of normal commerce...or, alternatively, that economic recessions and depressions are actually watershed periods, shake-ups in society that mark permanent changes in economic patterns.

As you consider these issues, keep in mind that history does repeat itself, not because human beings never learn, but because human nature is what human nature is. The economy, while comparable to a force as powerful as a tidal wave, is still a social force, led by people. Just as societies can change permanently, so can the economy. Nobody really knows what the world will look like after this downturn. Perhaps it will be something new and better. We can only hope.

There are a lot of similarities between our times and the time of the crash of 1929. I think we're in the midst of not just the early days of a depression, but a permanent economic change such as that which followed the last Great Depression.

That depression lasted twenty years, until the end of World War II. It was followed by a technological, cultural and economic boom evocative of the European Renaissance following the pandemic of the Black Death. The Baby Boomers grew up enjoying the promising climate of this economic surge. By the time Generation X were in the work force, however, the boom had begun to fizzle, and economic opportunities had started dwindling--accounting, by the way, for the much-maligned back-to-live-with-parents habits of Gen X.

Since then, that bold galleon that had ridden the full-bodied waves of a healthy economy in the 50s, 60s and 70s has been slowly, undramatically, yet perceptably sinking. And now it's half under water and floundering.

Why? And why is the economy visibly cleaving into two sectors: those who are succeeding and those who are failing--just as it did during the Great Depression? I think I know why, but that's for another, much longer, article.

In the meantime...please tell me what you think is going on. Are we in the Greatest Depression? And if so, why?