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1929 Crash |
Economic Slowdown |
Bennett in Power |
The Ottawa Conference |
Prairie Drought |
Relief |
The Regina Riots | Alberta &
Bible Bill | Statute of
Westminster | Woodworth & the CCF
| The Union Nationale |
Relief Camps |
Bennett's Conversion |
King's Return |
European Unrest |
Royal Visit
The roaring 20's had created a landscape
where not only the rich were investing in the stock
market but people from every walk of life and almost all
economic classes began to put money into the markets.
One of the opportunities for investing was known as
buying on margin which allow an investor to put as
little as 10% down on the purchase of a stock and not
have to worry about the rest unless their broker made a
margin call which would then require the payment of some
or all of the rest of the money owed on the cost of the
stock. These margin calls were rarely made until the
fall of 1929.
The market had been
raising all through the 20's and as it climbed higher
and higher, more and more invested a piece of their
savings or in some cases all of their money into the
market. Some even mortgaged their houses to get money to
invest, Stories
abounded of the great profits to be made, the easy money
that was generated on the markets and the lifestyle
which became possible as a result of the profits on
investment. This kind of frenzied investment created a
bubble which was waiting to burst. This was not
the first bubble of its kind. By August - September 1929
the Dow Jones Industrial Average, in the U.S. had
climbed 190 points from the beginning of 1928 to 381.
In Canada in January of 1929, with $50you could buy $350
or 100 shares of Home Oil and in March sell it for
$1575, or Okalta for $30 and sell it at $300. By early
September two Canadian stocks, Imperial and BA reached
record highs.
On September 6th a
wave of selling hit the markets and then buying kicked
in. For the remainder of the month the market began to
swing between selling and buying in increasingly chaotic
patterns. By the beginning of October an anxiety had
crept into the markets and on October 4th Bay Street and
Wall Street were hit with tidal wave of selling. The
Toronto Stock Exchange recorded about 200 million in
loses on the day. The following day buyers rushed in to
pick up what they thought were bargains and prices began
to rise again. By October 17th a rally seemed to be
underway and the Financial Post had predicted that
Canadian Mining Stocks would be the blue chip buy of the
1930's. By the afternoon a heavy wave of selling had
again invaded the market and driven it down sharply. A
few days later in New York on October 21st the same type
of selling trend set in. Both markets seemed to recover
and be on their way up again on October 22nd but there
was nervousness in the market.
By the 23rd the
tension in the markets was reaching a breaking point and
many investors were completely confused as to the future
of the market. The morning of October 24th or what would
become known as Black Thursday, began with many brokers
making margin calls for more money to cover their
positions. More and more of their calls were unanswered
and the brokers began to dump sell orders into the
market in order to protect themselves. Their prudent
actions turned into fear of selling to late and the
market slide began to accelerate. The fear turned into
panic and sock prices started to collapse completely. At
about 11:00 am the selling activity reached a peak and
for about 6 minutes the markets broke down completely.
Wheat dropped from $1.40 to $1.31 with millions of
bushels thrown onto the market.
Crowds had begun to gather outside the
Toronto Stock Exchange, The New York Exchange, Chicago,
Winnipeg, Montreal. Order broke down, police were called
in and the markets kept following. Ticker Tapes fell
hopeless behind the action with exchanges losing touch
with each other due to the volume of activity. Montreal
which had average about 25,000 shares traded a day
jumped to over 400,000 shares and New York traded over
13 million shares.
The bankers, brokers
and politicians all stepped forward claiming that the
slide in the market was a glitch and that the
fundamentals of the economy were sound. They helped
steady the market on Friday but over the weekend many
investors had a chance to think about their positions
and on Monday the slide began again as the sell orders
once again flooded in. The Toronto Stock Exchange slide
by one million dollars a minute and by the close of
trading on Monday, the brokers had sent out margin call
notices to almost all of their clients in an effort to
stem the selling.
Tuesday morning opened with another huge
drop and the worst day of the crash, October 29th, 1929
or Black Tuesday had begun. As the markets went into
free fall, investors, brokers and the public watched the
drama unfold. Some became hysterical, some began to cry
softly, and some just watched in silence. Terror crept
into every investors mind as the market dropped straight
down. The golden promise of the roaring 20's was
shattered in a day as was the financial stability of the
nation. Stocks were sold at any price offered as
complete confusion overtook the trading process.
The catastrophe hit
anyone who had invested in the markets. The future Prime
Minister Louis St Laurent was wiped out and was
still paying off his margin debt during the second world
war. R.B. Bennett the next Prime Minister also lost a
fortune but could afford the loss. Some of the declines
on the Toronto Stock Exchange were Brazilian Traction 82
to 12, BA Oil 36 to 8, Cockshutt 53 to 4 and Winnipeg
Electric 109 to 10. The Canadian bluechip stocks lost
over 5 billion dollars in value which in 1929 exceeds
anything before or since.
The spirit of the
investor was broken and the markets and the financial
systems lie in ruins. The worse was yet to come as the
economy began to crumble and the depths of the
depression were not reached until 1932/33 and recovery
only really began t surface in 1936/37.
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