The 1929 Wall Street Crash, explained: how borrowed money turned a stock selloff into the Great Depression.

Originally reported as: “Stock prices collapse in record trading volume as Wall Street panic deepens”

In late October 1929, over a few chaotic trading sessions later nicknamed Black Thursday, Black Monday, and Black Tuesday, US stock prices collapsed after years of speculative buying, much of it fueled by investors borrowing heavily to purchase shares. The Dow Jones Industrial Average kept falling for nearly three more years, eventually losing roughly 89 percent of its value from its 1929 peak to its 1932 low. The crash alone didn't cause the Great Depression, but it badly weakened an already fragile banking system, and thousands of bank failures wiped out ordinary people's savings since deposit insurance did not yet exist. Unemployment in the US eventually climbed to roughly 25 percent, and the crisis reshaped financial regulation for generations, leading directly to the creation of deposit insurance and the US Securities and Exchange Commission.