Stock Market Crashes of the Last 100 Years: The World Survived Them All

It has been a pretty grim few weeks as governments around the world scrambles to respond to the Global Financial Crisis of 2008. But if it is of any consolation, this is just one of the several that have rocked the world. And the good news is - the world survived all of them in the past.

The Great Depression (1929)

The Big Crash

After the extravagance of the Roaring Twenties, the American stock market was getting shaky amidst speculative fears. Between 1 September and 21 October, the market fell by 40 percent. On 24 October 1929, the stock market began to drop drastically. It was known as Black Thursday.  By July 1932, it was down by 90 per cent.

By 1933, a quarter of the American workforce was out of job. Widespread unemployment and misery followed. It caused the world to plunge into a global depression that lasted for more than a decade until World War II.

People could be seen everywhere on the streets on Black Thursday, 24 October 1929, as the stock market crashed. (Photo courtesy of Flickr)

Recovery

World War II was declared in 1941 and the preparations brought the economy back on track.

Importance

The Great Depression, which is the worst that the world has ever seen, is still being used as a benchmark for how far the economy can fall.

The Oil Shock (1973)

The Big Crash

It began when the world’s oil producers quadrupled oil prices. On 17 October, they announced that they would stop shipping oil to the United States, its allies in Western Europe and Japan. It was a move to retaliate against US for supporting Israel in the Yom Kippur War against Iraq, Syria and Egypt in 1973.

The surge in oil prices caused a jump in inflation which led to the first instance of stagflation (people were out of jobs but prices remained stubbornly high). It was the worst thing that could happen to an economy.

Recovery

Oil prices stabilised in the late 1970s, but rose to a new peak when war broke out in 1981 between Iran and Iraq. However, it declined gradually again after the war.

Importance

The Oil Shock is brought up as a warning to the economy each time oil prices shoot up to new records.

Black Monday (1987)

The Big Crash

A dark cloud loomed across the nation as the trade deficit continued to widen and there was a rash of investigations into insider trading. On 19 October 1987, jittery investors who were hit by confidence moved en masse out of stocks into safer bonds. Computers automatically cut their traders’ losses by issuing a large number of sell orders. This caused the system to lag, creating mass panic among investors. They reacted by dumping stocks in the darkness before they fell by more.