On the 8th July 1932, the Dow Jones Industrial Average – a key indicator of the value of America’s biggest companies – fell to its lowest point during the Great Depression that began with the Wall Street Crash. From its high of 381.17 on September 3rd 1929, the Dow plummeted by almost 90 per cent to 41.22. The last time it had closed that low was in June 1897.
The spectacular collapse of the Dow reflected the issue at the heart of the Great Depression – the panic selling of US stocks that wiped out private investors and many of the companies they had invested in. This had a knock-on effect outside the stock market, where those very companies were forced to lay off workers. In Cleveland, 50 per cent of the city’s workers were unemployed by the end of 1932. The downward economic spiral was eventually reversed, but the Dow itself didn’t return to its 1929 high point until 1954.
The response of American President Herbert Hoover to the economic crisis was not viewed favourably by ordinary American people. He gave numerous radio speeches in which he attempted to reassure them that things would improve. Although he never actually said, “prosperity is just around the corner” his speeches suggested it. But things continued to decline and shanty towns, known as Hoovervilles, appeared around the country as people moved from place to place in search of work. Protesting war veterans were attacked by the army. And, with promises of a ‘New Deal’ Franklin D Roosevelt went on to defeat Hoover in the 1932 presidential election.