October 29, 1929:
Black Tuesday
October 29, 1929:
Black Tuesday
Men during the Great Depression wait to enter the Keystone Pittsburgh Mission, Grant Street and Second Avenue Downtown, for a free meal. (Post-Gazette archives)
The worst U.S. stock market crash on record turns 90
October 27, 2019

As stock prices on Wall Street fell in a dizzying downward spiral, a cashier at the Peoples State Bank of McKees Rocks quietly checked into a room at the Roosevelt Hotel on Penn Avenue.

He had gambled in the market with $60,000 — $900,908 in 2019 dollars — embezzled from the bank, the Pittsburgh Sun Telegraph reported. Stocks were plummeting and he could no longer meet the margin calls on his losing positions. In desperation, he swallowed what he thought was a fatal dose of morphine, according to the front page article in the newspaper’s Oct. 30, 1929, edition.

A 1936 view of Sixth Street shows the Roosevelt Hotel on the left. (University of Pittsburgh contribution to Historic Pittsburgh)
The front page of the Pittsburgh Sun-Telegraph on Oct. 30, 1929, the day after the stock market crash, told the story of the guilt-ridden bank cashier. (Post-Gazette archives)

It was the Roaring Twenties, the age of boundless economic prosperity. Stock prices were going nowhere but up and many people had become comfortable buying shares on credit. But a massive selloff began Oct. 24, 1929. Over six gut-wrenching days, fortunes were lost and lives ruined when shares crashed by a third on the New York Stock Exchange.

This week marks the 90-year anniversary of that catastrophic Wall Street event.

“The collapse was far beyond the stock exchange. It was like dominoes toppling across the entire economy,” said Jim Meredith, executive vice president at the Hefren-Tillotson wealth management firm, Downtown. Eventually, he said, thousands of banks across the nation also would fail, taking people’s savings along with them.

In hindsight, there were signs the booming economy that preceded the crash was unsustainable.

A Pittsburgh-area steel mill going full blast circa 1919. (Carnegie Museum of Art contribution to Historic Pittsburgh)

“We were oversupplying goods and services to an economy that had been overheated and where demand was softening. Yet we didn’t know it,” said Robert Fragasso, CEO of Fragasso Financial Advisors, Downtown. “As an agricultural and industrial economy, we were heavily dependent on bank financing.

“We were oversupplying everything because things were booming, and so people were just making more. And then they started to compete on price,” he said.

“What happens when you compress margins is you don’t have profits. So, the price of stocks had to collapse eventually because of this oversupply,” Mr. Fragasso said.


Pittsburgh's stock exchange
Pittsburgh's stock exchange
The Pittsburgh Stock Exchange in 1947. (Heinz History Center contribution to Historic Pittsburgh)

By the last day of the stock market crash — Oct. 29, 1929 — the Dow Jones Industrial Average had tumbled 25% and investors had lost $30 billion (about $445 billion in 2019 dollars) on the New York Stock Exchange.

That was 10 times more than the 1929 federal budget and about as much as the U.S. spent on World War I.

While New York had its stock exchanges — the New York Stock Exchange and the American Stock Exchange — several major cities, including Pittsburgh, had their own smaller exchanges where shares of local companies changed hands.

The Pittsburgh Stock Exchange on Fourth Avenue was where stocks and bonds — primarily from local banks and industrial corporations and businesses — were traded.

Pittsburgh’s exchange shut down in 1974, but from the time of its opening in 1894, it had been a vehicle for businesses in the region to raise capital and to overcome communication problems that limited Pittsburghers’ ability to trade on the New York exchanges.

Local companies such as U.S. Steel, Koppers Gas, Pittsburgh Screw and Bolt, and Allegheny Steel were actively traded on the Pittsburgh exchange.

During the 1929 crash, heavy selling on Wall Street also forced Pittsburgh shares down. According to the Oct. 30, 1929, edition of the Pittsburgh Press, Lone Star Gas opened at $39 a share, two points lower than the day before, and fell to about $28.

A recap of the Pittsburgh Stock Exchange 1926 stock performances, published Jan. 3, 1927. (Post-Gazette archives)

Not all stocks were losers. Petroleum Exploration was among the few to show a gain, up half a point. But overall, it was a bloodbath.

“The busiest days of the Pittsburgh Stock Exchange were in the 1920s. It never got back to its pre-crash levels after 1929,” said Matt Strauss, chief archivist at the Sen. John Heinz History Center in the Strip District.

The market crash would be a reference point over the next decade as Congress created financial oversight agencies such as the FDIC and the Securities and Exchange Commission.

Federal lawmakers also established social safety nets such as the Social Security Administration and other regulations to try to prevent another crash and that social services — such as unemployment insurance — would be available to help.

The crash would change how many people viewed investing in stocks and banks for decades to come, even after the economy picked up speed to support demand for products as the U.S. entered World War II.

But that would be later. As stock prices slumped on Wall Street, people were getting the news by telephone, telegraph and word of mouth that they’d lost money.



Pittsburgh tragedies
Pittsburgh tragedies
Ditch digger Mike McLaughlin, 42, drowned himself in the Monongahela River in July 1931 when he couldn't find work, leaving a widow, Mary, and nine children, some of whom are pictured above. They are, from left, Colman, 16, Agnes, 2, Mrs. McLaughlin holding baby John, 6 months, Winifred, 4, and Catherine, 6. The children had no shoes, and there was no food in the house. The survivors faced a future in the "orphans' home and still greater poverty." (Post-Gazette archives)

In Pittsburgh, stories of personal tragedy continued making headlines in the months after the crash.

In Uniontown, a millionaire banker crazed by fears of poverty, fatally shot his three daughters and himself in their home, according to the Pittsburgh Press.

The 64-year-old banker had lost several hundred thousand dollars in the market crash and told business associates he feared his family would end up in the poor house. He shot the girls — ages 13, 10 and 9 — in their sleep. He also shot his 45-year-old wife, who survived.

A Uniontown banker shot and killed his three children, critically wounded his wife and killed himself over fears of losing all his money, as related in this front page Nov. 13, 1930, news story. (Post-Gazette archive)

Meanwhile, in New York, the enormous toll of human misery became part of the national folklore.

“The tragic story of Tuesday, Oct. 29, 1929, will not be written until the record is compiled of homes which must be mortgaged, lifetime savings which have vanished and the thousands of men and women who had retired after years of toil and saving go out seeking employment to sustain them for their remaining years which they thought had been taken care of by investments considered prudent,” the New York Daily News stated on Oct. 30.

Other crashes have occurred since then. There was Black Monday in 1987; the bursting of the DotCom Bubble in 2001 and 2002; and most recently the 2008 financial crisis.

But the crash of 1929 remains the most devastating in U.S financial history.

The damage was more severe because not only had individual investors put their money into stocks, so did businesses. Consumers who thought their money was safe in banks lost out when banks that had invested the money didn’t have enough reserves to repay it.

Banks as well as people invested in the stock market. When the market crashed, the banks did not have the funds to cover their losses. When customers wanted to withdraw the money in their accounts, the banks ran out of money and had to close their doors, temporarily or permanently. The Bank of Pittsburgh exemplified the problem, as shown in this Sept. 21, 1931, headline in The Pittsburgh Press. (Post-Gazette archive)

While the market crash was not the sole cause of the Great Depression — a massive economic downturn that followed and lasted until the late 1930s — it definitely contributed.

“Pittsburgh was hurt badly by the Great Depression. But you can’t blame the Depression entirely on the stock market crash,” said Edward Muller, an emeritus professor in the history department at the University of Pittsburgh. “Some say the crash caused it, but most economists say the fundamentals were already in terrible shape.

“We put on terribly high tariffs and the stock market numbers were rising beyond the fundamentals to support it, just like today,” he said. “Pittsburgh was particularly hard hit because the market for steel for bridges and automobiles collapsed.”



Bread lines appear in Pittsburgh
Bread lines appear in Pittsburgh
A 1930 bread line in Pittsburgh. (University of Pittsburgh contribution to Historic Pittsburgh)

Initially, it seemed Pittsburgh’s economy had escaped the worst.

The Wall Street turmoil barely received a mention in the Oct. 30, 1929, edition of the Pittsburgh Press, although the newspaper reported several local stocks traded on the Pittsburgh Stock Exchange had fallen in value — likely due to “the continued drive in New York.”

Newspaper clippings a month afterward remained upbeat. An editorial by Pittsburgh Post-Gazette publisher Paul Block noted that mainly the rich were hurt by the Wall Street crash.

Headlines in November and December 1929 proclaimed the second year of a welfare drive being a success; local banks declaring huge dividends; and, one week before Christmas, Pittsburgh shoppers spending a record-breaking $1 million in a day.

In October 1929 just before and just after the market crash, Pittsburgh was optimistically aglow in a national celebration of the 50th anniversary of the electric light's invention. City officials wanted to leave the lights up for Christmas, but it is unclear whether that took place. (Post-Gazette archive)

“News about the stock market crash wasn’t really relevant to the Pittsburgh community,” said Paul Brahim, CEO of BPU Investment Management, Downtown. “Think about how we made our money in Pittsburgh in 1929. The vast majority of people didn’t have stocks. It’s not like it is today.

“My grandfather worked at the mill,” he said. “So did everybody else’s grandfather. And then their kids worked at Westinghouse. We were principally a blue-collar town. 401(k)s didn’t exist. We weren’t investing in stocks. That was more for the elite folks.”

But the crash ended up hitting blue collar agricultural and industrial workers.

Those industries were heavily dependent on bank financing. The crash had crippled many banks because they financed a lot of the market action. After the crash, banks had to withhold credit from all but the most creditworthy businesses.

“Businesses that couldn’t get credit had to either cut back production or shut down, which in both cases necessitated layoffs,” Mr. Fragasso said. “There was no unemployment compensation, which made people destitute. This led to the iconic apple sellers on the corner.”

By March 1930, the Pittsburgh newspapers were singing a very different tune.

Homeless, unemployed men cook a meal over an improvised stove. (Post-Gazette archives)
Father James Renshaw Cox, pastor of Old St. Patrick's Church, stands in front of his "mayor's office" at the Strip District shantytown. The makeshift camp of about 200 men stood on Liberty Avenue between 16th and 17th streets, with shacks made of cardboard, tin and discarded lumber. Father Cox fought for the unemployed during the Depression. (Post-Gazette archives)

Violence broke out at a parade in Downtown Pittsburgh after 5,000 hunger strikers appeared on the scene. Hundreds of unemployed people were sleeping in city parks.

Bread lines appeared and several newspapers reported people stealing food to survive. A starving 28-year-old man died after stealing dough from a bakery and eating it. Authorities said the dough in his stomach raised and pressed against his heart.

The Pittsburgh Post-Gazette reported in April 1930 that a soup kitchen at Grant Street and the Boulevard of the Allies was feeding 2,000 men a day. One man fainted from hunger while standing in line. A 52-year-old man was jailed for getting food from a bread line while he had $2,500 in the bank.

Men eat their free meal of vegetable soup flavored with fish and a third of a loaf of bread at the Keystone Pittsburgh Mission soup kitchen. (Post-Gazette archive)

The McKees Rocks bank cashier who drank morphine at the Roosevelt Hotel as the market was crashing did not die. Police said he either didn’t make the potion strong enough or he didn’t drink enough of it.

He was sentenced in May 1930 to serve three to six years in the city’s workhouse after pleading guilty to two charges of forgery and one of making a false statement to the state banking department. The theft was ultimately determined to be $50,000.

The sentence was deferred after it was brought out that none of the depositors had lost money and that only a possible loss may had been suffered by the stockholders of the bank, which had been taken over by the McKees Rocks Trust Co.

Tim Grant: tgrant@post-gazette.com or 412-263-1591. Laura Malt Schneiderman contributed: lschneiderman@post-gazette.com.