We have been witnesses to some of the worst stock market crashes ever known. Driven by panic and external economic factors, a stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market. The results are significant losses of paper wealth. Usually occurring after a prolonged period of rising stock prices and excessive economic optimism, these events are almost as old as the stock market itself. In fact, there has been hundreds of stock market crashes over the past decades! Today, we will take a look at some of the worst ones. From the Wall Street Crash of 1929 to the Eurozone Crisis, these are 25 Of The Worst Stock Market Crashes in History.
Panic of 1873
The Panic of 1873 was a financial crisis that triggered a depression in Europe and North America that lasted from 1873 until 1879, and even longer in some countries. In Britain, for example, it started two decades of stagnation known as the “Long Depression” that weakened the country’s economic leadership. The Panic of 1873 was known as the “Great Depression” until the worldwide economic depression in the early 1930s set a new standard.
One of the worst stock market crashes in the history of Brazil, the Encilhamento was a major economic bubble that boomed in the late 1880s and early 1890s. Then Finance Ministers adopted a policy of unrestricted credit for industrial investments, backed by an abundant issuance of money in order to encourage Brazil’s industrialization. This policy of economic incentives created unbridled speculation, increased inflation, and encouraged fraudulent initial public offerings and takeovers.
Panic of 1893
The Panic of 1893 was a serious economic depression in the US that began in 1893 and ended in 1897. The depression deeply affected every sector of the economy and produced political upheaval that led to the 1896 realigning election and the Presidency of William McKinley. As a result of the panic, stock prices declined drastically, 500 banks closed, 15,000 businesses failed, and numerous farms ceased operation. The unemployment rate hit 25% in Pennsylvania, 35% in New York and 43% in Michigan.
Wall Street Crash of 1929
Also known as the Great Crash, the Wall Street Crash of 1929 began on October 24, 1929 and it was the most devastating stock market crash in US history in terms of full extent and duration of its aftereffects. The crash followed the London Stock Exchange’s crash of September 1929 and it contributed to the following 10-year Great Depression that affected all Western industrialized countries. Overall, prosperity and unregulated business had led to a very active and volatile stock market, which – combined with lack of clear banking practices to protect investments – eventually caused the crash.
Recession of 1937 - 1938
Triggered by an economic recession within the Great Depression and doubts about the effectiveness of Franklin D. Roosevelt’s New Deal policy, the Recession of 1937–1938 was an economic downturn that occurred during the Great Depression in the US. During this 13-month economic crisis, industrial production declined by almost 30% and production of durable goods fell even faster. Unemployment jumped from 14.3% in 1937 to 19% in 1938.