How myths of time have distorted the Crash of ’29

Yet few historical events are as misunderstood as the Crash of '29 — for, contrary to myth, it probably did not cause the Great Depression at all.

The Roaring Twenties seemed a golden age for the American people, boom years of jazz, baseball and Hollywood talkies, underpinned by a stock market that soared fivefold between 1924 and 1929. But as the market reached its peak, doubts began to set in. And on 24 October, "Black Thursday", a record 13 million shares changed hands — a sign that many investors wanted out.

Although bankers tried to halt the slide, it was too late. The following Monday, the stock market plunged by a record 13 per cent. And on "Black Tuesday", as investors dumped an unprecedented 16 million shares, billions of dollars were wiped off stock values.

The wealthy Rockefeller family tried to restore confidence but it was no good: so many people rushed to sell that the "ticker" kept running long into the evening, after most had already gone home.

Yet most of the myths of the Crash are completely untrue. Grief-crazed stockbrokers did not hurl themselves from Wall Street windows, and many people thought the Crash was a good thing. The great British economist John Maynard Keynes welcomed a "healthy" return to more sensible values, while the New York Times greeted the end of "an orgy of reckless speculation". And at the end of 1929, the same paper declared that the big story of the year had been the first American trip to the South Pole, not the Crash at all.

Meanwhile, the stock market was gradually reviving. By 1930, many stocks had recovered much of their value. In any case, only two in 100 Americans owned any shares at all. "In small towns out West, we didn't know there was a crash," said one farmer. "What did the stock market mean to us? Not a dang thing."

The truth is that the Wall Street Crash was an early symptom, not a cause, of the Great Depression. And the Depression did not really get underway until 1931, when a rash of banking failures sent the economy into recession.

Its real causes were much more complicated, including high trade tariffs, excessive international debt and the blunders of the Federal Reserve, which allowed the money supply to dwindle dangerously low.

All the same, the Depression was one of the 20th-century's seismic events, plunging the world into chaos and propelling Hitler into power. Bankers and regulators are now promising that it could never happen again, and the US government has already propped up some beleaguered banks. We can only hope they get it right this time.