FALL IN THE STOCK MARKET

CAMILO STEVEN BALLESTEROS MOLANO

MACROECONOMIA

UNIPILOTO

2022
 FALL IN THE STOCK MARKET

By: EDITORIAL EL TIEMPO September 3, 1991, 12:00 a.m. m.

That day, the 24th, the New York stock market crash marked the beginning of the Great World
Depression, whose epilogue would be World War II.

The previous Tuesday and Wednesday, the stock market had a weak behavior. When operations
opened on Thursday morning, a strange phenomenon, which could not be controlled, dumped an
excessive supply of shares on the boards that depressed prices in a matter of hours. Everyone
wanted to sell, and stocks changed hands with dizzying speed, but always falling.

In just 24 hours, 19 million shares that were launched on the Wall Street market collapsed by
more than thirty percent and caused the ruin of thousands of shareholders.

The fluctuations caused everything from investor suicides, which resulted in total bankruptcy
overnight, to the intervention of US President Herbert Hoover with the purpose of restoring
confidence in the financial market. However this Thursday only marked the beginning. The crisis
continued to affect all strata of social life in the United States until reaching its most critical point
on July 8, 1932, when a quarter of the country's workforce was unemployed and millions of
Americans had lost their savings trying to making quick profits through financial speculation.

In three years, six thousand banks had gone bankrupt, that is, 50 percent of the existing ones
when the crisis began that October.

By extension, the world economy was affected so dramatically that international trade fell by 70
percent three years later.

The unemployed, who in 1929 numbered 2 million, in 1932 reached a figure close to 14 million.

In contrast to the euphoric symbols of the Roaring Twenties, the 1930s retain all of its Depression-
associated imagery: Unemployment. Rationing. Confidence crisis. peasant migration. Paralysis in
international trade. Crisis of the rigidity of the gold standard. strikes. Bankruptcies. Hunger.
Devaluation. Galloping inflation. Economic contraction. Social agitation. Protectionism. Socialism.
National Socialism. Fascism. War.

In Colombia the crisis was anticipated. In 1923, due to the resounding bankruptcy of Banco López,
the Kemmerer Mission created the Banco de la República and the Banking Superintendency, and a
year before the bankruptcy of the New York Stock Exchange, the Bogotá Stock Exchange was
founded.

Due to the isolation of the country and its anemic international trade, the crisis did not hit the
Colombian economy so hard, but its consequences were gradually felt during the Colombian-
Peruvian conflict of 1932.

Finally, this time of depression only favored the liberals, because its consequences on
unemployment, the restriction of public investment and the inability to import goods, ended up
discrediting the unruly conservative regime of Miguel Abadía Méndez. And with the victory of the
liberal Enrique Olaya Herrera, in 1930, the 44 years of conservative hegemony ended.