History
The term “Black Friday” is commonly associated with the shopping event that occurs on the day after Thanksgiving in the United States, but it has been used to describe a number of significant events throughout history. Two of the most well-known events associated with the term are the financial crises that occurred in 1869 and 1929.
The Black Friday of 1869 was caused by a drop in the price of gold, while the Black Friday of 1929 was caused by the stock market crash that led to the Great Depression. Both events had a significant impact on the economy and continue to be studied by historians and economists to this day.
Definition
However, the modern definition of Black Friday, is related to the shopping extravaganza that happens the day after Thanksgiving. The term “Black Friday” was used in the 1960s in Philadelphia to describe the heavy and disruptive pedestrian and vehicle traffic that would occur on the day after Thanksgiving.
It wasn’t until the 1980s that the term became widely used to describe the retail sales event that we know today.
What events caused both Black Fridays
Black Friday in 1869 was caused by a sharp drop in the price of gold. At the time, gold was the basis for the U.S. currency, and a sudden drop in its value led to panic on Wall Street. The crisis led to the bankruptcy of several firms and the failure of many banks.
Sometimes the event is referred to as the Fisk-Gould Scandal, after the two financiers who were implicated in the crisis.
On the other hand, the Black Friday of 1929, was caused by the stock market crash on October 29 of that year. The crash was triggered by a combination of factors, including over-speculation, an economic boom that had peaked, and a lack of government regulation.
Ultimately, the crash led to a decade-long economic depression known as the Great Depression, which had a profound impact on the U.S. and global economies.
Black Friday 1869 vs 1929
Aspect | Black Friday 1869 | Black Friday 1929 |
---|---|---|
Date | September 24, 1869 | October 29, 1929 |
Cause | Gold price crash | Stock market crash |
Location | New York City | New York City |
Result | Panic on Wall Street, leading to economic fallout | Stock market crash that led to the Great Depression |
Impact on Businesses | Many businesses failed, especially in the railroad industry | Many businesses failed, leading to high unemployment rates |
Government Response | The government did not intervene | The government implemented policies to try to address the economic crisis |
Length of Crisis | The crisis lasted several years | The crisis lasted throughout the 1930s |
Facts
1869
• Crisis led to a significant increase in unemployment and caused widespread financial hardship.
• Was one of the earliest financial panics in U.S. history, and it led to calls for increased government regulation of the financial industry.
• Some individuals who lost their life savings in the crisis committed suicide, while others turned to crime in order to make ends meet.
• Crisis contributed to a decline in public trust in the financial industry, and it took several years for the economy to fully recover.
•Event is considered a turning point in the history of U.S. finance, and it led to increased scrutiny of financial markets and increased regulation by the U.S. government.
1929
• Stock market crash of 1929 led to a significant increase in unemployment and caused widespread financial hardship.
• Great Depression followed the crash led to a significant increase in suicides and mental health issues, as people struggled to cope with the economic fallout.
• Led to the implementation of new government regulations, including the creation of the Securities and Exchange Commission (SEC) to regulate the stock market and protect investors from fraud.
• Government also implemented policies aimed at stimulating the economy, including the New Deal programs launched by President Franklin D. Roosevelt.
• Had a profound impact on the U.S. and global economies, and it contributed to a shift in public opinion in favor of increased government involvement in the economy.
What ended the Great depression?
1. World War II: Massive spending on military equipment and supplies during WWII aided in job creation and economic growth. This spending created a huge demand for goods and services, which aided in the recovery of many countries.
2. Deal policies: President Franklin D. Roosevelt’s New Deal policies, which included government spending on infrastructure projects, social welfare programs, and financial regulations, aided in the stabilization of the economy and the restoration of confidence in the banking system.
3. Monetary policy: To stimulate economic growth, central banks in many countries, including the United States, implemented expansionary monetary policies such as lowering interest rates and increasing the money supply.
4. Technological advances: The development of new technologies, such as the automobile and radio, aided in the creation of new industries and jobs, thereby stimulating economic growth.
What caused the modern Black Friday shopping event?
The modern Black Friday shopping event as we know it today began in the 1950s in the United States.
Retailers saw an opportunity to jumpstart the holiday shopping season by offering deep discounts on products to attract customers. This strategy worked, and Black Friday has become one of the biggest shopping days of the year.
During Black Friday, retailers offer massive discounts on popular products, leading to long lines and chaotic scenes in stores.
In recent years, retailers have extended the event to include online sales, leading to Cyber Monday becoming another major shopping event.
What is the Black Friday trend?
1. Social Media: During the Black Friday season, many retailers use social media platforms such as Twitter and Instagram to promote their sales and engage with customers. As retailers try to reach younger, more digitally savvy consumers, influencer marketing and user-generated content have risen in popularity.
2. Changing Consumer Behavior: Finally, changing consumer behavior has transformed Black Friday in American households. Many people are now more interested in experiences and environmentally friendly products than in purchasing as many items as possible at the lowest possible price.
As a result, alternative shopping events such as Small Business Saturday and Giving Tuesday have grown in popularity, as has a greater emphasis on ethical and sustainable consumption.
3. Online Shopping: In recent years, more and more people have opted to shop for Black Friday deals online rather than brave the crowded stores.
As a result, retailers’ approaches to Black Friday have shifted, with many offering online-only deals and extending their sales over several days or even weeks.
4. Earlier Start Times: While Black Friday used to begin early on Friday morning, many retailers have recently begun opening their doors on Thanksgiving Day itself, sometimes as early as the afternoon or evening.
This has sparked debates about the holiday’s commercialization and its impact on retail workers and their families.
Black Friday vs Cyber Monday
Black Friday | Cyber Monday | |
---|---|---|
Definition | Traditional in-store shopping event on the Friday after Thanksgiving | Online shopping event on the Monday after Thanksgiving |
Origin | Started in the US in the 1950s | Started in the US in 2005 |
Date | Fourth Friday in November | First Monday after Thanksgiving |
Focus | In-store sales | Online sales |
Products | In-store discounts on a wide range of products, including electronics, appliances, clothing, and more | Online discounts on a wide range of products, including electronics, appliances, clothing, and more |
Sales Channels | In-store and online | Online only |
Discounts | Deep discounts, doorbusters, and limited-time offers | Online-only deals, free shipping, and exclusive offers |
Consumer Behavior | Crowded stores, long lines, and early morning shopping | Online shopping, price comparisons, and mobile purchases |
Advantages | In-store experience, ability to see, touch and try products, and same-day pickup | Convenience, larger product selection, and exclusive online deals |
Disadvantages | Crowded stores, long lines, and limited product availability | Limited in-store discounts and shipping time |
What regulatories help to prevent future stock market crashes?
1. Securities Act of 1933: This law required corporations to disclose critical financial information to investors before they purchased stock in the corporation. The goal was to aid increasing stock market transparency and lowering the risk of fraud.
2. Securities Exchange Act of 1934: In 1934, this law established the Securities and Exchange Commission (SEC), which is responsible for stock market regulation and enforcement of securities laws.
The Securities and Exchange Commission (SEC) has the authority to investigate and prosecute companies that violate securities laws.
3. Glass-Steagall Act: Enacted in 1933, this law separated commercial banking from investment banking. This reduced the likelihood of banks engaging in speculative investments that could lead to financial crises.
4. Wall Street Reform and Consumer Protection Act of 2010: The relatively new 2010 law increased financial industry regulation and established new agencies to oversee financial markets.
It also included provisions to protect consumers from predatory lending and other forms of abuse.
Corona crisis vs 1929 and following depression
Current crises, such as the COVID-19 pandemic and the resulting economic downturn, are not directly comparable to the events that precipitated the Great Depression in 1929.
The two crises had very different causes and circumstances, and the policies and institutions in place today to manage financial and economic risks are far more advanced than they were in the 1920s.
However, both the Great Depression and the current crises have had significant economic consequences for individuals and communities. The Great Depression was marked by high levels of unemployment, poverty, and social unrest, and full recovery took many years and significant government intervention.
Similarly, the COVID-19 pandemic has caused widespread economic disruption and hardship, especially among vulnerable populations like low-income workers and small businesses.