Local banks in U.S crashed
The Start to "The Great Depression"
All Banks in U.S crashed
The New York Stock Exchange, the big, barn-like floor where the pursestrings of the world are pulled, experienced the biggest panic, if not the wildest and most desperate, in the history of the world yesterday.
A record for all time was set when 12,894,650 shares of stock were sold. It was estimated that investors scattered across the face of the globe lost and won about $5,000,000,000. Curb sales totaled more than 6,337,400 shares against the previous top of 3,715,400. The ticker tape recorded the final sale at 7:08 P.M., just four hours and eight minutes behind the actual transaction on the frenzied floor of the exchange.
From a human perspective the crash set some records, too. Finding all telephones to brokerage offices busy, about 10,000 small-time market players, indulging in the new national game, came rushing pell mell to Broad and Wall sts. Police reserves were called out as panting business men and anxious stenographers sought entrance to the visitors' gallery.
The gallery was closed to visitors while the crowd milled about outside. This led to many rumors of panic, wholesale failures and even suicide inside. Scenes of the tragic panic of 1893, of Black Friday during the 1907 panic, and of the dire break of 1927 were recalled.
The man in the Street was not comforted until the "big men" conferred at noon in the squat, snug little rock of granite across the street - J.P. Morgan & Co.
Thomas W. Lamont of the Morgan firm presided there with Charles E. Mitchell, chairman of the board of the National City bank; A. H. Wiggin, chairman of the board of the Chase National bank, and William C. Potter, president of the Guaranty Trust company - the heads of the three biggest banks in the state.
A comforting statement came from the conference. And it was then that the man in the Street realized that all he could lose was his bankroll - that no banks were failing, that there was plenty of money about, that the country and his evening meal were safe.
The realization that the situation was purely a stock debacle brought a reaction. And the stocks began to climb. Cheers and whistling filled the floor of the Exchange after steel turned its downward plunge and began to ascend.
But at noon yesterday the financial community was in pandemonium.
Police reserves were called out to disperse crowds on Wall and Broad sts. and it was not only rumored on the street that the Stock Exchange and other commodity markets were to close, but members of the exchange itself said the market would cease trading at 1:00 o'clock until next Monday .
It was said that the Curb had closed at noon, that the Chicago board of trade had suspended trading, and that security markets all over the world were going to recess in an effort to avert panic.
The exchange didn't close, but so chaotic were conditions on the floor that the board of governors closed the exchange to the public at 1 o'clock and this resulted in reports all through the city that the exchange had suspended trading.
To add to the confusion, newsboys were yelling: "Extra! Panic on Wall Street. Stock exchange closed."
At noon the ticker was more than an hour behind and was valueless as an indicator of what prices were. Since everyone was in the dark all sorts of rumors gained currency.
Prices Crawl Back.
With squads of mounted police pushing crowds away from the Stock Exchange, from the Treasury building and from in front of the office of J.P. Morgan all kinds of wild stories were bandied about.
Cover of the New York Daily News on October 25, 1929.
The noontime conference at the office of J.P. Morgan & Co. was the signal for the abatement of the panic. From then on prices started rising and, while it couldn't be said that there was any sign of worthwhile public buying, still the banking support was sufficient to check the smash.
Lamont's first words were to deny reports that brokerage houses were in difficulty and said that the low quotations of the morning did not fairly represent the situation, because of the numerous air pockets created by sellers who did not find bids to take up their offerings.
He characterized the selling as disturbed and said that the heads of the various banking institutions believed the situation showed more technical weakness than fundamental weakness.
Record Curb Sales.
Traders were only waiting for some reassuring words and immediately prices bounded back. Although at 2 o'clock the ticker was nearly two hours late, within a few minutes the news that the leading bankers were supporting the market spread through the financial district and from then on until the close a moderate improvement was noted.
The ticker was still going four hours after the official closing time of the market, and while rough estimates were that half of the earlier losses had been recouped, the final figures for the day show that at least $3,000,000,000 in market values had been wiped out.
Before noon the blast of selling orders had pared market values by approximately $6,000,000,000.
At 4 o'clock yesterday afternoon partners of more than thirty of the leading wire houses met with Col. J.W. Prentice at Hornblower & Weeks and agreed that all the bad news was over and that from now on stocks were due to go higher.
While stocks were tumbling in the Stock exchange, the Curb experienced a crash of tremendous proportions. With stocks dropping from 40 to 10 points below opening values, there was a turnover during the panicky hours of 6,337,400 shares.
The activity of business on the Curb can best be mirrored in comparing yesterday's sales of 6,337,400 shares with previous high, a trading of 3,715,400 shares in one day's business.
It was at noon when the fury of the break was felt the hardest, and in the afternoon there was a rally, but it was of slight strength. The day's trading was hardly an hour gone when the break was beginning to tell.
Cities Service was in the most spectacular drop on the curb, which plunged from an opening quotation of 55 ¾, dropped to 45 as noon approached. At mid-day, sales of 1,000,000 shares were recorded, and when the day's debacle was ended, there was a record turnover of 1,151,000 shares.
Gas Stocks Suffer.
The tickers were so far behind sales that their usefulness was negligible, and traders depended on board quotations. Outsiders were literally outsiders, for with the ticker crippled they could not trade.
So destructive was the midday crash that the afternoon rally served only as putty in healing the break. Losses continued in the afternoon and ranged from 2 to 10 points on the active issues, while the less active stocks carried along with 30 point drops.
Natural gas stocks, such as Dixie Gas and Utilities, Arkansas Natural Gas, Southern Utilities and Lone Star Gas suffered losses of from 3 to 17 points. These securities have been following the trend main utility markets closely this year.
Nor were investment trusts exceptions to the day's diving antics. Goldman Sachs dropped 15 points to 70; Insull Utility Investment, Middle West Utilities and Southwest Utilities joined the ranks of securities which made record lows for the day.