As I’ve noted here earlier, the blog newsfrom1930 performs a very valuable “reality check” for today by each day publishing a summary of the Wall Street Journal from the same day in 1930. The overwhelming flavour of reports from that time is that the Depression was over and recovery was imminent. Plus la change…
This week it’s offering another service–publishing summaries of news reports from one year earlier: 1929. The reason, of course, is that we are approaching the 80th anniversary of “Black Tuesday”: the day in 1929 when the Dow Jones fell for more than 10 percent for a second day in a row, bringing to an emphatic end the bull market of 1929 and ushering in the Great Depression.
Newsfrom1930’s coverage began on October 24th, since the market’s serious fall really began the day before with a 6.3% drop (which was duly reported in the next day’s Wall Street Journal).
The entire blog post on October 24th 1929 is reproduced below, but I do recommend reading it in the original as well:
Thursday, October 24, 1929: Dow 305.85 ‑20.66 (6.3%)
[Note: Your regularly scheduled 1930 news will be along later in the day, but first a commemorative special. This day in 1929 was roughly the start of what’s known as the Great Crash, which lasted about a week. I’m going to give a quick summary for each day, to give an idea of how it played out. As with the 1930 news, the summary is from the WSJ on each day in 1929, so it describes the action from the previous day. So the following describes Wednesday, Oct. 23 — note this is not one of the legendary “Black” days yet.]
Market wrap: Bears resumed aggressive operations, “combed the list during the morning for issues in a weakened state,” attacking Bethlehem Steel, Hahn Dept. Stores, Hayes Body, and others. Selling spread to the main trading stocks in the noon hour, picking up momentum on increasing volume as the afternoon progressed; many stop-loss orders hit; leaders including Radio, US Steel, GE, and Westinghouse broke sharply. “Selling took on a panicky character” in the final hour; “pandemonium reigned around the posts at which active stocks were traded”; 2.6M shares were traded in the final 50 minutes, or about 40% of the total day’s volume of 6.4M; the tape ran almost 2 hours behind and price breaks were exceptionally wide.
Prof. I. Fisher of Yale Univ. defends stock market rise of 100% since 1923, says based on increasing prosperity due to many factors, including more stable money, new scientific management, new inventions, Prohibition [Note: huh???]; believes public speculative mania is least important factor in the rise. Concludes by criticizing capital gains tax.
Bond market has been rallying as stocks decline recently.
Some commodity prices: Wheat over $1.25, corn over $0.90, cotton 19 cents, copper 18 cents.
Rail freight loadings for the week ended Oct. 12 were down 11,121, or about 1%, from 1928, vs. 7,985 decline prev. week.
Steel trade reviews report decline in production appears to have hit bottom, with all departments except automotive active.
Senate refuses to classify avocado as pear for tariff purposes.
Somewhat later in history, another important event occurred–the election of Franklin D Roosevelt as US President, and the beginning of the New Deal policies in 1933. I was reminded of this by a quote on program outline for the Green New Deal conference that I attended yesterday. Normally we only see the “the only thing we have to fear is fear itself” quote, but that program excerpted a rather more relevant observation of Roosevelt’s on what had caused the Great Depression:
Yet our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered because they believed and were not afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.
True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.
The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.
It’s a great speech, and I recommend reading it in its entirety. We’re also very fortunate to have ready access these days to original documents like this via the Internet.
