Monday, Nov. 04, 1929
In Grand Central, Manhattan, Sydney Zollicoffer Mitchell dismounted from the Twentieth
Century with a bad cold, went quickly to his office in the 2 Rector St. building. He telephoned a large Stock Exchange house, said he thought there would be trouble but "just call on me for anything you want." A few hours later stock of his gigantic Electric Bond & Share which had recently reached a high of 189 sold for 91. A few days later, it sold at 50.
John Davison Rockefeller Jr. was in Detroit attending Edison celebrations. It was said that he had been quietly liquidating for some weeks.
E. H. H. Simmons, President of the New York Stock Exchange, was honeymooning in Honolulu.
Arthur Cutten was reported in Atlantic City whither he is wont to go when he desires to be nearer to the corner of Wall and Broad Streets than his own Chicago. Whether or not he, "biggest bull," had been engaged in a month-long duel with Jesse Livermore, famed bear, was not a matter of public knowledge. No one could quite believe that Mr. Livermore was, in storybook fashion, tsar of a band of bears which had fanatically obeyed his orders for two months. But certain it seemed that a colossal effort to reduce the price of stocks had had masterful direction, beginning with the selling of U. S. securities by the French Government and other European investors weeks ago.
Promptly at 10 a. m. on Thursday Oct. 24, sounded the gong of the New York
Stock Exchange and 6,000 shares of Montgomery Ward changed hands at 83—its 1929 high having been 156.
For so many months so many people had saved money and borrowed money and borrowed on their borrowings to possess themselves of the little pieces of paper by virtue of which they became partners in U. S. Industry. Now they were trying to get rid of them even more frantically than they had tried to get them. Stocks bought without reference to their earnings were being sold without reference to their dividends. At around noon there came the no-bid menace. Even in a panic-market, someone must buy the "dumped" shares, but stocks were dropping from 2 to 10 points between sales—losing from 2 to 10 points before a buyer could be found for them. Sound stocks at shrunk prices—and nobody to buy them. It looked as if U. S. Industries' little partners were in a fair way to bankrupt the firm.
Then at 1:30 p. m., a popular broker and huntsman named Richard F. Whitney strode through the mob of desperate traders, made swiftly for Post No. 2 where, under the supervision of specialists like that doughty warrior, General Oliver C. Bridgeman, the stock of the United States Steel
Corp., most pivotal of all U. S. stocks, is traded in. Steel too, had been sinking fast. Having broken down through 200, it was now at 190. If it should sink further, Panic with its most awful leer, might surely take command. Loudly, confidently at Post No. 2, Broker Whitney made known that he offered $205 per share for 25,000 shares of Steel—an order for $5,000,000 worth

of stock at 15 points above the market. Soon tickers were flashing the news: "Steel, 205 bid.''
More and more steel was bought, until 200,000 shares had been purchased against constantly rising quotations. Other buyers bought other pivotal stocks. In an hour General Electric was up
21 points, Montgomery Ward up 23, Radio up 16, A. T. & T. up 22. How far the market would have gone downward on its unchecked momentum is difficult to say. But brokers and traders alike agreed that the man who bid 205 for 25,000 shares of Steel had made himself a hero of a financially historic moment.
That hero, Richard Whitney, head of Richard Whitney & Co., was brother of George Whitney,
Morgan Partner. Back of his action lay a noontime meeting held at No. 23 Wall St., Home of the
House of Morgan. Although an excited Hearst reporter would have it that the Head of the House was present, actually, John Pierpont Morgan was in Europe. It was Partner Thomas W. Lament with whom conferred Charles E. Mitchell, National City Bank; William C. Potter, Guaranty
Trust; Albert H. Wiggin, Chase National Bank; Seward Prosser, Bankers Trust. These men controlled resources of more than $6,000,000,000. They .met briefly; they issued no formal statement. But to newsmen, Mr. Lamont remarked that brokerage houses were in excellent condition, that the liquidation appeared technical rather than fundamental. He also conveyed, without specifically committing himself, the impression that the banks were ready to support the market. And the meeting was hardly over before Hero Whitney had become Heroic.
Traders, talking over the Morgan meeting, failed to remember any previous occasion on which a stock market conference had been called while a trading session was still in progress. They did recall, however, that in 1907, with call money at 125%. Secretary of the Treasury Cortelyou conferred with J. P. Morgan, put $25,000,000 of Government funds into Manhattan banks, halted the Panic. They remembered too the Northern Pacific crash of 1901. when, after Northern Pacific stock had gone overnight from $150 to $1,000 a share, the House of Morgan, representing the late great James J. Hill and the House of Kuhn, Loeb, representing the late great Edward H.
Harriman, compromised at $150 a share, saved from ruin many a short. Then there was the U. S.-
England war scare of 1895 when, with money at 80%, J. P. Morgan offered money at 6%, averted a threatened crash. Thus bankers have for a long time recognized their responsibilities as panic-preventers, and when the glass house of speculation has cracked and splintered, it has most often been the strong House of Morgan that has assumed the responsibility of fame and brought order out of confusion.
Despite the rapid Thursday afternoon recovery, the low point of the swinging pendulum cut off many a speculative head. Roaring was the business done by down, town speakeasies. Wild were the rumors of ruin and suicide. In Manhattan, one Abraham Germansky, realtor, was last seen tearing ticker tape. In Seattle, one Arthur Bathstein, finance company secretary, shot himself.
Estimates of the number of margineers closed out varies from 20% to 70%. During the first three hours of Thursday stock valuations shrank about $11,250,000,000, recovered all but
$3,000,000,000 before trading closed. Brokers met at Hornblower & Weeks, counseled against witless selling, thought the decline had spent itself in a day's volume of trading far exceeding anything ever known. On the Stock Exchange 12,894,650 shares changed hands, besides almost as many more on the curb, "over the counter" and other exchanges in the U. S.

Soundly anti-climactic was the remainder of the trading week. The recovery of Thursday afternoon had brought most of the list back to within a few points of its Thursday opening. In the two final days an unofficial but obviously potent banking pool stood ready to prevent a retreat from becoming a rout, a recession from developing into a panic. In addition to the banks already mentioned, the banking pool was described as including George F. Baker's First National, thus renewing the old Morgan-Baker alliance which once caused J. P. Morgan to remark that the friendship of George F. Baker was the most valuable asset that he or his father had ever known.
Mr. Baker, fast approaching his goth birthday, had known Panic before Morgan Partner Lament was born. Compared to Morgan-Baker efforts of the past, however, the 1929 crisis was notable through the presence of a non-Morgan bank—National City, by far the largest in the U. S.—in a position of vital importance.
Undaunted by pooling bankers, the big and now successful Bears made Monday, Oct. 28, a day of fresh disaster. Over the weekend many an investor had fully realized the necessity for an immediate exit from the market. Thus the session, opening with an accumulation of selling orders, both amateur and professional, was hopeless from the start. By noon more than 3,500,000 shares had been sold in what was obviously a panic-situation. Again bankers met, but issued no statement, hardly retarded the decline. Again Broker Whitney haunted Post No. 2, but at this time U. S. Steel broke through 200, reeled down to a closing figure of 186. All the blue chips of the late bull market were hammered and sliced—the better the stock, the bigger the break. On this day A. T. & T. fell 24 points; Columbia Carbon, 61; Consolidated Gas, 20; Electric Power &
Light, 13; General Electric, 47; Eastman Kodak, 41; Otis Elevator, 60; New York Central, 22;
Montgomery Ward, 15; U. S. Industrial Alcohol, 39; Standard Gas & Electric, 40, etc. etc. etc. ...
In Rio de Janeiro the coffee market already frightened (TIME, Oct. 21), closed altogether. But in
Chicago a bushel of wheat was worth 3 cents more.
By Tuesday morning the suspicion that there might be a panic had turned to the apprehension that there was a panic. With the market failing to show even the usual closing rally, it appeared that Messrs. Lamont, Mitchell and their associates had been content to witness a liquidation that might technically be termed orderly but was certainly extremely depressing.*
Tuesday brought also a quota of cheerful utterances. Said T. B. Macauley, president of the Sun
Life Assurance Company of Canada (one of the largest of institutional stock-buyers) : "The present crisis in the stock market squeezes out inflation caused by speculation, and we have taken opportunity largely to increase our holdings, and we are still buying." Said Chase
National's Albert Wiggin: "None of the corporations or institutions I am connected with is selling stocks at this time. We are buying." President Hoover said that U. S. Industry was on a sound basis. The banking group also met again Monday evening and on Tuesday was again quoted as standing firmly (bulls thought at a safe distance) behind the market.
When Tuesday came, nobody could make any sense of performances on the stock exchange, where the almost incredible number of 16,338,000 shares of U. S. Industry & Commerce were dumped as if they were so much junk. The day's transactions, including odd lots and other exchanges, undoubtedly exceeded 30,000.-ooo shares. Necessity, perhaps, but not Reason ruled.

That nearly every stock was at bargain prices by any modern economic standard was best shown by the fact that very soundest stocks were selling at ten times current earnings and many a stock such as that of the General Motors Corp. reached a point where it was only five or six times current earnings. And General Motors, according to the once unchallenged statement of John J.
Raskob, should sell at 15 times earnings. Quite aside from their relation to earnings many stocks sold at a point where their actual yield in dividends was higher than the yield of bonds. The following were typical of stocks which were purchased at a price to yield in dividends between
8% and 10%: Anaconda Copper, Bethlehem Steel, Chrysler, General Foods, General Motors,
Kennecott Copper, Sinclair Oil.
Such stocks as American Telephone, Baltimore & Ohio, Canadian Pacific, New York Central,
Standard Oil of New Jersey, U. S. Steel, Westinghouse, all sold at some time to yield between
4% and 6%.
Any person who once paid $50,000 for a hundred shares of Auburn Motors would have been lucky to get $15,000 for his stock on October 29th. Goldman-Sachs' famed Blue Ridge investment trust which was to share in the entire sweep of U. S. prosperity was sold at $3 per share. Dozens of stocks of huge companies sold for less than half of what somebody had once said they were worth. So nonsensical did all this seem that some brokers refused to sell out their customers even when technically they might have. But the awful expected began to happen when one brokerage house, John J. Bell & Co., was suspended. What failures loomed, none could say.
Would the nightmare, to many tragically cruel, never end? As shades of Tuesday evening fell, it seemed again that the worst was past. A belated ticker recorded gains in significant stocks. New
York Central was three points above Monday's close. Hysteria, it was hoped, had met its master in the Banking Power of the U. S., which appeared to have bought a good proportion of U. S.
Industry.
-* It was the second time that Mr. Mitchell had arrived in Manhattan on the wings of panic. He took his first Manhattan job (with Trust Co. of
America) just in time to cope with the Panic of 1907. He arrived home from Europe last week, just in time to utter bullish reassurances on the eve of the crash.

Monday, Nov. 18, 1929
Experience, said Oscar Wilde, is the name men give to their mistakes. Although there could be no general agreement as to whether or not the Stockmarket crash of Oct. 23 et seq. was a mistake, last week found most economists and many a businessman looking for the "lesson."
The Bull Market of 1924-29 was sired by the Golden Industrial Age of the corresponding period.
It was easy, after the Market had broken, to denounce speculators as fools and speculation as vicious. Yet a few die-hards (such as Yale's Irving Fisher) maintained, even after the Crash, that quotations had never become so weirdly out of touch with reality as prophets-after-the-event were quick to label them. Given a profound conviction that the future of U. S. industry was boundless, that there was no limit to the potential value of U. S. securities, where could the line be drawn between farsightedness and folly? Speculation is the shadow of industry thrown forward on the wall of the future. It had been thrown a long way forward during the late Bull
Market, its size swollen, its perspective distorted. But though it was a magnified picture, it was not an imaginary picture. Behind the shadow of Speculation there was still the substance of
Prosperity.
October 23. Why then, did a Market which had broken on Oct. 23 demonstrate with a continued crash on Oct. 24 that the end of the Great Bull Market had really arrived? Professor Fisher may stand a discredited prophet, yet apt appeared his analogy between the break on the market and a run on a bank. The Bank was U. S. Industry. Assets of the bank were the real assets of U. S.
Industry. Stocks were the paper money which the bank had issued. Now all banks, even the
Federal Reserve System, issue more money in paper than they have gold in their vaults. Every bank would be broken if all its depositors simultaneously attempted to exchange paper for gold.
And, unhappily, the Industrial Bank had held itself to no fair ratio between cash and paper.
Auburn at 514—Johns Manville at 242— Radio at 114—here were bank-branches with a topheavy proportion of notes to cash. Even the biggest and most secure branches, such as
General Electric, American Telephone &Telegraph, United States Steel, constituted inflated currency when their securities stood at 403, 310 and 261 respectively. So long as the depositors did not begin to brood over this inflation, no harm was done. But so soon as the lines started forming at the paying teller's window, the Crash was inevitably swift.
Oct. 23-Nov. 12. Why the crash came on Oct. 23, 1929, is as mysterious (and as unimportant) as why the World War chanced to begin on Aug. 4, 1914. If some trace the War no further than to an archducal assassination, then others might trace the Crash to a variety of such moments as that when Goldman Sachs terminated the syndicate on their Blue Ridge investment trust. Vital point is the undermining of popular confidence that ended in the crash.
Causes of this undermining were: 1) Warnings from the Federal Reserve Board and other prophets of disaster—warnings which, scoffed at when given, nevertheless filled the Market with a conviction of sin. 2) A period of almost two months (since the Babson Break early in
September) in which it had taken strychnine-injections to push quotations ahead. The September

slump (currently almost ignored in favor of the peculiar theory that the Market crashed without warning) was of tremendous importance in its indication that a Market which could survive only by constant rises had reached the limits of its climb. 3) Most important of all, indications of a slowing tempo in U. S. industry. The motor stocks, for example, had long since fallen from their
January highs—a forecast of slackening production in the latter portion of the year. Now steel mills were no longer running at 97% and 98% of capacity. Slowly the Market began to realize that 1929 might be an abnormal year, a high-water year instead of one more level in a still-rising tide. If this fear were well founded, what then of 1930, or 1931, of even more distant times, the anticipated prosperity of which had been already discounted? The Market had mortgaged itself with the future as its security. If that future did not continue rosy, the security had disappeared.
Economics. Apart from the "causes" of the break, many an economic point was made apropos the break. Three widely discussed points were:
1) That corporations which had loaned money "on call" to speculators had contributed more than any other group to an unsound financial situation because many a corporation promptly called in its loan at the first sign of trouble. Five directors of one corporation threatened to resign last week if their company should call its loan. These directors took the honorable position that having once loaned its money to the stockmarket, the corporation should stand by the market so long as its loan was adequately protected by collateral.
2) That speculation had been encouraged by the over-conservative financial reports of corporations. There have always been dishonest concerns which rig their books to show $1 per share profit when actually there was no profit. But suppose an ultra-conservative concern, by scaling its assets to minimum and carrying the liabilities at maximum, shows $1 per share profit when someone else thinks they might presumably have shown $2 per share profit; then the incentive to imagination and hence speculation is great and obvious.
3) That widespread distributions of stock to employes have made hundreds of thousands unduly
"stock-conscious."
Results. As to "results" of the break, the most important question could not be answered, i. e.: to what extent would the Bear psychology of the market spread to business generally? Through last week, optimism was certainly more pronounced than pessimism. Stock brokers were far more pessimistic than businessmen. Being, especially in the lower ranks, a provincially Manhattan lot, they seemed to think the Stockmarket would be disgraced if Business did not humbly follow its lead. Outside of lower Manhattan, Detroit was the gloomiest spot, the depths being reached by the jocular motor executive who seemed to feel that never again would any U. S. citizen be able to buy anything except a Ford. Following are three typical "results" variously predicted:
1) That Prosperity would increase because many persons would hereafter do more work and less gambling. Every large organization has contained at least one executive who paid more attention to the Market than to the work for which stock-holders presumably paid him. And thousands of independent little store owners and such have neglected their business with the result that they have sold less of the products of Big Business than they might have.

2) That funds hitherto concentrated in the Stockmarket would go into more legitimate fields
(some realtors appeared to think that the public was going to build houses with the money it had lost in the market). Certainly there was much talk of a revival of interest in bonds, which have recently been spurned even by widows and orphans.
3) That the constructive wizardry of Herbert Hoover ("great engineering works") might soon be exhibited to a waiting and ready people.