1929: The Great Crash Page #4

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became increasingly volatile.

Behind closed doors, President

Hoover's unease was growing.

Herbert Hoover did keep making

enquiries among his Wall Street friends,

asking if he should be concerned,

and he received a memo

from Thomas W Lamont, who was the

senior partner of JP Morgan & Co.

Grandfather said in that letter

that the market will correct itself

and there would not appear to be any need for

any kind of government intervention in the market.

Lamont reassured Hoover that there

was absolutely no cause for concern

and the memo ended with the line,

"The future appears brilliant. "

Five days later,

the Stock Market crashed.

No-one knows what triggered

the sudden loss of confidence

that happened at

the end of Wednesday 23rd October.

But out of nowhere, a sharp fall in automobile

stocks provoked a frantic last hour's trading.

Millions of shares

were suddenly sold.

The next day,

the Great Crash of 1929 began.

October 24th 1929, Black Thursday, is often

considered to be the beginning of the Crash.

There was really a tremendous drop,

which scared a lot of people.

It's impossible to underestimate

the shock.

A sense of stunned disbelief. People panic

as the market just drops and drops and drops.

Desperate for news, thousands

gathered outside the Stock Exchange.

Tremendous crowds standing there very grimly,

staring ahead. Men who had just been wiped out.

City officials are so alarmed by this

that they send 400 mounted police,

fearing that there's going to be a kind of

Bastille-like invasion of the Stock Exchange.

And it's said that there was

a strange murmur in the air,

that there was a very, very strange

kind of haunting sound,

which must have been the cumulative voices

of all of these people sharing their concerns.

The popular reaction is

one of, "This can't be happening. "

A visitor from Britain

was there that day, too.

Winston Churchill had invested much

of his own money in the US Stock Market

and had decided to pay a visit.

I happened to be walking down Wall

Street at the worst moment of the panic,

and a perfect stranger,

who recognised me,

invited me to enter the gallery

of the Stock Exchange.

I expected to see pandemonium, but

the spectacle that met my eyes

was one of surprising calm

and orderliness.

The twelve hundred members

of the Stock Exchange...

were, walking to and fro like a

slow-motion picture of a disturbed

ant-heap, offering each other enormous blocks

of securities at a third of their old prices.

Churchill was to lose

a fortune in the Crash that day.

Outside, the crowds continued to

wait for news.

Rumours were fuelling

the mounting panic.

Once the Crash is under way, the real

question becomes one of confidence.

when you lose all confidence in the

economy good and bad go down together

and so the chief investment elite

is at great pains to try to restore

that confidence,

to convince people that the economy

and the stock market is sound.

The bankers knew they had to do something

to avert a total financial meltdown.

A Times journalist watched

events unfold.

The crowd grew thicker and noisier,

and then there was an eddy in the

middle of it

and a man in shirt-sleeves was pushing his way across

the street in the direction of the Morgan offices.

This was Charles E. Mitchell,

Chairman of the National City Bank.

He pushed his way into

the offices of the house of Morgan

and a little later,

we learned what he'd gone for.

Charles Mitchell had been summoned to

a meeting at the offices of JP Morgan.

Around the table were four other leading

bankers including Richard Whitney...

vice President of the

New York Stock Exchange.

These were some of the wealthiest

businessmen in America,

representing around six billion

dollars in assets.

Chairman was Thomas Lamont.

Oh, I think it was a

great shock to Grandfather.

He did not foresee that anything like the

Great Crash that took place would happen.

Grandfather called a meeting, at his office at 23

Wall Street of some of the leading bankers in town

and figured out what they could do to

support the stock market which was plunging.

What they came up with was a plan to put

together a pool of 250 million dollars.

And those funds would be used

to support a key list of stocks.

At lunchtime, Richard Whitney

marched across the street

back to the

trading floor of the Stock Exchange.

With a huge injection of the

bankers' cash,

Whitney hoped to

get the market moving again.

Whitney parades over to the

desk where US Steel is being sold

and buys 25,000 shares of US steel

at a price

well above what it was then selling

for and then makes...

a similar promenade

to other blue chip stocks

and makes a similar purchase,

the idea being,

"We will now restore everybody's

confidence in the market. "

And other great financial titans of the time

including John D Rockefeller make similar

purchases hoping that this

symbolic act will turn the tide.

And it worked.

Such was the magical power

of the Whitney name and the Morgan name that

stock suddenly turned around and started to go up.

By now, news of the meeting had leaked out,

and journalists were desperate for information.

Grandfather was meeting

with a group of reporters who

were assembled on Wall Street

outside of his bank office.

His style was always

to stay calm and never

say anything that would cause, er, that would

erode peoples' confidence in the Stock Market.

Silver-haired Mr Lamont received

us with a manner so reassuring...

It was like the man who comes on the

stage of a burning theatre and urges

everyone to keep perfectly cool,

stating there is no cause for alarm.

There has been a little distress

selling on the Stock Exchange

and we have held a meeting

to discuss the situation.

We have found that there are no Houses in difficulty

and margins are being maintained satisfactorily.

Grandfather and many others

felt that the worst was over.

But they were very, very wrong.

Over the weekend, the bankers'

intervention seemed to have worked...

trading on Friday and Saturday

was calm and uneventful.

President Hoover also tried to

steady nerves by repeating a mantra

that has been used during market

crashes many times since.

The fundamental business of the

country, that is production and

distribution of commodities,

is on a sound and prosperous basis.

But in the offices of the Financial

District, there was total chaos.

One of the things that we forget

is how primitive the technology was,

so many stocks traded on

October 24th that it took

four hours for the ticker to print all of

the stock trades after the market had closed.

The ticker, hopelessly swamped, fell hours behind

the actual trading and became completely meaningless.

All night long, the lights blazed

in the windows of the tall

office buildings

where margin clerks and bookkeepers

struggled with the desperate task

of trying to clear one day's

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