[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.
My father was born on this day. From what he tells me, it was an interesting time to say the least. His father was an active trader, and apparently even the birth of his first son was not enough to pull him away completely from the unfolding drama on the stock exchange floor.
ReplyDeleteThe story had a happy ending for him, although his business partner was a bigger risk taker than he was, and was forced into bankruptcy after his highly leveraged futures blew up.
Philippa -
ReplyDeleteWow, what a day to be born! He must have some interesting stories. Did your grandfather get through the 1930's without difficulty or did he have some tough periods?
Isaac
I don't recall any stories of them suffering any hardships, though my grandfather was very frugal all his life (my grandmother not as much so, and she lived it up after he died). Even years after the Depression he never owned a car, and always walked so he could save the busfare. He never understood why people went to a cafe for a cup of coffee since it was much cheaper to brew your own. My dad said it was totally unheard of while growing up for their family to go to a restaurant for a meal.
ReplyDeletePhilippa -
ReplyDeleteYes, I know that frugality well - I don't think my father has ever used a teabag less than twice. Do you know if your grandfather was able to continue trading actively through the 1930's?
Isaac
I believe he did, though I don't know too many details. I have no idea how frequent the trades were. At one stage they lived in a fairly rural area in Holland and I know he also used to buy and sell what they called "fruit off the trees" - essentially calls on the cherry harvest. I also have no idea what he did during the war years.
ReplyDeleteHe would be terrible to be around on days when his trades went against him. On good days he would never celebrate, saying instead that he needed to put money away to compensate for the losses.
By the sixties he and my grandmother were sufficiently wealthy to move to Switzerland, where they built a beautiful house - I'm sure it's worth a fortune now, though they both passed on a long time ago.
The frugality movement is very popular right now, but my sense is the motivation is different than it used to be: it's either borne out of unconsumerism or necessity. The concept of frugality for the sake of saving for retirement is not something many people talk about. I guess in the backs of our minds we (as a society at least - I am personally under no illusions) still believe pensions will be there to take care of us in our old age. In spite of the current recession, consumer pressures are still stronger than perceived retirement needs. At least, that's how it seems to me.
Hi Philippa -
ReplyDeleteVery interesting, thanks! I guess Holland has a very long tradition of trading indeed. You may be right about the current frugality movement - I think it often takes a really long and painful experience to permanently change most people's behavior.
Isaac