One year ago today:
[Note: Continuing the recap of the 1929 Great Crash - the following describes Oct. 28, subsequently known as Black Monday.]
Market wrap: Monday's session repeated Thursday's drastic declines “on a slightly more orderly scale.” Selling orders had flooded in from every section of the country over the weekend; large blocks of the leading stocks were thrown on the market early and liquidation proceeded steadily through the morning, with the whole market severely pressured. Traders were rattled when one after another of the leaders broke through Thursday's resistance levels. A major battle was waged around US Steel's Thursday low of 193 1/2, with the bears finally forcing it through; this was followed by further sharp declines across the list. Some hope came from another conference of bankers at the Morgan offices around midday; no statement was made but some rallying developed and it appeared support might have been decided on. However, the rally quickly disappeared in a flood of afternoon selling, and the market was “acutely weak during the last hour.”
While declines were generally larger than Thursday's break, trading was less panicky; a continuous market was available in major stocks, there were few 5-10 point drops between sales as happened Thursday, and volume was 9.213M shares compared to Thursday's record 12.895M. There was one new yearly high and 286 new lows.
Some buying came into the market “on a scale” down, but was much smaller than the offerings and had no appreciable effect.
Some dispute over whether banks were supporting the market. Some couldn't discern any support, and one wit suggested “the bankers' pool forgot to put in its buying orders.” On the other hand, a spokesman for the bankers' group talked to reporters late Monday and implied the bankers' pool continued to operate. It was emphasized that the bankers' intervention on Thursday was to stabilize a market that had gotten out of hand; Monday's market, by contrast, was “far more orderly.” It was also clearly indicated that bankers had heard from numerous sources that the market had reached a point where investment trusts (similar to mutual funds) and others with large resources were ready to buy stocks on a sizeable scale.
“Sentiment is highly unsettled again. ... In fact, quite a few market interests favor disposing of all stocks at the moment, and then remaining on the side lines until there has been material improvement in the whole situation.”
Some liquidation remains to be done judging by the nervousness demonstrated yesterday; after this, “it will be essential for the market to have a period of quiet.”
Public expected to be more wary of stocks for some time after many were badly hurt recently; when they do return, more consideration will be given to fundamentals such as earnings and future prospects, and less to “the so-called 'information' which caused over-buying in the past.”
Investment trusts have gone from the height of popularity a short time ago to being avoided entirely by the public now.
A. Sloan, GM pres., says stock market break was healthy, although a little drastic.
S. Strawn, Montgomery Ward chair.: “I believe the severe check (in the stock market) will have good results for the whole country”; expects funds to be turned from speculation into trade and industry.
Editorial: While “speculators whose margins have been devastated” may be hard to console, there are some comforting aspects to the current situation. “Business in general shows no signs of disintegration”; it has slowed somewhat from a midsummer peak, but this preceded the market break. With a few exceptions such as the car industry, we don't have the high inventories that have caused previous recessions; together with lower prices, this indicates part of the needed readjustment has already been accomplished. Finally, a pause in the recent flood of security issues should be beneficial.
Economic news:
US Steel directors meet this afternoon; rumor mill active on what might be announced, especially in light of official promise last week that “something encouraging” would be released.
American Railway Assoc. reports railroads on Oct. 1 had 29,481 freight cars on order, up 21,959 over 1928 and up 14,648 over 1927.
Recent lower money rates are expected to stimulate construction.
Federal Farm Board puts $100M at disposal of Farmer's Nat'l. Grain Corp. for stabilizing wheat prices, which the Board considers unjustifiably low and “chiefly due to the rapid or disorderly movement which is putting a large part of the year's supply of wheat on the market within a short time.”
Merchants Assoc. denies AFL charge that 233 US firms are manufacturing abroad under US trademark to use cheap labor.
Other stuff:
Amusing anecdote: A New York businessman hadn't been feeling well for some time and finally went for a physical. After a thorough exam, his doctor told him he had diabetes. 'What!' he exclaimed. 'Diabetes at 37?' 'Yes, you have it,' declared the doctor. Very upset, he went to his office. 'Hello, Jim,' said a friend. 'Your face is longer than a board. What's eating you?' 'I have diabetes at 37,' was the sad reply. 'That's nothing!' said the friend. 'I have Chrysler at 135.'
New York Edison installs world's largest single-unit electric generator - at 161.2 MWatt, this brings total system capacity to 1.643 GWatt.
American Red Cross, in fiscal year ending June 30, donated $8.096M for relief work in 117 catastrophes in US, 11 in foreign countries.
Movie: Showing at the Roxy theater is Frozen Justice, the talking film debut of Lenore Ulric, in which she “enacts the part of a halfbreed who is torn emotionally between her love for her Eskimo husband [played by Robert Frazer] and her desire to get away from the dullness of igloo life to the land of her white father.” Also on the bill at the Roxy are a condensed version of Faust in eight scenes, a violin solo by F. Fradkin playing Sarasate's Gypsy Airs, and a delightful ballet representation of Hallowe'en by the Roxyettes.
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