The Day Wall Street Was Silent

Fifty years later: 1929 and all that remembered

Without hearing a word of what is being said or shouted, any experienced trader on the floor of the New York Stock Exchange can listen to the hum of voices around him and tell what is happening. An up market has a different pitch from a down market. But old Wall Street hands vividly remember an exception to that rule. One day 50 years ago next week, recalls David Granger, 76, a senior partner at Granger & Co., a Wall Street brokerage house, "there was a hush over the floor that I've never heard since. It was funereal." Indeed, it was Oct. 29, 1929 --Black Tuesday, the most cataclysmic day of the Great Crash. It was the day prosperity died and the U.S. economy began the decline that culminated in more than ten years of Depression and national anguish.

The panic selling had actually started the previous Thursday, Oct. 24. That was when the Dow Jones industrial average, having already slipped in seven weeks from its record high of 381, dropped by six points on spectacularly high volume to 299. The plunge continued on Friday, on a half-day session Saturday, and on Monday as well. But Tuesday is nonetheless remembered as the truly black day: as frightened shareholders across the country rushed to sell, trading volume soared to an unprecedented 16,410,030 shares,-- the Dow tumbled another 31 points, to 230, and it was clear to almost everyone that something catastrophic had taken place. The Dow was down 151 points, or about 60%, from its September peak. When its wild plummet finally stopped in July 1932, the index was at 41, and the stocks it represented were worth around 12% of what they had been valued at in September 1929. All told, in three years investors lost more than $74 billion, which in terms of today's inflated dollars would be nearly $300 billion.

Signs of impending disaster had appeared all through 1928 and 1929. The speculative fever of the Roaring Twenties had infected rich and poor alike, and vast numbers of people were dangerously overextended. Credit was absurdly easy to obtain, and most brokerages required only 10% cash for stocks bought on "margin."

That is, one could buy $10,000 worth of stock with just $1,000. Many thousands did, lured into the market by boosters like John J. Raskob, the stenographer turned entrepreneur who built the Empire State Building. "Everyone ought to be rich," he wrote in an exuberant Ladies' Home Journal article; anyone who could invest $15 a month, he declared, could eventually reap a profit of $80,000. A Harvard behavioral psychologist named John Watson even found therapeutic value in speculation. "Sex has become so free and abundant," he theorized, "that it no longer provides the thrill it once did." Gambling on Wall Street is about the only thrill we have left."

The politicians seemed to endorse such ebullience. In his last message to Congress in December 1928, outgoing

President Calvin Coolidge assured the country that it could "regard the present with satisfaction and anticipate the future with optimism." His successor, Herbert Hoover, said that the U.S. would soon see the end of poverty. Only a few public figures raised doubts. One of them was Financier Paul Warburg, who warned in March 1929 that unless the Federal Reserve acted to curb speculation, there would be a collapse and "a general depression involving the entire country."

Such concerns began to seem more immediate during the summer of '29, as the economy began to falter. After the market reached its high on Sept. 3, there was a gentle decline, with ups as well as downs, for several weeks. "We tend to blame the market," says Kidder Peabody Chairman Albert Gordon, 78, who then worked in corporate finance for Goldman, Sachs. "But the market was just a symptom. We were in a bad economic situation whether or not the stock market crashed."

The decline turned into a rout on Oct. 24, five days before Black Tuesday, and in the days and weeks that followed Wall Street was like a city under siege. Broker Jonas Ottens, 78, then an odd-lot order clerk with Salomon Bros., recalls being pressed into service to telephone customers to tell them that their margined stocks were to be sold off unless they put up more money. "The first call was routine," he remembers. "But the second man acted so upset that I thought he was going to go out and kill himself. I just refused to make any more calls."

Leonard Jarvis, 75, now a senior vice president with Shearson Hay den Stone, remembers Black Tuesday as "a bloodbath. It was horrible." In the days after the crash, he says, several of his friends committed suicide, one by jumping off the Daily News Building, another by leaping from his commuter train. One man asked a friend of Jarvis how someone could kill himself without pain; a drug was mentioned and the next morning the questioner was dead. Two weeks later the man who advised him shot himself. "They went one after another," says Jarvis. "They couldn't stand it any more."

Gordon recalls that when he and his colleagues left their offices at night, "we walked in the middle of the street; if somebody was going to commit suicide, we did not want him to land on us." It was not an idle concern. Charles Mattey, then 19 and a commodities clerk, was typing on a billing machine when a body crashed through a skylight and landed in his office. Says he: "It was extremely traumatic." George Fowler, a retired Morgan Guaranty Trust Co. vice president, was a 15-year-old office boy with the old Guaranty Trust Co. when a husband and wife jumped from the 33rd floor of an adjacent building. "Like everybody else, I ran to the window to see what was going on," he says. "It was horrible to see limbs and other body parts strewn around. A jaw was lying in the roadway, and a policeman pushed it with his foot to where the major parts of the corpses were."

Mattey, now 69 and a senior vice president at Bache Halsey Stuart Shields, blames the suicides on the psychology of the era. "Then people seemed to be more affected by the loss of money than they are today. When people lose a lot of money now, they just plan on how they are going to make a winner somewhere down the road. The people who lost then appeared despondent. They didn't seem to be in a frame of mind in which they could possibly make a comeback one day."

In the brokerage house back offices, where the huge volumes of shares traded had to be processed by hand, the working hours extended from early in the morning until well into the night. Some Wall Street firms sent their employees over to the St. George Hotel in Brooklyn Heights for a few hours' sleep, then brought them back early the next morning. Barbers were brought in to shave them at their desks. "We were going all the time," says Fowler. "The older fellows used to work until 8 or 9 o'clock at night and then go to some speakeasy for drinks. They lived fast." Some also spent some time in nearby Trinity Church, where they prayed and openly wept.

As the days went on and the panic spread, Western Union hired fleets of taxis to help deliver margin calls to speculators. It was common to see people rushing from their banks to their brokers with stock certificates and bonds they had just taken from safe deposit boxes. Insurance companies were besieged by people wanting to cash in or borrow on their policies.

On Black Tuesday itself some stocks could scarcely be given away. White Sewing Machine Corp., which had reached 48 not long before, had closed at 11 on Monday. On Tuesday someone--some say a messenger boy--suggested a bid of a dollar a share. Since there were no takers, he got a block of it. Reuben Thorson, 77, retired senior partner of Paine Webber, recalls, "The volume was so heavy that the tape was late by hours. We had no idea what the prices were."

At noon the members of the Big Board's governing committee held a secret meeting in a room under the exchange floor. Cigarettes were lit and the small room filled with smoke. Some members felt the exchange should be closed; others argued that if that happened it would never reopen. The governors did nothing, and by the end of the day $6.7 billion more had been erased from investors' portfolios.

Many brokers and banks bought stocks on their own as a gesture of confidence, and on Wednesday old John D. Rockefeller, the personification of American capitalism, gave his reassurance to the nation's investors. Said he: "In the 90 years of my life, depressions have come and gone. Prosperity has always returned, and will come again. Believing that the fundamental conditions of the country are sound, my son and I have been purchasing sound common stocks for some days."

("Sure," replied Comedian Eddie Cantor.

"Who else had any money left?") New York Mayor Jimmy Walker asked movie theaters not to run newsreels of the Wall Street panic, but to show instead "pictures which will reinstate courage and hope in the hearts of the people."

Hope, of course, did not return for years, and even now the Great Crash is a raw memory, particularly to those who were there. Could it happen again?

Probably not, at least not in the same way. Twenties-style speculation is all but impossible today. The market is closely supervised, and margin requirements are 50%, five times what they were then. In 1929 relatively small drops in the market ruined many plungers who had bought on margin. They had to sell, and their selling pushed other investors to the brink.

The bull market had been built on flimsy credit, and when it started to topple, it did not fall slowly, but all at once.

"The dip we had earlier this month was insignificant compared with that of October 1929," says Harvard Economist Gottfried Haberler. "On its worst day this month, Oct. 9, the Dow fell by less than 3%; on Oct. 29, 1929, it fell by 12%." Adds Albert Gordon: "I think a repetition of 1929 is most unlikely. But obviously economic and human affairs go in cycles. It could well be that some time there will be a collapse. I've always thought that if we did have one, it would be the dollar, not the stocks." In the turbulent economy of 1979 that is no comfort at all.

* That is far fewer than the record 81.6 million that were traded on the exchange on last Oct. 10. But many more shares are listed on the exchange now than in 1929, and the trading volume that occurred on Black Tuesday would be the equivalent of 435 million shares today.

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