The roaring twenties or the Jazz age was a time of intense stock market speculation. There may never be a time again like the 1920s, where talk about investing dominated almost every conversation. As reported by John Brooks in Once in Golconda, a British Correspondent, after arriving in New York in 1929, reported “You could talk about Prohibition, or Hemingway, or air conditioning, or music, or horses, but in the end you had to talk about the stock market, and that was when the conversation became serious.”
People believed the market could go nowhere but up. Despite hard-earned lessons from a Florida real estate bubble in the mid 1920s and even many volatile days (mostly down days) in September of 1929, investors did not hold back. Until Thursday, October 24th – a day that will live in infamy as “Black Thursday.”
Black Thursday
Black Thursday was the first sign of the end of a great bull market. What goes up, must come down. And come down it did. However, Black Thursday was not the nail in the coffin (that comes on Black Monday and Tuesday). In fact, Black Thursday involved a great comeback. Here's how the story goes:
12.9 million shares changed hands on Black Thursday (a new record – 4 million shares was considered a busy day back then). Most of the panic took place in the morning hours. The ticker tape machine fell behind by an hour and a half leaving investors madly scrambling to sell their investments without even knowing the current prices. Panic set in. People gathered outside the exchanges and brokerages, police were dispatched to insure peace. Rumors were flying. By 12:30 pm, the Chicago and Buffalo Exchanges closed down, eleven well-known speculators had already killed themselves and the NYSE closed the visitor’s gallery on the wild scenes below. Reporters learned that an important meeting was taking place at the office of J.P. Morgan and Company, involving many of the most important men in banking. After the meeting broke, Thomas Lamont, senior partner at Morgan – a company founded by a man who had help stop a panic in 1907, made the following statement to newspaper reporters: “There has been a little distress selling on the Stock Exchange… due to a technical condition of the market” and that things were “susceptible to betterment.”
The market moved up a bit after Lamont’s statement, but the real recovery came at 1:30 pm, when self-confident Richard Whitney, vice-president of the NYSE and floor broker of J.P. Morgan and Company, walked into the exchange floor. The crowd went silent. Everyone expected an announcement that the NYSE would be closed. Instead, Richard Whitney surprised everybody…
