43 Chapter 43
From the beginning to mid-October, people spent their time speculating, worrying, and anticipating. They didn't pay much attention to the current decline in stock prices because "organized support" was being discussed by everyone. On the 23rd, Philip Fisher (a renowned securities analyst) and Mitchell once again expressed optimism, but in the afternoon, stock prices plummeted sharply. Ironically, Fisher evaluated the prospects of fundamental industries in the United States and noted many supply and demand problems, making the outlook quite unstable. In August 1929, he presented a report to top bank executives titled "The most severe bear market in 25 years is about to unfold." It can be considered the most notable stock market prediction of his life. Unfortunately, Fisher was "bought instead of sold," saying, "I couldn't resist the power of the stock market. So, I looked for relatively cheap stocks and valuable investment opportunities because they hadn't risen too much yet.
At this very moment, "organized support" was still being discussed, and even President Hoover stated that the US economy was fundamentally sound. However, a sense of alertness had already engulfed Wall Street.
On October 24, 1929, in New York, United States, at the Stock Exchange.
In the future, you can simply download trading software from securities firms and trade anytime, anywhere through your phone, which can be described as extremely convenient. But now, it was a time when even landline telephones were not widespread. If you wanted to buy or sell securities, you could only do so at the exchange.
Therefore, except for Saturdays and Sundays, the exchange buzzed every day, and today was no exception.
Even before the market opened, the exchange was already crowded. As the trading volume on Monday reached 6.09 million shares, it became the third-largest trading volume in history. Everyone enthusiastically discussed how much their stocks would rise today but were horrified to find that something was wrong!
It wasn't just something; the stocks that were thriving yesterday suddenly began to plummet significantly without any warning!
"Damn it, sell the stocks quickly!" everyone shouted, rushing to the counter, eager to sell their stocks.
No one considered that this would further worsen the stock's decline. Each person simply wanted to protect their own money because many people had invested their savings in the stock market here!
Soon, the malfunctioning ticker tape caused by the crash led some people to sell due to uncertain concerns, while others, unable to meet margin call demands, were forced to liquidate their positions. By around 11:30 a.m., chaos reigned supreme. Those who considered themselves smart lost their rationality, became frantic, and entered a frenzy. Perhaps the devil had just arrived, or perhaps people thought God had never come.
The New York Stock Exchange had stood for 112 years and had gone through several crises during that period, but it always recovered quickly and had never faced such a prolonged crisis. A large group of people seeking to buy at the bottom began rebuilding their positions, either in late October or November. They couldn't imagine that two years later, these stocks would be worth less than 30% of their value.
On the weekend following Black Thursday, bankers reacted quickly and joined forces to protect the market. The panic seemed to calm down, and the market showed signs of recovery. Over the weekend, President Hoover made another speech: the basic business conditions of the country, whether in terms of production or sales, were on a healthy and prosperous basis. Other political and business figures expressed similar opinions, creating the expectation that Monday's buying would regain lost ground and God would descend once again.
However, the real disaster began on Monday, and once it started, it was difficult to stop.
On the 28th, the market dropped 49 points, with a trading volume of 9.25 million shares. Bankers held another meeting, assuring that the market was still healthy.
On the 29th, the darkest day since the establishment of the New York Stock Exchange, the trading volume reached 16.41 million shares. The average industrial index fell 43 points, and investment fund stocks suffered heavy losses due to deleveraging. Stock prices fell almost in half, with some even more than two-thirds. Bankers held two more meetings that day and concluded it was monotonous. However, it was later discovered that some bankers also thought of selling.
The "organized support" was no longer believed in. Thousands of Americans helplessly watched their savings evaporate in just a few days. It was the darkest day in the history of US securities and the most significant and damaging economic event in American history, with cascading effects reaching Western countries and the whole world.
On the 30th, the stock market experienced a technical rebound, even leading Rockefeller to express confidence in the stock market. President Hoover also spoke, repeatedly emphasizing the health of the market. Furthermore, top officials from the Department of Commerce and Goldman Sachs, among other respected figures working diligently for the country's well-being, shared similar opinions.
On the 31st, the stock market had a slight high during the three hours of trading before closing until the following Monday. Optimism began to emerge, and every rise was seen as a lifeline.
On November 3, the stock market dropped 22 points, with a trading volume of 6 million shares. On the 5th, it dropped 37 points with the same trading volume. Later, there was a slight recovery. From the 11th to the 13th, it dropped 50 points. Meanwhile, the real economy rapidly deteriorated. Cotton trading volume plummeted, and wheat prices collapsed. The leveraged and margin-driven keys operated by investment fund companies built a perfect mechanism for the stock market's suicide. The deleveraging effect quickly drove down stock prices, while the margin system forced partial liquidation to preserve some stocks.
Simultaneously, the selling pressure from dumped stocks further contributed to the overall reduction in stock prices. This cycle repeated endlessly. It was said that hotel receptionists in New York at the time asked guests if they wanted accommodation or if they were jumping from the building. This happened because 11 speculators had already committed suicide, and the body of a commission trader was recovered from the Hudson River, carrying $9.
In mid-November, the stock market hit its lowest point, closing at 224 points compared to 452 points on September 3. President Hoover, who thought the storm had passed, appeared and announced policies to stimulate the economy and implement tax cuts, although they were not very substantial. Additionally, a meeting was held at the White House with participants from various sectors of society, mainly for exchanging ideas, expressing attitudes, increasing confidence, and opening up to laissez-faire. Hoover could have taken more effective measures, but he seemed quite content with becoming the worst president of the 20th century. The New York Stock Exchange joined the commotion by announcing an investigation into short-selling transactions, but it yielded no results.
The entire country and the entire capitalist world were in mourning!
All of this was no longer Wilhelm's concern. A year ago, Hjalmar Schacht was sent to the United States by him, returning triumphantly after several successful operations. The $500 million in funds raised by Wilhelm had more than tripled in his hands!
