Tuesday 29 October 1929 was Black Tuesday, the Wall Street crash. What were the reactions and was it any different from any other time when extended exuberance comes to an abrupt end?
The Washington Evening Star was a local paper of record for much of its life. The market had been very turbulent over the previous week. On the first page of its Tuesday issue – and it was an evening paper with a cut-off in the early afternoon – it recorded “Stocks in rally as sales mount to record level”. On the third page, it recorded a meeting of the Mortgage Bankers’ Association. The tone was generally realistic. The events of the last week was a “crash” which ought to be alerting an informed investment public that putting money solely into shares and putting it in for price and not for value was not a sound approach. The conclusion was “The developments of the past week should put an end to such unwise investment, and sound business will benefit.”
Although Monday had been a larger loss on the index, Tuesday was an unprecedented volume, with the ticker racing well after the exchange closed.
On the Wednesday the front page reported “Closing of stock exchange for two days is decided”, with the excuse being the board of governors voting “to give brokers and office staffs a rest”.
Inside on page 4, there were a number of stories which, history suggests, represented in summary the different sorts of reactions a reasonable observer might expect.
There was the government stands calm story. “Business unhurt, Dr Klein declares – Market crash not expected to affect firm structure of US industry”. Dr Klein was the Assistant Secretary of Commerce charged with giving the government line and his remark was reported as coinciding “with President Hoover’s previous statement on the business situation.”
There was the opposition blames the government story:
The break in stock prices was attributed to the party in power by Senator Tydings, Democrat, Maryland, in a statement issued through Democratic national headquarters. It asserted that ‘in most cases there is the ironical realization that these great leaders, who a year ago were yelling “prosperity” are trying to find a scapegoat in the fact of a $15,000,000,000 lost in one week of American life.
There was the hunt for value story. “Yields gain heavily as market crashes”. Prominent banker Arthur W Loasby was quoted as saying “as a result of the deflation, investors will being purchasing yields instead of quotations”. Loasby is better remembered for his line a few days before, after an initial drop, “There will be no repetition of the break yesterday …. I have no fear of another comparable decline.”
There was the responsible employer story. Julius Rosenwald, chairman of Sears, Roebuck, pledged his fortune on the margin accounts of 40,000 employees, repeating a pledge he’d made in the postwar recession.
There was the human interest story. While there is no evidence of any surge in suicides, the collapse brought immense stress. The story beneath that on Rosenwald was that of David Korn, a 57-year-old businessman who dropped dead in his broker’s office as he watched the ticker tape.
On the righthand side of the page, the calm of “Hysteria subsides” and “Bankers’ statement” is supported on one side by “Second broker casualty” and on the other by “Brokers ask receiver”.
And by Thursday, there was the fault story with “European traders blamed for crash”.
It is difficult to determine how to run the biggest story in recent history. A media outlet has its own reputation to defend, and joining the hysteria it is reporting is a bold call. On Black Tuesday the Pittsburgh Press was not hysterical but its language is closer to our collective memory than that of the Evening Star. On the first page:
Wall Street today passed through the most momentous and disastrous period of its colorful existence.
The bubble had broken. Millionaires were sent home paupers.
Billions of dollars were lost in the hurricane of tumbling prices. The struggle was titanic.
The earliest reference to “Black Tuesday” I have found is in the Alaskan Seward Daily Gateway in November the following year although it put the expression in inverted commas in a manner suggesting that the term was recent but not new. The paper itself opted for “the day of butchered bulls”.
We haven’t heard about Black Tuesday yet.”