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The Week That Was....Long, Long Ago?
Great Depression Headlines, as always, from the highly entertaining News from 1930 blog. And all, very appropriate for our blow by blow recreation of the G.D., courtesy of the historically predisposed Chairman.
Sept 20
A. Reynolds, Cont'l. Ill. Bank & Trust Chair., criticizes
Fed. Reserve easy-money policy as ineffective in reviving business,
says it may cause banks to buy bonds that have “not always turned out
fortunately” in the past; “it is a serious question as to whether a
commercial bank should be a large purchaser of such bonds.”
Thomas Edison visits Newark Airport, hints he is working on new approach to developing helicopter.
Great depression: check; Easy-Reserve Money policy: check; Helicopter: check.
Ben bernane all over it
Sept. 19
Trusteed Share News reviews history of severe market reactions
in past 30 years, including those in 1903, '07, '17, '21, and '29.
Points out that every market low was higher than the previous one, and
therefore that buying after the market reaction “would have rewarded
the investor in the highest degree.”
Today's Trusted Share News aka CNBC: "Buy the lows"
Sept. 18
Arthur Lehman of Lehman Brothers: “improvement in business is
slow but is nevertheless gaining; recent trends indicate no lines of
business are getting worse, while a few are getting better.”
TD: Arthur Lehman is spinning in his grave right now. Nuf said.
Sept. 17
O. Caldwell, Electronics editor, says “vacuum or electron tube”
will be third great electric revolution following Edison's incandescent
lamp and Westinghouse's introduction of alternating current. Greatest
benefit to utility industry will be transmission of direct current over
existing high tension lines, allowing 3 - 6 times as much power. Use of
tubes also greatly reduces size of equipment; “a vacuum tube switch the
size of a gallon bottle” can replace a 2 - 3 ton oil switch the size of
a room.
TD: little did Caldwell know that the greatest "electric" revolution would be automated robots providing liquidity by the bushell to bankrupt firms such as AIG, C and MPG, who, just like shares, are in desperate need to keep moving hundreds of millions of shares of stock, or they simply die.
Sept. 16
Today is 10th anniversary of deadly bombing at Wall and Broad
Streets; bomb exploded 12:01PM, closing Stock Exchange and almost all
financial operations.
Sept.15
The great debate: Bears argue that past
month's rally has already discounted the mild improvement in business,
and that decline in steel production in past week indicates weakness.
Bulls counter that steel decline was due to Labor Day, that August
steel and car loading figures show more than seasonal improvement, and
that recent retail figures and company outlooks have been improved. On
the technical side, bulls believe the recent rally has “definitely
broken” the downtrend since last Sept., indicating future support
should come in well above the June bottom of 212.
»
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just wondering where This Week in Mayhem is?
I was thinking the same thing!
TD- there was a great chart that I saw at the beginning of the year in which it had the DOW during the bear market rally in the 1930's with a timeline of quotes from very influential voices in the market making bullish statements. Wondering if you or anyone else knows where to find this chart. If I find it I will post it.
I didn't find what you were looking for but this is a great series of videos on the topic. It beautifully brings together everything and has great video footage from the era.
http://www.pbs.org/wgbh/amex/crash/program/index.html
For Tyler and everyone. This is a great series of video about the depression. Great photos and video from the depression as well as a beautifully chronicled timeline.
This is a MUST watch.
http://www.pbs.org/wgbh/amex/crash/program/index.html
I concur.
This is a MUST watch.
The astrologer looks just like Madoff in drag.
is this the link you referring to?
http://www.gold-eagle.com/editorials_01/seymour062001.html
President Clinton just blamed FDR for everything.
quotes form 1929 to 1931-
http://www.chartingstocks.net/2009/02/great-depression-quotes-1929-vs-20...
Thanks for the link. But there is a chart out there that links the quote to when and at what level on the Dow it was made. I will try to dig it up. But sure enough you had all the biggest and most respected voices saying that everything was Rosy.
You mean this?
http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/arch...
The link I posted above details that. It's not the chart you speak of but just as effective.
OKAY GOT THE CHART- http://www.gold-eagle.com/editorials_01/seymour062001.html
1927-1933 Chart of Pompous Prognosticators
- "We will not have any more crashes in our time."
- "I cannot help but raise a dissenting voice to statements that we are living in a fool's paradise, and that prosperity in this country must necessarily diminish and recede in the near future."
- "No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment...and the highest record of years of prosperity. In the foreign field there is peace, the goodwill which comes from mutual understanding."
- "There may be a recession in stock prices, but not anything in the nature of a crash."
- "Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months."
- "This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan... that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years."
- "The decline is in paper values, not in tangible goods and services...America is now in the eighth year of prosperity as commercially defined. The former great periods of prosperity in America averaged eleven years. On this basis we now have three more years to go before the tailspin."
- "... a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall."
- "I see nothing in the present situation that is either menacing or warrants pessimism... I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress."
- "For the immediate future, at least, the outlook (stocks) is bright."
- "...there are indications that the severest phase of the recession is over..."
- "There is nothing in the situation to be disturbed about."
- "The spring of 1930 marks the end of a period of grave concern...American business is steadily coming back to a normal level of prosperity."
- "... the outlook is favorable..."
- "While the crash only took place six months ago, I am convinced we have now passed through the worst -- and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us."
- "... irregular and conflicting movements of business should soon give way to a sustained recovery..."
- "... the present depression has about spent its force..."
- "We are now near the end of the declining phase of the depression."
- "Stabilization at [present] levels is clearly possible."
- "All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S."
Chart locations are an approximate indication only
- John Maynard Keynes in 1927
- E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928
"There will be no interruption of our permanent prosperity."
- Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928
- Calvin Coolidge December 4, 1928
- Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929
"This crash is not going to have much effect on business."
- Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929
"There will be no repetition of the break of yesterday... I have no fear of another comparable decline."
- Arthur W. Loasby (President of the Equitable Trust Company), quoted in NYT, Friday, October 25, 1929
"We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices."
- Goodbody and Company market-letter quoted in The New York Times, Friday, October 25, 1929
- R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929
"Buying of sound, seasoned issues now will not be regretted"
- E. A. Pearce market letter quoted in the New York Herald Tribune, October 30, 1929
"Some pretty intelligent people are now buying stocks... Unless we are to have a panic -- which no one seriously believes, stocks have hit bottom."
- R. W. McNeal, financial analyst in October 1929
- Stuart Chase (American economist and author), NY Herald Tribune, November 1, 1929
"Hysteria has now disappeared from Wall Street."
- The Times of London, November 2, 1929
"The Wall Street crash doesn't mean that there will be any general or serious business depression... For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game... Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before."
- Business Week, November 2, 1929
"...despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation..."
- Harvard Economic Society (HES), November 2, 1929
- HES, November 10, 1929
"The end of the decline of the Stock Market will probably not be long, only a few more days at most."
- Irving Fisher, Professor of Economics at Yale University, November 14, 1929
"In most of the cities and towns of this country, this Wall Street panic will have no effect."
- Paul Block (President of the Block newspaper chain), editorial, November 15, 1929
"Financial storm definitely passed."
- Bernard Baruch, cablegram to Winston Churchill, November 15, 1929
- Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929
"I am convinced that through these measures we have reestablished confidence."
- Herbert Hoover, December 1929
"[1930 will be] a splendid employment year."
- U.S. Dept. of Labor, New Year's Forecast, December 1929
- Irving Fisher, Ph.D. in Economics, in early 1930
- Harvard Economic Society (HES) Jan 18, 1930
- Secretary of the Treasury Andrew Mellon, Feb 1930
- Julius Barnes, head of Hoover's National Business Survey Conference, Mar 16, 1930
"... the outlook continues favorable..."
- HES Mar 29, 1930
- HES Apr 19, 1930
- Herbert Hoover, President of the United States, May 1, 1930
"...by May or June the spring recovery forecast in our letters of last December and November should clearly be apparent..."
- HES May 17, 1930
"Gentleman, you have come sixty days too late. The depression is over."
- Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930
- HES June 28, 1930
- HES, Aug 30, 1930
- HES Nov 15, 1930
- HES Oct 31, 1931
- President F.D. Roosevelt, 1933
Colin J. Seymour, June 2001
http://www.users.dircon.co.uk/~netking
20 June 2001
some good stuff in the archives - circa 1932
(NOTE that this discusses a stock offering in the Goldman Sachs Trading Company from late 1928 of $100 million, which adjusted for inflation amounts to $1.2 Trillion in 2009 dollars ( http://www.usinflationcalculator.com/ )
Stock Exchange Practices. Hearings before the Committee on Banking and Currency Pursuant to S.Res. 84 and S.Res. 56 and S.Res. 97.
http://fraser.stlouisfed.org/publications/sensep/
excerpt
Senator Couzens - So Goldman Sachs & Co manage the Goldman Sachs Trading Corporation, is that it?
Mr. Sachs - Subject to its board of directors. But the majority of the board of dierctors are composed of partners of the firm.
Senator - Did Goldman Sachs & Co, organize the Goldman Sachs Trading Corporation?
Mr. Sachs - Yes Sir.
Senator - And it sold stock to the public?
Mr. Sachs - A portion of it. The firm invested originally in 10% of the entire issue for the sum of $10m.
Senator - And the other 90% was sold to the public?
Mr. Sachs - Yes Sir.
Senator - At what price?
Mr. Sachs - At $104.00. that is the old stock. The present stock at a price of $52 as the stock was split two for one.
Senator - And what is the price of the stock now?
Mr. Sachs - Aproximately $1 and 3/4.
Senator - And what was the purpose of Goldman Sachs & Co. organizing the Goldman Sachs Trading Corporation?
Mr. Sachs - To form a company to trade, deal, and to make investments in securities of various kinds in which companies we, as a firm, participated, and in which others could participate through stock ownership if they so desired.
Senator - Well, outside of the partners of in Goldman Sachs & Co, how much new capital was taken into the Goldman Sachs Trading Corporation?
Mr. Sachs - Well, I can't answer that figure exactly. The company was fomred for $100 million of which the firm invested $10m.
Senator - And so you went to the public and got $90 million more?
Mr. Sachs - yes, sir.
Senator - At $104.00?
Mr. Sachs - At $104.00. There was $100 million paid into the company. The stock was bought by Goldman Sachs & Co, and 900,000 shares were sold to the public at $104.00 less selling commissions to a distributing group, and so forth.
Senator - How much is left of that $100 million that was put into Goldman Sachs Trading Corporation?
Mr. Sachs - It is difficult for me to answer that question exactly. According to the figures of our las balance sheet of December 31, 1931, the capital and surplus was $40,2569,100.48.
Senator - So the organization, the firm of Goldman Sachs & Co has lost $60 million, at least of the money that they collected from the public at the time of organization of the Goldman Sachs Trading Corporation?
Mr. Sachs - Well I will answer your question in this way, that a large sum of money was lost by the stockholders, by all the stockholders, obviously, yes, sir.
Senator - And when you fix the net asset of the Goldman Sachs Trading Corporation at some $40m have you written down the portfolio to present market prices?
Mr. Sachs - We have written them down - these figures are market prices where such market quotations were available. There are certain assets where market quotations are not available and where the assets had to be taekn in on some basis, which bais is made perfectly clear in our reports.
and later in the hearing
Senator Brookhart - Let me ask a question, What is the difference between the curb exchange and the stock exchange?
Mr. Sachs - Well the New York Stock Exchange is one body, usually referred to as the stock exchange, and there is another exchange on which stocks are traded that are not listed on the New York Stock Exchange, which is known as the New York Curb Exchange. There are just two exchanges.
Senator - Are they under the same kind of rules and regulations?
Mr. Sachs - I am not sufficiently familiar with the rules to know whether they are exactly the same or not.
Senator - Well, the curb, as they call it, has a place of business the same as the other?
Mr. Sachs - It now has a building, it did not years ago.
Mr. Gray - It used to operate on the street, Senator, on Broad Street up there, but now has a building of its own.
Senator - And it transacts a large volume of business, but not as much as the big exchange?
Mr. Sachs - No; not as much , but large volume.
Senator - And very much on the same rules? It kind of follows the methods of the other exchange?
Mr. Sachs - I think so. As I say, I am not familiar with it.
Senator - Well, did you sell any of these stocks through the curb?
Mr. Gray - All of them through the curb, Senator.
Mr. Sachs - Yes; the Goldman Sachs Trading Corporation is listed on the curb?
Senator - The Goldman Sachs Trading Corporation is listed on the curb?
Mr. Sachs - Yes.
Senator - So they have a listing scheme as well as the other exchange?
Mr. Sachs - Yes.
http://fraser.stlouisfed.org/publications/sensep/
(PDF warning)
http://fraser.stlouisfed.org/publications/sensep/issue/3912/download/648...
"Mr. Sachs - Aproximately $1 and 3/4."
Well if you unsplit that that 1.75 comes to about 3.50.
Oh goddamnit. That damn lochness monster. Always wanting tree fiddy.
http://www.youtube.com/watch?v=8CJQSlxbqFU&feature=related
+1, that was one of my favorite episodes of southpark
minor typo: Under Sept. 17th, when you say "TD: little did Caldwell ... just like shares, are in desperate need ...", you mean "just like sharks"
minor typo: under Sept 17, you mean "just like sharks", (and not "just like shares")
Based on census data from 1930 the age distribution of the US was younger. How do the Baby Boomers fit into this market?
Based on census data from 1930 the age distribution of the US was younger. How do the Baby Boomers fit into this market?
Based on census data from 1930 the age distribution of the US was younger. How do the Baby Boomers fit into this market?
In short, they don't.
Sooner rather than later, they will want to start making withdrawls, whether the market is high or low. The vicious cycle is that the lower the markets, the more they will need to withdrawl. Then, eventually they will die, and the estate will likely liquidate to settle the estate. Of course, in a situation where estate taxes are a factor, they will pretty much guarantee liquidation, and the govt's share taken out of the markets permanently. Wonder whether the Gubmint gave that much consideration? Especially if it should come as a part of some hypothetical pandemic, rather than spread over many years as the actuaries would suggest.
Just my thoughts.
Deckhand