On This Date In 1929, The Black Thursday Selling Has Begun

Tyler Durden's picture




 

Last week, the misty eyed reminiscences were recalling the 25th anniversary of Black Monday. Today, we look even further back. 83 years back to be precise to this date in hallowed antiquity, when in 1929 the selling had officially begun, with what would ultimately culminate as the Great Crash. Cue Art Cashin: "on this Thursday morning, the market opened nervous but relatively steady. Within the first half hour, prices began to fade and the tape began to run late. By noon the tape was nearly an hour and-a-half late in reporting transactions in a market that had opened only two hours before. To speed the reporting digits were deleted and so "Radio" which had opened at 68 3/4 now showed on the tape at 8 3/4. But prices were moving so fast that the price was not 58 3/4 but 48 3/4 on its way to 48 1/4 before it would bottom in the afternoon at 44 1/2. To avoid confusion the Exchange published flash prices of selected securities on the slower moving bond tape." By early afternoon the cascade of prices caused an emergency meeting at the offices of J.P. Morgan across the street from the Exchange...."

From Art Cashin of UBS Financial Services

On this day in 1929, Wall Street brokers headed for work more than a little confused. The action the day before had made them a bit uneasy. Several weeks earlier, the Dow had made one more record high - the latest of a series in a super bull market that had lasted years and caught the attention of a fascinated public. Then the market began to sputter-but-so what. The Great Bull had rolled and rested before only to roar and rise again. But the prior day's trading had raised the anxiety level. So, on this Thursday morning, the market opened nervous but relatively steady.

Within the first half hour, prices began to fade and the tape began to run late. By noon the tape was nearly an hour and-a-half late in reporting transactions in a market that had opened only two hours before. To speed the reporting digits were deleted and so "Radio" which had opened at 68 3/4 now showed on the tape at 8 3/4. But prices were moving so fast that the price was not 58 3/4 but 48 3/4 on its way to 48 1/4 before it would bottom in the afternoon at 44 1/2. To avoid confusion the Exchange published flash prices of selected securities on the slower moving bond tape."

By early afternoon the cascade of prices caused an emergency meeting at the offices of J.P. Morgan across the street from the Exchange. The heads of all the big banks were there: Mitchell of Citibank; Presser of Bankers Trust; Wiggin of Chase; Potter of the Guaranty Trust; Baker of First National and, of course, Lamont of the House of Morgan. They pledged over $30 million and called the "Morgan broker", Richard Whitney who got the job by cleverly being the brother of one of the Morgan senior partners.

Since there was no SEC at the time, a terrible thing happened. Some broker looked out the windows on Broad Street and noticed the major bankers of America were going into the House of Morgan. Not understanding the penalty for inside information he probably said "The bankers are meeting to form a pool." Despite the fact that no one would use such tainted data, prices began to steady.

And then Whitney entered the U.S. Steel crowd and bid 205 for 10,000. He bought only a few hundred shares but left his bid on the book. He then walked to each of the key stocks of that era and bid similarly. The market began to rally. In the final 1/2 hour selling began again but a disaster had been averted. At the bell, the tape was four hours late and the volume was an astounding 12 million shares.

(A brief note on tape lateness – in over four and a half decades of trading, I have been asked thousands of times – “How come you guys trade so slow that when things gets busy, the tape runs late?” I would reply that tape lateness had everything to do with the tape readers and not the floor broker. I, and my fellow NYSE members, can trade many, many times faster than you, or anyone can read. The tape was linear. If it printed the trades as fast we made them, it would zip by at unreadable lightning speed. So, the tape ran at maximum “reading” speed and was thus “delayed” because it couldn’t keep up with the frenzied pace of trading. Nowadays reporting is digital to a computer so prices are current and not confined to a linear tape.)

The story of Whitney’s bid of “205 for 10,000 Steel” was repeated again and again in the papers. It soon reached mythic proportions. Whitney was portrayed as the ultimate man of action, a Colossus who strode across a panicky floor trying to shield a market and a nation from collapse. Never mind it was not his money.

The image grew and Whitney was elected President of the NYSE from 1930 through 1935. He was a national celebrity who became a much sought-after speaker on things like “Business Honesty And Ethics”.

But neither Whitney nor the bankers' pool could stem the awful tide that began to crest on this particular Thursday.

Anyway, five days later, the bottom would fall out of the market. Four months later banks would begin to fail. And, ten years later Richard Whitney, again the president of the Exchange ,would be sent to Sing Sing prison for misappropriating money escrowed for widows of Exchange members.

To celebrate drop by the Smoot-Hawley Lounge and point out to some regulator that Whitney was the only inmate to serve time at Sing Sing who was called "Mr." by everyone from the warden to the denizens of death row. It was "Mr. Whitney" from the day he came in until the day, years later, when he drove off in his brother's limo.

Traders were looking for lifeboats rather than limos for much of Monday's session. Then a last hour rescue by Apple and friends removed all the angst.

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Tue, 10/23/2012 - 10:04 | 2912520 VulpisVulpis
VulpisVulpis's picture

Same as it ever was ...

Tue, 10/23/2012 - 10:18 | 2912563 kliguy38
kliguy38's picture

yes and no.......you've gotz ur PUTERS to rig it a little tighter.......but by the same token it just takes a key stroke to dump it also......so "yes" they can "tank" it  now in a nanosecond.

Tue, 10/23/2012 - 10:40 | 2912605 economics9698
economics9698's picture

For those who do not know the story the Fed lowered the reserve requirement to buy stocks from 100% to 10% in 1921. 

English central banker Montagu Norman meet with American Fed Chairman Benjamin Strong in 1924 and wanted the pound to be pre-WWI level of $4.80 instead of $3.50 so if America would inflate the money supply it would help England

Since the Fed was owned by Rothschild family residing in England this was not a problem.  The money supply was expanded 61.8% and the rest is history.

The central bankers never envisioned Hoover (29-33) would be so incompetent.  Hover raised taxes from 25% to 63%, increased federal sending 47%, and passed Smoot-Hawley tariff act, tariffs up to 61%.

And the Great Depression was born.

FDR was another class warfare stooge, raised taxes to 79%, passed minimum wage laws, the Fed doubled the reserve requirement in 37, and the disaster set the world up for WWII.  95% man made disaster.  Typical when the assholes are in charge.

Let me add Norman meet with American Secretary of the Treasury Mellon in February of 29 and told of the coming crash.  The Fed sold off all its market exposure soon afterwards.  Paul Warburg (Fed creator) notified the top 0.01%, Rockefeller, Morgan of the crash.  By the summer of 29 all the elites were out of the market. 

When this next bond market crash comes maybe we can hang these bastards instead of them spending the next decade buying up assets, ya think?

Tue, 10/23/2012 - 10:55 | 2912723 Dalago
Dalago's picture

The House of Rothschild will eventually meet its demise.  Their control is subtle but a control nonetheless.  And just the Kings they will fall.

Tue, 10/23/2012 - 11:00 | 2912749 economics9698
economics9698's picture

We need to identify who they are and where they live and plaster it all over the internet.  The days of a few elites fucking up everyone’s lives for their sick perverted amusement are coming to a end.  They will see the end of a rope.

 

Tue, 10/23/2012 - 11:17 | 2912772 BLOTTO
BLOTTO's picture

Royal Houses of Europe...bloodlines...

Tue, 10/23/2012 - 11:19 | 2912818 Spirit Of Truth
Spirit Of Truth's picture

There's no grand conspiracy by 'evil Jews'.  Man suffers from a manic-depressive creative genius syndrome:

http://www.spiritoftruth.org/Thesis/Intro/

Consequently, there's a seasonal tendency for mass panics to strike during the autumn:

http://thespiritoftruth.blogspot.com/2012/09/mans-seasonal-insanity.html

Prechter and Elliott Wave are on top of this.  I thought we'd see a seasonal mass panic into the 10/15 new moon, but I may have been off a 1/2 lunar cycle.  The 10/29 full moon, which happens to involve a Puetz eclipse crash window associated with the 11/13 total solar eclipse, might be more relevant to man's seasonal lunacy.

If the Mideast lights up, head for a bunker.

Tue, 10/23/2012 - 11:28 | 2912846 THX 1178
THX 1178's picture

Interesting stuff. I'm re-reading The Fourth Turning at the moment. Prescient. The universe is much stanger than we can imagine.

Tue, 10/23/2012 - 12:12 | 2912990 redpill
redpill's picture

You're telling me.  Got dark energy?

Tue, 10/23/2012 - 12:19 | 2913008 THX 1178
THX 1178's picture

No, but can I interest you in a "timeless instant in which all possible permutations of all the matter in the universe exists at once in superposition, which our consciousnesses crosscut to generate the illusion of time"? Or crack if you want that...

Tue, 10/23/2012 - 16:12 | 2913824 spanish inquisition
spanish inquisition's picture

Got it. Times job is to keep you from experiencing everything all at once.

Wed, 10/24/2012 - 05:11 | 2915171 THX 1178
THX 1178's picture

I didn't expect that.

Tue, 10/23/2012 - 12:19 | 2913012 bigbwana
bigbwana's picture

We are reliably informed that there are thousands of different civilisations is our galaxy, alone! Kept a great secret from us by the Illuminati, part of their strategy for a NWO. As was privatising the Fed, BOE, et al. They started all global wars and made obscene profits selling arms to both sides. They will be punished, and they know it, for their crimes against humanity. Promise the Galactic Federation (Google). The Illuminati have been defeated! WSpread the wondrous news!

Tue, 10/23/2012 - 12:25 | 2913021 THX 1178
THX 1178's picture

I'll answer this sentence by sentence:

Oh? Hmm... Yep. Most of the big ones. Probably-- I hope so. LOLWUT. The who? I'll get on that.

Tue, 10/23/2012 - 12:26 | 2913023 SMG
SMG's picture

Yea, I'll beleive that when I see the Oligarchs being drug through the street by a UFO.  Until then we still need to keep fighting the bad guys.

Tue, 10/23/2012 - 11:13 | 2912803 HeatMiser
HeatMiser's picture

Can't do that because the powers that be would call you and Anti Semite and then charge you with hate crime.

Tue, 10/23/2012 - 12:14 | 2912989 earleflorida
earleflorida's picture

countries such as great britain have territories eg., bermuda and the caymans, et.el.

the danes have greenland under their jurisdiction/ control, and many old world functioning dynasties still having the same territorial rights of many undeveloped and 3rd world {[diaspora by wars and great wars [[I & II]} countries--- think of indonesia via france? in the 19th/ 20th century, etc., etc.,!

now, to my point? ask yourself this,... why hasn't the united states claimed israel as a territory...

answers...?!

jmo 

Tue, 10/23/2012 - 15:11 | 2913582 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

"why hasn't the united states claimed israel as a territory...

answers...?!"

Sorry, but you're backwards- Israel has already claimed the United States as a territory!

Tue, 10/23/2012 - 11:59 | 2912942 SMG
SMG's picture

It's not enough to bring justice to the Elitles.  Their SYSTEM must be totally dismantled, lest new monsters fill their shoes.

Tue, 10/23/2012 - 12:37 | 2913052 economics9698
economics9698's picture

That is why we support a gold standard.

Tue, 10/23/2012 - 11:33 | 2912866 jbvtme
jbvtme's picture

i'm long guillotines

Tue, 10/23/2012 - 10:53 | 2912727 GMadScientist
GMadScientist's picture

What were taxes before Coolidge put them at 25%, chief?

 

Tue, 10/23/2012 - 10:55 | 2912733 economics9698
Tue, 10/23/2012 - 11:10 | 2912790 vato poco
vato poco's picture

Think of it...a President who *wasn't* deeply in love with the sound of his own voice, who kept his (and the USG's) nose out of other people's affairs AND cut the shit out of both government & taxes. Damn. I think I'm getting a hardon.

Tue, 10/23/2012 - 16:23 | 2913873 zerozulu
zerozulu's picture

This time, we will move toward direct taxing system.

we have 11 years of experience.

http://www.globalpost.com/sites/default/files/imagecache/gp3_full_articl...

Tue, 10/23/2012 - 12:52 | 2913096 Rusty Shorts
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- "John D. Rockefeller made $1 billion a year, measured in today's money, and paid no income tax. No one did, for income tax did not yet exist in America. Congress tried to introduce an income tax of 2 per cent on earnings over $4,000 in 1894, but the Supreme Court ruled it unconstitutional. Income tax wouldn't become a regular part of American life until 1914, and in the meantime any money that was made was kept. People would never be this rich again".

 

- excerpt from Bill Bryson's recent book "At Home"

Tue, 10/23/2012 - 12:56 | 2913110 Rusty Shorts
Rusty Shorts's picture

 - "descriptions about the period in America where there was no income tax or other major 'redistribution of wealth', and there was no centralized (communist) policy for money planning. Ideas and wealth were pouring into America with this more favorable business environment. The "gap" between the wealthiest people and the poorest was, of course, boundless, but the additional REAL wealth creation came in from overseas via massive exporting, and, in addition to the entrepreneurial "rich" creating manufacturing jobs, they threw parties and built homes that created jobs, and they funded universities and hospitals to secure their legacies (as the mega-rich very often do). They also brought art and worldly treasures to our shores that sit in our museums today. Importantly at this time, ambitious immigrant workers were certainly no less "exploited" than anywhere else in the world and, unlike the restrictive class barriers and lack of upward mobility in Europe, new and existing Americans were becoming millionaires by the tens of thousands. This growth was not agrarian via slavery (this ended in 1865) or cotton, but rather industrial via steel and ingenuity and, most importantly, via the power of property rights (including virtually no taxes, i.e. "right to your own wealth") and free markets. This unprecedented growth happened decades before "the roaring 20's" of easy credit, and before the Federal Reserve was ever created".

 -  

Tue, 10/23/2012 - 13:00 | 2913119 Rusty Shorts
Rusty Shorts's picture

Here is an excerpt from Bill Bryson's recent book "At Home" about this particular period:
"The Eiffel Tower was the most striking and imaginative large structure in the world in the nineteenth cetury, and perhaps the greatest structural achievement too, but it wasn't the most expensive building of its century or even of its year. At the very moment that the Eiffel Tower was rising in Paris, two thousand miles away in the foothills of the Appalachian Mountains in North Carolina an even more expensive structure was going up - a private residence on rather a grand scale. It would take more than twice as long to complete as the Eiffel Tower, employ four times as many workers, cost three times as much to build, and was intended to be lived in for just a few months a year by one man and his mother. Called Biltmore, it was (and remains) the largest private house ever built in North America. Nothing can say more about the shifting economics of the late nineteenth century than that the residents of the New World were now building houses greater than the greatest monuments of the Old. America in 1889 was in the sumptuous midst of the period of hyper-self-indulgence known as the Gilded Age. There would never be another time to equal it. Between 1850 and 1900 every measure of wealth, productivity and well-being skyrocketed in America. the country's population in the period tripled, but its wealth increased by a factor of thirteen. Steel production went from 13,000 tons a year to 11.3 million. Exports of metal products of all kinds - guns, rails, pipes, boilers, machinery of every description - went from $6 million to $120 million. The number of millionaires, fewer than twenty in 1850, rose to forty thousand by century's end. Europeans viewed America's industrial ambitions with amusement, then consternation and finally alarm".

Tue, 10/23/2012 - 11:28 | 2912829 LMAOLORI
LMAOLORI's picture

 

 

Oh goody history :)  who do we have to thank for the Fed? Our politicians in particular...

 

If Obama wins, will he go down as another Woodrow Wilson?

snip

There has only been one president in American history who won a second term by a smaller popular vote percentage and electoral vote margin than four years before. That was Woodrow Wilson, the Democrat elected in a three-way contest against his two predecessors in 1912 and re-elected in 1916 by 49 to 46 percent in popular votes and 277 to 254 in the Electoral College.

If California, which then had only 13 electoral votes, had not gone for Wilson by 3,773 votes, the incumbent would have lost.

In his first term, Wilson had legislative accomplishments more popular than Obama’s. A partisan Democratic Congress passed a new antitrust act, created the Federal Trade Commission and the Federal Reserve, lowered trade barriers and imposed an income tax on high earners.

When Americans voted in November 1916, World War I had been raging in Europe for more than two years. Hundreds of thousands were dying in trench warfare, and Wilson ran on the slogan of, “He kept us out of war.”

Wilson’s second term was wholly unlike his first. In April 1917, he went before Congress and got approval for a declaration of war against Germany. A military draft was instituted, a law passed criminalizing antiwar protests, the railroads were nationalized, and the top income tax rate was raised to 77 percent.

Who got us out of FDR's mess?

America’s Greatest Depression Fighter

http://www.lewrockwell.com/orig4/powell-jim4.html

 

 

Tue, 10/23/2012 - 12:27 | 2913022 earleflorida
earleflorida's picture

wilson's 2nd wife literally and figuratively ran the white house -- lock, stock, and barrel!

http://www.virtualology.com/usfirstladies/EDITHWILSON.COM/

Tue, 10/23/2012 - 11:36 | 2912875 resurger
resurger's picture

Word!

Tue, 10/23/2012 - 10:51 | 2912717 GMadScientist
GMadScientist's picture

Especially if that 'keystroke' is on the '1/0' switch on the back. ;)

Tue, 10/23/2012 - 10:05 | 2912522 fonzannoon
fonzannoon's picture

From Schiff yesterday

"I do not believe that the stock market is as vulnerable to another Black Monday. With the Federal Reserve so committed to its current course of quantitative easing, it seems to me unlikely that they will allow such a steep one-day drop. Also, with bond yields so low, domestic investors are currently presented with fewer attractive options. If anything, the next Black Monday is more likely to occur in the currency and/or bond markets, with safe haven flows moving into gold not treasuries."

Tue, 10/23/2012 - 10:20 | 2912575 JPM Hater001
JPM Hater001's picture

Whoa whoa hwoa...

Are you saying the markets are rigged?

peshaw.

Tue, 10/23/2012 - 10:29 | 2912629 economics9698
economics9698's picture

Yes the bond market is the next collapse.  

Tue, 10/23/2012 - 11:49 | 2912912 LMAOLORI
LMAOLORI's picture

 

 

PPT really = Presidential (and Bank) Protection Team 

“You read about traders that aren’t trading. So who’s making the volume? Is it the plunge protection team? The government’s manipulating it? We don’t have any answers to that,” said Yamada. 

http://www.cnbc.com/id/49434576/Full_Speed_Ahead_Stocks_May_Top_2012_Highs

Tue, 10/23/2012 - 10:30 | 2912618 Gene Parmesan
Gene Parmesan's picture

That assumes that a little bleed-off and ensuing light panic are viewed as negatives by the decision makers at present. What's the current trajectory of the election? If it's perceived by TPTB that, barring an event of some kind, Romney is on track to win, then a little shakeup - a crisis if you will - might be just what they're looking for.

Tue, 10/23/2012 - 10:28 | 2912622 Dr. Engali
Dr. Engali's picture

I like Schiff but I wouldn't bet on that in a moment. The Bernank has chased away all the bears,and therefore the buyers at lower levels.If the robots withdraw their "liquidity" look out below the cascade will be bloody.

Tue, 10/23/2012 - 10:35 | 2912654 Vince Clortho
Vince Clortho's picture

The big ? in all this is the bots withrdrawing "liquidity".  It would have to be an intentional act, since their reserves are limited only by the cp's own printing presses.

Tue, 10/23/2012 - 10:31 | 2912634 BooMushroom
BooMushroom's picture

So, Schiff, does this mean that if the dumb money decides they all want out, so they can pay the space rent for their mobile homes and buy more cat food, that the Fed and the smart money will keep driving everything up anyway?

Oh, wait, I guess that's what's happening. Last human out, please turn off the lights! The robots can trade in the dark.

Tue, 10/23/2012 - 10:08 | 2912530 New Survivalist
New Survivalist's picture

Thin air, bitchez!

Tue, 10/23/2012 - 10:10 | 2912537 firstdivision
firstdivision's picture

On this date in 1929, you didn't have the FRBNY waving its wand and conjuring up the spell, "hit-ius every offer-ous".   

Tue, 10/23/2012 - 10:23 | 2912593 John McCloy
John McCloy's picture

Agreed and when the date arrives that unprecedented BS accounting, QE's, global bond buying and 6 years of ZIRP could not halt a crash in it's tracks is going to be quite the frightening day & they can "Forgeticus" about anything aside from a bank holiday, banning all selling and martial law stopping the inevitable.

    The markets are always seeking out fair value and on a long enough time line everything else done in the past decades and most recently is NOTHING but a temporary market distortion and is artificial. All pipers get paid eventually.

Tue, 10/23/2012 - 10:27 | 2912606 madcows
madcows's picture

Free Benny bucks, Obama-phones and Biden jokes for everyone!  Don't worry, it's not like it's real money... it's a promisory note from the Cartel Federal Reserve.  It's even got Turbo Timmy's signature on it.

Tue, 10/23/2012 - 10:11 | 2912541 insanelysane
insanelysane's picture

After 3 presidential debates and 1 vice presidential debate I don't know how anyone could be selling?   Regardless of who wins...Buy, buy, buy!!!

 

</sarc>

Tue, 10/23/2012 - 10:16 | 2912562 fuu
fuu's picture

Don't forget the First Wives debate.

Tue, 10/23/2012 - 10:37 | 2912657 Vince Clortho
Vince Clortho's picture

More excitement than reruns of "Laverne and Shirley"?

Tue, 10/23/2012 - 10:38 | 2912659 fuu
fuu's picture

Who do you think did better?

Tue, 10/23/2012 - 10:53 | 2912731 GMadScientist
GMadScientist's picture

69? I call it a 'draw'.

Tue, 10/23/2012 - 10:12 | 2912542 LongSoupLine
LongSoupLine's picture

Those "offices" at JP Morgue are still active. Since then, they've added a Fed red phone.

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