By DIVYA WATAL
Seventy-five years ago, on October 24, 1929, known to history as Black Thursday, a seismic event shook the New York Stock Exchange. It resulted in a catastrophic collapse in share prices, a chain reaction of bankruptcies, and an economic depression that lasted more than a decade, creating mass unemployment.
Today, at the trading floor on 18 Broad St., at the corner of Wall St., NYSE traders, who yell and cry to sell and buy shares of more than 2,800 companies worldwide, seem oblivious to the upcoming 75th anniversary of Black Thursday.
“There’s not too much concern on the floor,” said trader Lawrence Rodano. “Most people aren’t even aware of it.” Half a dozen other traders interviewed had similar opinions.
Rodano agreed, however, that October seemed to be a jinxed month for Wall Street — the stock market crashes of 1929, 1987, and 1997 all took place toward the end of October. Does “October phobia” affect the NYSE?
“Right now there are a lot more things on people’s minds,” said another trader, who preferred to remain anonymous. Terrorism, the price of oil, and the upcoming election are bigger issues on the floor than October phobia, he said. “Maybe people care about the ’87 crash, but ’29 — no one cares. It’s too far back,” he added.
Nevertheless, not everyone has forgotten the 1929 Wall Street fiasco — the Museum of American Financial History is sponsoring a guided walking tour of Lower Manhattan on Saturday, Oct. 30.
Conducted by James S. Kaplan, an attorney and political historian, and Richard M. Warshauer, a commercial real estate executive and Wall Street enthusiast, the tour will delve into the political, financial, real estate and architectural history of New York’s Financial District. Kaplan and Warshauer started the walking tour in 1988, after the stock market crash of 1987, and have been updating it every year since then. This year, of course, is an important one for them.
In the realm of history and economics, the crash of 1929 has taken on mythical significance over the last three-quarters of a century. After the experience of Black Thursday, where 13 million shares were disposed of in a single day, stock markets around the world introduced measures to temporally suspend trading in the event of heavy losses. Since then, no crash has been as severe, although after every subsequent big drop, new “preventive” measures are often put in place.
“Some years, like some poets and politicians and some lovely women, are singled out for fame far beyond the common lot, and 1929 was clearly such a year,” wrote John Kenneth Galbraith in his seminal book, “The Great Crash: 1929.”
Part of the reason the crash of 1929 has such import in the collective consciousness of history and economics aficionados is that no one knows for certain why it happened. Experts always offer explanations, but the fear that market forces could cause (and did cause, in 1987 and 1997) such a panic again is ingrained in recollections of the event.
Galbraith, in his book, thoroughly analyzed why the economy was unsound in 1929. America in the 1920s had corporate structures that encouraged frauds, imposters, grafters and swindlers. It was a “flood tide of corporate larceny,” wrote Galbraith. The banking system was inherently weak — when one bank failed, the assets of other banks were immediately frozen, leading to investor panic and a domino effect of bank failures. Lastly, the idea of using deficit spending to jump-start the economy had not yet been accepted. President Hoover’s advisors were urging him to balance the budget instead of spending more money to relieve a distressed economy or reducing taxes to alleviate the drop in wages.
However, one of the greatest myths about the crash of 1929 is that traders and bankers were jumping off buildings and committing suicide in droves. A story, probably apocryphal, often told is that clerks in Downtown hotels were asking guests if they wanted the room for sleeping or jumping. In fact, Lower Manhattan was not littered with bloodied bodies, and the suicide rate did not deviate from its normal level.
Another myth is that the crash of 1929 caused the Great Depression — in reality, the recession had already begun, and more likely, it caused the crash.
The three-hour walking tour of Lower Manhattan will illuminate the “great crash” further, uncovering little-known facts about the area’s rich history. The tour starts at 1 p.m. at 28 Broadway, between Beaver St. and Exchange Place. Tickets are $15 each ($10 for students and seniors), payable at the start of the tour. For advance tickets, please contact Kristin Aguilera at the Museum of American Financial History at info@financialhistory.org or (212) 908-4695.
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