Posted by
Forgive My Patriotism on Tuesday, October 14, 2008 11:14:41 AM
“People are not in need of absolute truths; were it otherwise, progress would be arrested and life would cease in humanity; the ebb and flow of contrary ideas, the clash of opinions, the passions of the time, ever impelled by its dreams, are necessary to the intellectual growth of peoples. The people know it full well, and therefore they would quickly avoid a real doctor to gather themselves around hucksters who sell quack medicines. Some of these hucksters that are thought of as great thinkers, especially, too often resemble children playing charades. They quickly avoid those who know the answer already, lest the game be spoiled by depriving the puzzle of the question of all its interest.”
“black Magic may be defined as the art of inducing artificial mania in ourselves and in others.” Eliphas Levi
In case this bit of history has escaped anyone. The parallels to today are uncanny. One major difference is, the Rescue Package in the 1930s (New Deal leap into Red Socialism) didn't occur until we were already fully into a depression. But for this generation, it is being done simultaneously.
The stock market crash occurred in three phrases - black Thursday, black Monday, and black Tuesday. All three are appropriate, for the crash was not a one-day affair. The initial crash occurred on black Thursday (October 24, 1929), but it was the catastrophic downturn of black Monday and Tuesday (October 28 and 29, 1929) that precipitated widespread panic and the onset of unprecedented and long-lasting consequences for the United States. The collapse continued for a month.
Greatest Stock Market Gains
6 Oct 1931 14.8%
30 Oct 1929 12.34%
21 Sep 1932 11.36%
13 Oct 2008 11.1%
21 Oct 1987 10.15
In the days leading up to black Tuesday, the market was severely unstable. Periods of selling and high volumes of trading were interspersed with brief periods of rising prices and recovery. Economist and author Jude Wanniski later correlated these swings with the prospects for passage of the Smoot-Hawley Tariff Act, which was then being debated in Congress. After the crash, the Dow Jones Industrial Average (DJIA) recovered early in 1930, only to reverse again, reaching a low point of the great bear market in 1932. The Dow did not return to pre-1929 levels until late 1954, and was lower at its July 8, 1932 level than it had been since the 1800s.
After an amazing five-year run when the world saw the Dow Jones Industrial Average (DJIA) increase in value fivefold, prices peaked at 381.17 on September 3, 1929, The market then fell sharply for a month, losing 17% of its value on the initial leg down. Prices then recovered more than half of the losses over the next week, only to turn back down immediately afterwards. The decline then accelerated into the so-called "black Thursday", October 24, 1929. A record number of 12.9 million shares were traded on that day. At 1 p.m. on Friday, October 25, Richard Whitney, vice president of the Exchange, with the bankers' financial resources behind him, placed a bid to purchase a large block of shares in U.S. Steel at a price well above the current market. As amazed traders watched, Whitney then placed similar bids on other “blue chip” stocks. This tactic was similar to a tactic that ended the Panic of 1907, and succeeded in halting the slide that day. In this case, however, the respite was only temporary
On Monday, October 28, the first "black Monday", more investors decided to get out of the market, and the slide continued with a record loss in the Dow for the day of 13%. The next day, "black Tuesday", October 29, 1929, about 16 million shares were traded. The volume on stocks traded on October 29, 1929 was "...a record that was not broken for nearly 40 years, in 1968." Author Richard M. Salsman wrote that on October 29 — amid rumors that U.S. President Herbert Hoover would not veto the pending Hawley-Smoot Tariff bill—stock prices crashed even further."
William C. Durant joined with members of the Rockefeller family and other financial giants to buy large quantities of stocks in order to demonstrate to the public their confidence in the market, but their efforts failed to stop the slide. The DJIA lost another 12% that day. The ticker did not stop running until about 7:45 that evening. The market lost $14 billion in value that day, bringing the loss for the week to $30 billion, ten times more than the annual budget of the federal government, far more than the U.S. had spent in all of World War I.
An interim bottom occurred on November 13, with the Dow closing at 198.6 that day. The market recovered for several months from that point, with the Dow reaching a secondary peak (ie, dead cat bounce) at 294.0 in April 1930. The market embarked on a steady slide in April 1931 that did not end until 1932 when the Dow closed at 41.22 on Jul 8, concluding a shattering 89% decline from the peak. This was the lowest the stock market had been since the 19th century.
The New Deal was the name that President Franklin D. Roosevelt gave to a sequence of programs he initiated between 1933 and 1936 and with the goal of giving work (relief) to the unemployed, reform of business and financial practices, and recovery of the economy during The Great Depression.
Whatever the reason, whatever the excuse, whatever the stated need or the perceived good it can do, every time government steps in, we lose freedom. This time it is an enormous loss, and we are all standing at the feet of the Duke and the Dauphin asking for it.
http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929
http://en.wikipedia.org/wiki/New_Deal