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This Week in History
October 19-25, 2014

Black Tuesday 1929: Just a 'Correction'

October 22, 1929

This article was originally published in the October 30, 1987 issue of Executive Intelligence Review and is reprinted with permission.

[PDF version of this article in Executive Intelligence Review]

Even a cursory look into the archives of the 1929-33 period, following the crash of the stock market in October 1929, reveals some striking parallels to the responses of today's elected officials and "financial analysts":

Oct. 22, 1929. Professor Irving Fisher of Yale: "Even in the present high market the prices of stocks have not caught up with their real values. Yesterday's break was a shaking out of the lunatic fringe that attempts to speculate on margin."

Oct. 23, 1929. Stocks fell sharply.

Oct. 24, 1929. Charles E. Mitchell of National City Bank: "This reaction has badly outrun itself."

Oct. 24, 1929. New York Times: "Confidence in the soundness of the stock market structure notwithstanding the upheaval of the last few days was voiced last night by bankers and other financial leaders."

Oct. 24, 1929. Thomas W. Lamont of J.P. Morgan and Co.: "Prices of many important issues had been carried down below the levels at which they might be fairly expected to sell."

Oct. 25, 1929. President Herbert Hoover: "The fundamental business of the country, that is, production and distribution, is on a sound and prosperous basis."

Oct. 26, 1929. Stocks again fell sharply.

Oct. 29, 1929. Stocks plunged wildly. John D. Rockefeller announced that conditions were fundamentally sound, and he was buying stocks.

Oct. 30, 1929. John J. Raskob, Democratic Party National Chairman, in a statement in the New York Times: "Prudent investors are now buying stocks in huge quantities and will profit handsomely when this hysteria is over and our people have opportunity in calmer moments to appreciate the great stability of business by reason of the sound fundamental economic conditions in this great country of ours."

Nov. 18, 1929. William Green, president of the American Federation of Labor: "The Federal Reserve System is operating, serving as a barrier against financial demoralization. Within a few months industrial conditions will become normal, confidence and stablilization in industry and finance will be restored."

Mass unemployment then struck American labor. Banks collapsed throughout the world.

Oct. 22, 1932. Detroit, Michigan. Speech of President Herbert Hoover: ". . . the tide has turned and the gigantic forces of depression are in retreat. Our measures and policies have demonstrated their effectiveness. Recovery would have been faster but for four months of paralysis during the spring months while we were defeating proposals of the Democratic House of Representatives to increase governmental expenses by $3.5 billion.

"Manufacturing production has increased by ten percent . . . . The Department of Commerce shows that over 180,000 workers returned to the manufacturing industry in August, 360,000 more in September .... "

1932. Campaign slogan of President Herbert Hoover: "Prosperity is just around the corner."

The Great Depression increased in its fury, continuing until 1939. Then President Franklin Roosevelt, in defense preparations, geared up the peacetime economy, deliberately promoting industrial development with cheap credit and government contracts.