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Good-bye To Everything!
For the first half hour on that fateful Thursday, stock prices were steady.
August 1965 | Volume 16, Issue 5
Except for this bizarre expectation there was little external emotion cither on Wall Street or elsewhere. According to Edwin Lefèvre, a veteran Stock Exchange reporter, the faces of the watchers expressed “not so much suffering as a sort of horrified incredulity.” In brokers’ branch olliccs, crowds overflowed from buildings, blocking sidewalks, forcing nonspeculating tenants to use service entrances. “They stood there,” Lefèvre said, “dying men counting their own last pulse beats.” He did not see a single one telling his neighbor his tale of woe. Each kept his misery to himself. As the ticker fell further behind, many called the Exchange door for current news. Few got through; most telephone lines were jammed. When one did, he would come back, report the news, and other men would simply shake their heads or just gulp.
There was more visible grief in the uptown brokers’ offices that kept separate rooms for women clients. One elderly woman sat all day in the first row at one office, weeping quietly, while her daughter tried to comfort her. In the office of De Saint Phalle & Co., at Park and Fifty-seventh, there was an attendant on duty with smelling salts.
On the Atlantic, aboard the luxury liner Berengaria , which the resourceful Michael J. Meehan had equipped with a broker’s office and ticker tape, a replay of scenes on land took place. Games, chats, all the ordinary ritual of shipboard life, ceased, and passengers jammed the deck outside the broker’s office. One woman lost $160,000 in the morning’s trading, and the ship’s radioman all but wore out his fingers flashing orders for nearly 20,000 shares in the course of the day. It was, one passenger declared, a “deathwatch that even kept people from their meals.”
At about twelve o’clock on the Exchange floor, the dreaded “no bid” became commonplace. One of the basic principles (and mysteries) of the speculators’ market has always been the readiness of someone else to buy when stocks are offered for sale. But now blue chips were dropping five and ten points between bids. Around steel’s No. 2 post, there was even worse news. The market leader had crashed below 200 and was rapidly approaching 190.
But help was on its way. To the august offices of J. P. Morgan and Company at 23 Wall Street hurried Charles E. Mitchell, chairman of the National City Bank; Albert H. Wiggin, chairman of the Chase National Bank; William C. Potter, president of the Guaranty Trust Company; Seward Prosser, chairman of the Bankers Trust Company. Together they represented six billion dollars of what the New York Times called “massed banking resources.” Their host was Thomas W. Lamont, Morgan’s senior partner.
Word of the meeting was enough to steady prices on the Stock Exchange floor. Traders with a sense of history recalled a similar meeting on October 24, 1907, when J. P. Morgan, E. H. Harriman, James Stillman, Henry Clay Frick, and other titans of the time had created a $25,000,000 pool which saved a plunging market. The eitler Morgan was dead now, and his son was in Europe. But the firm’s name was enough to raise hopes everywhere, as the information purred out over the news ticker.
At about twelve thirty, reporters were summoned to Lament’s office. With a perfectly straight face, he told them: “There has been a little distress selling on the Stock Exchange, and we have held a meeting of the heads of several financial institutions to discuss the situation. We have found that there are no houses in difficulty, and reports from brokers indicate that margins are being maintained satisfactorily.”
Lamont declared that the situation was being caused by a “technical condition of the market, rather than any fundamental cause.” He said that in many places “air holes” had developed in sections of the list. But the situation was “susceptible of betterment.”
What Lament meant by betterment was soon apparent on the Exchange floor. Though panic with its most awful leer was no longer in command, the situation could hardly be called rosy. In three hours, valuations had crashed by an incredible $11,250,000,000. At one thirty, into the maelstrom strolled Richard F. Whitney, vice president of the Stock Exchange and brother of a Morgan partner. Handsome, debonair, a noted huntsman, Whitney had aristocrat written all over him. He often traded on the floor for the House of Morgan. “They”—the creators of “organized support”—could have chosen no better representative. Coolly, Whitney made his way through the chaotic throng around Post No. 2, and in a loud but calm voice, bid 205 for 10,000 shares of U.S. Steel. This was the price of the last sale. He was in effect ignoring as beneath contempt those lower bids which had yet to find a seller, and laying out $2,050,000, some twelve points above the market.
Whitney got 200 shares and left the rest of his order with the steel specialist. Then, like a messenger from the gods, he strolled from post to post around the Exchange, and left similar bids for fifteen or twenty other stocks. It was obvious to everyone that the bankers were at work for “betterment.” They had, in fact, pooled some $30,000,000 to shore up the market.