On this day in economic and business history...
Oct. 28, 1929, the original Black Monday, is one of two days most identified with the Great Crash that wiped out a generation of stock market gains. That day, the Dow Jones Industrial Average fell by 13.5%, a decline only surpassed once in the index's history. Different newspapers took diametrically different stances when reporting on the unprecedented collapse. The Los Angeles Times wrote of Wall Street "weed[ing] out speculative accounts and plac[ing] its house in order after the wild orgy of speculation ... which has taken place in the last five years." The Chicago Daily Tribune, however, gave full voice to the hysteria that had swept through the market:
The second hurricane of hysterical liquidation within four days hit the New York stock market today. It came suddenly and with awe inspiring violence, after holders of stocks had been lulled into a false sense of security by the rallies of Friday and Saturday. It was a countrywide collapse of open market security values which in declines established and actual dollars and cents losses taken was probably the most far reaching in the history of the New York exchange. It was calculated tonight that the total price shrinkage during the day in American securities on all exchanges had aggregated some 14 billion dollars.
More than 9 million shares were sold on Black Monday -- then the second-largest total in history behind Black Thursday, the aforementioned first "hurricane of hysterical liquidation." The estimated marketwide loss of $14 billion was worth nearly 15% of the national GDP, which makes it the largest single loss in GDP terms to this day -- the more recent Black Monday of 1987 only saw a loss equal to 10% of GDP. Many Dow stocks suffered terribly. AT&T Inc. (NYSE:T) lost $449 million in market value, General Electric Company (NYSE:GE) had $343 million of its market value destroyed, General Motors Company (NYSE:GM)'s market cap shrank by $204 million, and U.S. Steel lost $142 million. These four bellwether stocks were responsible for more than 7% of the day's total losses.
Washington officials reiterated President Herbert Hoover's earlier statement that business fundamentals were sound. An anonymous source close to the White House told The Washington Post that the crazed trading action of recent days was "something of an indication that the depression would not be prolonged, even with reference to stock prices."
The banking cabal led by JPMorgan Chase & Co. (NYSE:JPM), established on Black Thursday in response to a record level of fear-fueled trading, offered no public statement, as it felt none was warranted. The bankers' silence only served to amplify the sell-off, as many investors appeared to believe this group was to serve as an implicit floor against steep declines, not to "merely supply bids where no bids existed," according to the Chicago Daily Tribune. The New York Times took the pulse of the market that afternoon and found it remarkably calm:
Many level-headed bankers and brokers expressed the opinion after the market's close ... that the reaction had been overdone, and that many stocks were worth in excess of their open market price on the year's earnings alone. It would be hard to find one in Wall Street who believed a month ago that any such situation as the present one would have been encountered.
Those bankers and brokers changed their tune eventually. They would have no choice as the great Crash of 1929 barreled onward into the history books.