Wall Street and The Great Depression

Wall Street and The Great Depression

“You could talk about Prohibition, or Hemingway, or air conditioning, or music, or horses, but in the end you had to talk about the stock market, and that was when the conversation became serious.”

[From John Brooks’s Once in Golconda]

Wall Street has a long and varied 200-plus years of history, full of colorful vignettes and wheeling-dealing. Almost from the moment that the market was organized out-of-doors in the 18th century, it has been a symbol of the best and worst finance has had to offer. It has been known for its scandals, avarice, and greed on the one hand and ingenuity and even patriotism on the other. At times, it is impossible to live with, while at others, impossible to live without. And lurking just below the surface, are events and personalities that have shaped American history.

Wall Street and The History of the Stock Market

In March of 1792, twenty-four of New York City’s leading merchants met secretly to discuss ways to bring order to the securities business and to wrest it from their competitors, the auctioneers. Two months later, on May 17, 1792, these merchants signed the Buttonwood Agreement, calling for the signers to trade securities only among themselves, to set trading fees, and not to participate in other auctions of securities. These men had founded what was to become the New York Stock Exchange.

The New York Stock Exchange rented a room on Wall Street and every morning the president, Anthony Stockholm, read the stocks to be traded. The exchange was an exclusive organization, new members were required to be voted in, and a candidate could be black-balled by three negative votes. In 1817 a seat on the exchange cost $25, in 1827 it increased to $100, and in 1848 the price was $400.

By 1929, the Wall Street con game had convinced millions of Americans that the country was riding on an upward spiraling wave of financial glory and both rich and poor had put their money into stocks and bonds. Stock prices were pushed up beyond any relationship with the actual worth of the companies.

But, as history shows, what goes up, must come down:

ü October 24, 1929 “Black Thursday”: A record 12.9 million shares changed hands on Black Thursday (a new record – 4 million shares was considered a busy day back then) and the ticker tape fell behind by one and a half hours.