The Worst News in the History of Finance

I've been spending time lately holed up in the Library of Congress in Washington, DC, reading old financial newspapers. Eventually I hope to turn this (oh-so thrilling) experience into an article on what the past teaches us about the future, but I've grown antsy.

I want to share something.

The stock market collapsed on October 29, 1929. The day marked the unofficial start of the Great Depression, and the Dow Jones went on to lose nearly 90% of its value.

What were newspapers saying about markets and the state of the economy in the days immediately before the crash?

Most put on a remarkable display of sheer obliviousness.

Yes, I'm saying that with hindsight. But as I scoured the papers documenting the week before the crash of 1929, I could not find one hint of pessimism, even in the face of a cracking market and souring economy.

Take these opinions of some of the most powerful men in business at the time, documented in the October 26th edition of The New York Times in an article titled, "'All Well' is View of Business Chiefs." They are responding to a relatively small intra-day market dip three days before the crash:

Arthur W. Loasby, president of the Equitable Trust Company: "There will be no repetition of the break of yesterday. The market fell of its own weight without regard to fundamental business conditions, which are sound. I have no fear of another comparable decline."

J.L. Julian, partner of the New York Stock Exchange firm of Fenner & Beane: "The worst is over. The selling yesterday was panicky brought on by hysteria. General conditions are good. Our inquires assure us that business throughout the country is sound."

M.C. Brush, president of the American International Corporation: "I do not look for a recurrence of Thursday and believe that the very best stocks can be bought at approximate present prices."

John M Davis, president of the Lackawana Railroad: "Railroads are the largest consumers of steel, copper, coal, lumber and many manufactured articles, and records show that not only the railroads but also the manufacturers are carrying the lowest inventories since the World War, and with that condition there is no reason to believe that this country will not have good general business throughout the winter."

R.B. White, president of the Central Railroad of New Jersey: "There is nothing alarming in the situation as regards business. Business will continue the way it had. Plans in the railroad for the future have in no way been changed."

It is almost as if the journalist compiling these quotes said, "Gentlemen, try as hard as you can to look foolish 80 years from now."

It was clear, however, that the breaking market was already having an impact on the American psyche. Take this short article, buried deep in the same paper on October 26, 1929:

Bernard H. Sandler, attorney of 225 Broadway, was asked yesterday morning by Mrs. Abraham Germansky of Mount Vernon to help find her husband, missing since Thursday Morning. Germansky, who is 50 years old and an east side real estate operator, was said by Sandler to have invested heavily in stocks.

Sandler said he was told by Mrs. Germansky that a friend saw her husband late Thursday on Wall Street near the stock exchange. According to her informant, her husband was tearing a strip of ticker tape into bits and scattering it on the sidewalk as he walked toward Broadway.

Three days later, the economy and markets collapsed.

The article The Worst News in the History of Finance originally appeared on

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