Cautionary voices - such as Paul Warburg, the influential banker,
Roger Babson, the "Prophet of Loss" and Alexander Noyes, the eternal
Cassandra from the New York Times - were derided. The number of
brokerage accounts doubled between March 1927 and March 1929.
When the market corrected by 8 percent between March 18-27 -
following a Fed induced credit crunch and a series of mysterious
closed-door sessions of the Fed's board - bankers rushed in. The New
York Times reported: ``Responsible bankers agree that stocks should
now be supported, having reached a level that makes them
attractive.'' By August, the market was up 35 percent on its March
lows. But it reached a peak on September 3 and it was downhill since
then.
On October 19, five days before "Black Thursday", Business Week
published this sanguine prognosis:
"Now, of course, the crucial weaknesses of such periods -- price
inflation, heavy inventories, over-extension of commercial credit --
are totally absent. The security market seems to be suffering only
an attack of stock indigestion... There is additional reassurance in
the fact that, should business show any further signs of fatigue,
the banking system is in a good position now to administer any
needed credit tonic from its excellent Reserve supply."
The crash unfolded gradually.
Pages:
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104