Despite
further reductions in the discount rate to 4 percent, it shed a
whopping 89 percent in nominal terms when it hit bottom three years
later.
Everyone was duped. The rich were impoverished overnight. Small time
margin traders - the forerunners of today's day traders - lost their
shirts and much else besides. The New York Times:
"Yesterday's market crash was one which largely affected rich men,
institutions, investment trusts and others who participate in the
market on a broad and intelligent scale. It was not the margin
traders who were caught in the rush to sell, but the rich men of the
country who are able to swing blocks of 5,000, 10,000, up to 100,000
shares of high-priced stocks. They went overboard with no more
consideration than the little trader who was swept out on the first
day of the market's upheaval, whose prices, even at their lowest of
last Thursday, now look high by comparison ...
To most of those who have been in the market it is all the more awe-
inspiring because their financial history is limited to bull
markets."
Overseas - mainly European - selling was an important factor. Some
conspiracy theorists, such as Webster Tarpley in his "British
Financial Warfare", supported by contemporary reporting by the likes
of "The Economist", went as far as writing:
"When this Wall Street Bubble had reached gargantuan proportions in
the autumn of 1929, (Lord) Montagu Norman (governor of the Bank of
England 1920-1944) sharply (upped) the British bank rate,
repatriating British hot money, and pulling the rug out from under
the Wall Street speculators, thus deliberately and consciously
imploding the US markets.
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