and was thus preparing for future emergencies, traders who had sold out higher up were coming back into the market again with new purchases, in the hope that the bottom had been reached. (Hadn't they often been told that "the time to buy is when things look blackest"?) The newspapers carried a very pretty series of reassuring statements from the occupants of the seats of the mighty; Herbert Hoover himself, in a White House statement, pointed out that "the fundamental business of the country-that is, production and distribution of commodities-is on a sound and prosperous basis." But toward the close of Saturday's session prices began to slip again. And on Monday the rout was underway once more.

The losses registered on Monday were terrific-172 points for steel, 47% for General Electric, 36 for Allied Chemical, 3411⁄2 for Westinghouse, and so on down a long and dismal list. All Saturday afternoon and Saturday night and Sunday the brokers had been struggling to post their records and go over their customers' accounts and sent out calls for further margin, and another avalanche of forced selling resulted. The prices at which Mr. Whitney's purchases had steadied the leading stocks on Thursday were so readily broken through that it was immediately clear that the bankers' pool had made a strategic retreat. As a matter of fact, the brokers who represented the pool were having their hands full plugging up the "air holes"in the listin other words, buying stocks which were offered for sale without any bids at all in sight. Nothing more than this could have been accomplished, even if it could have been wisely attempted. Even six great banks could hardly stem the flow of liquidation from the entire United States. They could only guide it a little, check it momentarily here

and there.

Once more the ticker dropped ridiculously far behind, the lights in the brokers' offices and the banks burned till dawn, and the telegraph companies distributed thousands of margin calls and requests for more collateral to back up loans at the banks. Bankers, brokers, clerks, messengers were almost at the end of their strength; for days and nights they had been driving themselves to keep pace with the most terrific volume of business that had ever descended upon them. It did not seem as if they could stand it much longer. But the worst was still ahead. It came the next day, Tuesday, October 29.

The big gong had hardly sounded in the great hall of the exchange at 10 o'clock Tuesday morning before the storm broke in full force. Huge blocks of stock were thrown upon the market for what they would bring; 5,000 shares, 10,000 shares appeared at a time on the laboring ticker at fearful recessions in price. Not only were innumerable small traders being sold out, but big ones, too, protagonists of the new economic era who a few weeks before had counted themselves millionaires. Again and again the specialist in a stock would find himself surrounded by brokers fighting to sell-and nobody at all even thinking of buying. To give one single example: During the bull market the common stock of the White Sewing Machine Co. had gone as high as 48; on Monday, October 28, it had closed at 1113. On that black Tuesday, Somebody-a clever messenger boy for the exchange, it was rumored had the bright idea of putting in an order to buy at 1-and in the temporarily complete absence of other bids he actually got his stock for a dollar a share. The scene on the floor was chaotic. Despite the

jamming of the communication system, orders to buy and sell-mostly to sell came in faster than human beings could possibly handle them; it was on that day that an exhausted broker, at the close of the session, found a large wastebasket which he had stuffed with orders to be executed and had carefully set aside for safekeeping-and then had completely forgotten. Within half an hour of the opening the volume of trading had passed 3 million shares, by 10 o'clock it had passed 8 million, by half past one it had passed 12 million, and when the closing gong brought the day's madness to an end the gigantic record of 16,410,030 shares had been set. Toward the close there was a rally, but by that time the average prices of 50 leading stocks, as compiled by the New York Times, had fallen nearly 40 points. Meanwhile there was a near panic in other markets the foreign stock exchanges, the lesser American exchanges, the grain market.

So complete was the demoralization of the stock market and so exhausted were the brokers and their staffs and the stock exchange employees, that at noon that day, when the panic was at its worst, the governing committee met quietly to decide whether or not to close the exchange. To quote from an address made some months later by Richard Whitney: "In order not to give occasion for alarming rumors, this meeting was not held in the governing committee room but in the office of the president of the Stock Clearing Corp. directly beneath the stock exchange floor. *** The 40 governors came to the meeting in groups of 2 and 3 as unobstrusively as possible. The office they met in was never designed for large meetings of this sort, with the result that most of the governors were compelled to stand, or to sit on tables. As the meeting progressed, panic was raging overhead on the floor. * The feeling of those present was revealed by their habit of continually lighting cigarettes, taking a puff or two, putting them out and lighting new ones a practice which soon made the narrow room blue with smoke. **** Two of the Morgan partners were invited to the meeting and, attempting to slip into the building unnoticed so as not to start a new flock of rumors, were refused admittance by one of the guards and had to remain outside until rescued by a member of the governing committee. After some deliberation, the governors finally decided not to close the exchange.

It was a critical day for the banks, that Tuesday the 29th. Many of the corporations which had so cheerfully loaned money to brokers through the banks in order to obtain interest at 8 or 9 percent were now clamoring to have these loans called-and the banks were faced with a choice between taking over the loans themselves and running the risk of precipitating further ruin. It was no laughing matter to assume the responsibility of millions of dollars' worth of loans secured by collateral which by the end of the day might prove to have dropped to a fraction of its former value. That the call money rate never rose above 6 percent that day, that a money panic was not added to the stock panic, and that several Wall Street institutions did not go down into immediate bankruptcy, was due largely to the nerve shown by a few bankers in stepping into the breach. The story is told of one banker who went grimly on authorizing the taking over of loan after loan until one of his subordinate officers came in with a white face and told him that the bank was insolvent. "I dare say," said the banker, and went ahead unmoved. He knew that if he did not, more than one concern would face insolvency.

The next day-Wednesday, October 30-the outlook suddenly and providentially brightened. The directors of the Steel Corp. had declared an extra dividend; the directors of the American Can Co. had not only declared an extra dividend, but had raised the regular dividend. There was another flood of reassuring statements though by this time a cheerful statement from a financier fell upon somewhat skeptical ears. Julius Klein, Mr. Hoover's Assistant Secretary of Commerce, composed a rhapsody on continued prosperity. John J. Raskob declared that stocks were at bargain prices and that he and his friends were buying. John D. Rockefeller poured Standard Oil upon the waters: "Believing that fundamental conditions of the country are sound and that there is nothing in the business situation to warrant the destruction of values that has taken place on the exchanges during the past week, my son and I have for some days been purchasing sound common stocks." Better still, prices rose steadily and buoyantly. Now at last the time had come when the strain on the exchange could be relieved without causing undue alarm. At 1:40 o'clock Vice President Whitney announced from the rostrum that the exchange would not open until noon the following day and would remain closed all day Friday and Saturday-and to his immense relief the announcement was greeted, not with renewed panic, but with a cheer.

Throughout Thursday's short session the recovery continued. Prices gyrated wildly-for who could arrive at a reasonable idea of what a given stock was worth, now that all settled standards of value had been upset?-but the worst of the storm seemed to have blown over. The financial community breathed more easily; now they could have a chance to set their houses in order.

It was true that the worst of the panic was past. But not the worst prices. There was too much forced liquidation still to come as brokers' accounts were gradually straightened out, as banks called for more collateral, and terror was renewed. The next week, in a series of short sessions, the tide of prices receded once more-until at last on November 13 the bottom prices for the year 1929 were reached. Beside the figures hung up in the sunny days of September they made a tragic showing:

The New York Times averages for 50 leading stocks had been almost cut in half, falling from a high of 311.90 in September to a low of 164.43 on November 13; and the Times averages for 25 leading industrials had fared still worse, diving from 469.49 to 220.95.

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The big bull market was dead. Billions of dollars' worth of profits and paper profits-had disappeared. The grocer, the window cleaner, and the seamstress had lost their capital. In every town there were families which had suddenly dropped from showy affluence into debt. Investors who had dreamed of retiring to live on their fortunes now found themselves back once more at the very beginning of the long road to riches. Day by day the newspapers printed the grim reports of suicides.

Coolidge-Hoover prosperity was not yet dead, but it was dying. Under the impact of the shock of panic, a multitude of ills which hitherto had passed unnoticed or had been offset by stock-market optimism began to beset the body economic, as poisons seep through the human system when a vital organ has ceased to function normally. Although the liquidation of nearly $3 billion of brokers' loans contracted credit, and the Reserve banks lowered the rediscount rate, and the way in which the larger banks and corporations of the country had survived the emergency without a single failure of large proportions offered real encouragement, nevertheless the poisons were there: overproduction of capital; overambitious expansion of business concerns; overproduction of commodities under the stimulus of installment buying and buying with stock-market profits; the maintenance of an artificial price level for many commodities; the depressed condition of European trade. No matter how many soothsayers of high finance proclaimed that all was well, no matter how earnestly the President set to work to repair the damage with soft words and White House. conferences, a major depression was inevitably underway.

Nor was that all. Prosperity is more than an economic condition; it is a state of mind. The big bull market had been more than the climax of a business cycle; it had been the climax of a cycle in American mass thinking and mass emotion. There was hardly a man or woman in the country whose attitude toward life had not been affected by it in some degree and was not now affected by the sudden and brutal shattering of hope. With the big bull market gone and prosperity going, Americans were soon to find themselves living in an altered world which called for new adjustments, new ideas, new habits of thought, and a new order of values. The psychological climate was changing; the ever-shifting currents of American life were turning into new channels.

The postwar decade had come to its close. An era had ended.

[From "Since Yesterday" Harper & Row, Publishers, Inc.]

BLACK DEPRESSION

(BY FREDERICK LEWIS ALLEN)

Statistics are bloodless things.

To say that during the year 1932, the cruelist year of the depression, the average number of unemployed people in the country was 122 million by the estimates of the National Industrial Conference Board, a little over 13 million by the estimates of the American Federation of Labor, and by other estimates (differently arrived at, and defining unemployment in various ways) anywhere from 812 to 17 million-to say this is to give no living impression of the jobless men going from office to office or from factory gate to factory gate; of the disheartening inevitability of the phrase, "We'll let you know if anything shows up"; of men thumbing the want ads in cold tenements, spending fruitless hours, day after day and week after week, in the sidewalk crowds before the employment offices; using up the money in the savings bank, borrowing on their life insurance, selling whatever possessions could be sold, borrowing from relatives less and less able to lend, tasting the bitterness of inadequacy, and at last swallowing their pride and going to apply for relief-if there was any to be got. (Relief money was scarce, for charitable organizations were hard beset and cities and towns had either used up their available funds or were on the point of doing so.)

A few statistical facts and estimates are necessary, however, to an understanding of the scope and impact of the depression. For example:

Although the amount of money paid out in interest during the year 1932 was only 3.5 percent less than in 1929, according to the computations of Dr. Šimon Kuznets for the National Bureau of Economic Research, on the other hand the amount of money paid out in salaries had dropped 40 percent, dividends had dropped 56.6 percent, and wages had dropped 60 percent. (Thus had the debt structure remained comparatively rigid while other elements in the economy were subjected to fierce deflation.)

Do not imagine, however, that the continuation of interest payments and the partial continuation of dividend payments meant that business as a whole was making money. Business as a whole lost between $5 and $6 billion in 1932. (The Government figure for all the corporations in the country-451,800 of them-was a net deficit of $5,640 million.) To be sure, most of the larger and better managed companies did much better than that. E. D. Kennedy's figures for the 960 concerns whose earnings were tabulated by Standard Statistics— mostly big ones whose stock was active on the stock exchange-show that these 9601 ad a collective profit of over a third of a billion.