New York Times - April 3, 1999
All the King's Horses and All the Kings Men Were Still Optimistic
Wall Street cheered this week as the Dow Jones industrial average finally closed above 10,000. Many analysts are counting on a continuing bull market. Who knows? They may be right. And then again, they may not. Stock market predictions are a tricky business, as you can see from a look back at what was said 70 years ago, before and right after the Oct. 29 crash. Joyce Jensen compiled these quotations from "The Great Crash, 1929," by John Kenneth Galbraith (Houghton Mifflin, 1997); "The Stock Market Crash of 1929," by James Crane Kellogg 3d and William E. Downey (J. C. Kellogg Foundation, 1954); "The Experts Speak," by Christopher Cerf and Victor Navasky (Villard Books, 1998); "The Day the Market Crashed," by Donald I. Rogers (Arlington House, 1971), and "The Big Board: A History of the New York Stock Market," by Robert Sobel (The Free Press, 1965).
"The poorhouse is vanishing from among us. We have not yet reached the goal, but given a chance to go forward with the policies of the last eight years, we shall soon . . . be in sight of the day when poverty will be banished from this nation." Herbert Hoover, the Republican candidate for President, June 1928.
"The market is following natural laws of economics and there is no reason why both prosperity and the market should not continue for years at this high level or even higher." Thomas C. Shotwell, "Wall Street Analysis," The World Almanac for 1929.
"We seem only to have touched the fringe of our potentialities. . . . As long as the appetite for goods and services is practically insatiable, as it appears to be, and as long as productivity can be consistently increased, it would seem that we can go on with increasing activity. But we can do this only if we develop a technique of balance." From a report by a Presidential committee, "Recent Economic Changes in the United States," early 1929. "The economic condition of the world seems on the verge of a great forward movement." Bernard Baruch, financier and Presidential adviser, June 1929. "The outlook for the fall months seems brighter than at any time." The Wall Street Journal, Aug. 23, 1929.
"The consensus of judgment of the millions whose valuations function on that admirable market, the Stock Exchange, is that stocks are not at present overvalued." Joseph Lawrence, professor at Princeton University, 1929.
"I see no reason for the end-of-the-year slump which some people are predicting." Charles Mitchell, head of the National City Bank and director of the New York Federal Reserve Bank, Oct. 15, 1929.
The market should go "a good deal higher than it is today within a few months," Irving Fisher, professor of economics at Yale University, Oct. 15, 1929. "This crash is not going to have much effect on business," Arthur Reynolds, chairman of Continental Illinois Bank of Chicago, Oct. 24, 1929.
"The worst has passed," Joint Statement by representatives of 35 of the largest retail brokerage houses on Wall Street at the close of trading, Oct. 24, 1929.
"This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan that any man who is bearish on the United States will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years." R. W. McNeel, director of McNeel Financial Service, quoted in The New York Herald Tribune, Oct. 30, 1929.
"A severe depression like that of 1920-21 is outside the range of probability. We are not facing protracted liquidation." The Harvard Economic Society, November 1929.
"Financial storm definitely passed." Bernard Baruch, cablegram to Winston Churchill, Nov. 15, 1929.