95 Years Ago This Week on Wall Street

On Tuesday, July 28, Austria-Hungary attacked Serbia, and World War I officially began. Stock markets around the world collapsed (some closed), and the price of gold soared. On Wall Street, trading volume hit 1,020,000 shares, and market officials pondered closing the exchange.
On Wednesday, July 29, politicians were trying to halt the European violence, but Austro-Hungary bombed Belgrade and Russia mobilized troops along Austria’s border. In response, three major European stock exchanges (Vienna, Rome and Berlin) closed their doors.
On Thursday, July 30, the rush to sell stocks and buy gold escalated. Panic selling on the New York exchange reached 1.3 million shares, the highest volume since the Panic of 1907. Many blue chip stocks crashed, falling 20% to 30% that single day. GM fell from $59 to $39 (-34%). Even Bethlehem Steel, which figured to profit from making war armaments, was down 14%. That night, exchange officials met to decide whether or not to close the exchange on Friday.
Early in the morning of Friday, July 31, the London Stock Exchange announced that it would suspend trading until further notice, the first time it had done so in its centuries-long heritage. If the New York Stock Exchange opened for trading on this final day of July, it would have been the only open stock market in the world. Since markets were now connected by undersea cables, all the world’s sellers would converge on Wall Street. In fact, the overnight sell orders “at any price” were lined up for the opening bell, so the NYSE governors decided to close for only the second time in its history. The NYSE was totally closed until the middle of December, 1914, but only a few stocks traded then. The full board only re-opened in April, 1915 – nine months later.
However, U.S. banks stayed open, and the rush to convert cash to gold wiped out many banks. From July 27 to August 7, 1914, $73 million in gold was withdrawn from New York banks alone.
On Monday, August 3, 1914, no stock markets in Europe or America were open. On that day, Germany declared war on France and invaded Belgium; very soon, Britain declared war on Germany, and Turkey signed a military pact with Germany. As the sun set on that dismal day, Sir Edward Grey, British foreign secretary, said, “The lamps are going out all over Europe; we shall not see them lit again in our lifetime.”
(via: Gary Alexander)

Posted by on July 28th, 2009 at 1:20 pm


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