In a New York Times article from July 7, 1932, Urges Minimum For Stock Prices, the author wrote, “In the belief that the stock market has ceased to be a reliable yardstick of values, some business leaders are discussing the advisability of establishing minimum prices for securities as a means of establishing confidence in industry.” The stock market would do that for them the very next day, making its final minimum price. Two years, eight months and twenty-two days after Irving Fisher said “stock prices have reached what looks like a permanently high plateau,” they would finally reach a permanent low.
The Dow Jones Industrial Average fell from a high of 381.17 to 41.22, an 89.18% decline. Arriving at the bottom was a full-blown liquidation. By March 1932, the Dow was already 77% off its September 1929 highs. And then in the next four months, in a straight line, it crashed another 54%. Here is what the New York Times financial section looked like on this day in 1932. There was nothing in here to suggest the selling was over. Not a single mention of how far stocks had fallen, nor a single mention of the Dow Jones Industrial Average.
There was however, one very interesting piece of information, and it’s something that would have been glossed over at the time: “The acquisitions between April 6 and June 29 formed the greatest government security-buying program in history and were designed to ease credit, offset the outflow of gold and indirectly to improve the government securities market in view of the tremendous volume of new issues by the Treasury.”
Between 1930 and 1951, only 8 people were hired to work on the New York Stock Exchange trading floor. The Great Depression wiped out a generation of investors. I guess a 90% crash and a twenty-five year recovery will do that to you. It’s impossible to really know what it was like to live through this period, but if you want to get pretty darn close, read The Great Depression: A Diary.