The Panic of October 24
On Black Thursday, October 24, 1929, the market lost 11% of its value at the opening bell. Nearly three million shares changed hands in the first three minutes, representing about $2 billion in wealth. The ticker tape fell hours behind, leaving investors uncertain about current prices.
The trading floor descended into chaos. Leading bankers met to devise a response. Thomas W. Lamont of Morgan Bank, Albert Wiggin of Chase National Bank, and Charles E. Mitchell of National City Bank backed a direct intervention.
A Show of Confidence
They selected Richard Whitney, vice president of the New York Stock Exchange, to act for them. Whitney placed a bid for 25,000 shares of U.S. Steel at $205 per share—well above the prevailing market price. He then made similar bids for other leading “blue chip” stocks.
The message was theatrical and financial at once: powerful institutions were willing to buy. Traders watching the bids interpreted them as evidence that prices could stabilize. The Dow recovered during the day, closing down only 2.09%.
Why the Rescue Failed
The intervention resembled the strategy used during the Panic of 1907. But confidence could not be restored for long. On Black Monday, margin calls drove more investors to sell, and the Dow suffered a record daily loss. Black Tuesday brought an even larger wave of trading and erased roughly $14 billion in stock value.
The episode revealed the limits of elite intervention. Bankers could temporarily influence prices, but they could not erase excessive valuations, weak economic conditions, or the fear spreading among millions of investors. A market can be steadied by a signal—but only confidence can keep it steady.