Academic

The News From July 21, 1930

By Kim Krawiec

As regular readers know, I?m a fan of the blog News from 1930, which provides a daily news summary based upon the author?s reading of the Wall Street Journal from the corresponding day in 1930.  Today?s entry is especially good:

Monday, July 21, 1930: Dow 236.65 -3.92 (1.6%)

Governor R.A. Young of Fed. Reserve Bd. warns banks to be careful about the increasing amount of loans against securities. About the crash last fall, says: ?there is food for serious thought in the fact that, under our excellent banking system ... we nevertheless came to the brink of a collapse, had to resort to heroic action to prevent a panic, and were not able to avoid ... severe liquidation and what appears to be a business depression. Is this unavoidable? Is it necessary for this country to go through periods of reckless exuberance, accompanied by enormous credit expansion and fantastic levels of money rates that profoundly disturb the financial structure not only here but all over the world?? The cost of these episodes is paid in unemployment and worldwide depression. Reminds banks that security loans are safe only if a liquid market exists for the security; large scale sales can cause a drop in value, ?and there is no telling when such a drop may terminate and what catastrophe may follow ...? Calls on banks not to assume Fed will always be able to help them, since its resources are ?not inexhaustible.? (emphasis mine)

And a rhyme (who knew?):

?Sitting in the broker's office, Wondering what in heck to do;

Watching, waiting, hoping, fearing, Praying all my dreams come true. ...

NPT is still a dairy; old VA has just gone by;

BMT is slowly mending; Radio is flying high.

Will I? Won't I? Hurry, Hurry; Down she wavers; up she goes.

?Buy,? I shout with great decision; Comes the answer ? ?Market closed.??

Full post as published by The Faculty Lounge on July 21, 2009 (boomark / email).