On this day in financial and economic history...
The Dow Jones Industrial Average (DJINDICES:^DJI) witnessed one of the most violent days in its history on Oct. 24, 1929. It was only a day after the Dow passed a tipping point into the Great Crash that wiped out nearly 90% of the index's value. The Washington Post led its business coverage with the headline "Stampede Breaks Wall Street Record." The New York Times called it "the widest break in the history of the stock market since the war, and one of the most costly to stockholders of all periods." But by the time it was over, the Dow had ended its day only 2% lower.
Advanced high-speed tickers of the day, only recently installed in some elite brokerage houses, were pushed to their breaking points by a day that saw 12.9 million shares change hands. The record-breaking volume shattered the previous all-time mark by more than four million shares. A number of stocks fell precipitously in early trading, with many losing 10% or more of their value before a cavalry of bankers led by JPMorgan (NYSE:JPM) chairman Thomas W. Lamont rode in with a confidence-boosting show of support, with "more than six billions of massed banking resources," according to the Chicago Daily Tribune.
Bankers put up a shockingly optimistic facade in the face of disaster. Lamont told reporters that his coalition felt that the sell-off was based on technical reasons, rather than fundamental stock problems. Lewis E. Pierson of the Irving Trust Company pointed out that record-breaking earnings provided a stable fundamental base for most stocks.
Charles E. Mitchell, chairman of National City Bank -- Citigroup's (NYSE:C) corporate progenitor -- agreed with Lamont's assessment, saying that the sell-off had "badly overrun itself." Mitchell was hardly a proper spokesman for market rationality. Within a month, Senator Carter Glass (of Glass-Steagall fame) would say that Mitchell, "more than any 50 men is responsible for this stock crash." Mitchell had fueled a high-octane expansion of National City by selling $650 million (equal to nearly $9 billion today) worth of its stock in 1929 alone and was also responsible for inflating the value of many other stocks his bank held or managed. Mitchell's stock market shenanigans led to a criminal case against him for tax evasion in 1933.
From sea to shining sea, telegraphically
The first transcontinental telegraph whizzed across the United States on Oct. 24, 1861, connecting east and west coasts just as North and South were fiercely contesting the first battles of the Civil War. The effort was spearheaded by Western Union (NYSE:WU) president Hiram Sibley. His success further enhanced the company's growing power while immediately signaling the obsolescence of the Pony Express, which closed down just two days later.
Western Union's dominance of telegraph transmissions led Charles Dow to include the company on his earliest industrial averages, but it wouldn't join the true Dow Jones Industrial Average until 1916. Western Union continued these operations for 145 years -- well beyond the point when telephones and the Internet rendered the technology obsolete -- before finally closing its telegram services in 2006.
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