http://www.cjseymour.plus.com/finan/prognost.htm (Great article from this site).
“Fast forward” –>
1.”We will not have any more crashes in our time.”- John Maynard Keynes in 1927 [NB: The authenticity of this one is a little suspect]
2.”I cannot help but raise a dissenting voice to statements that we are living in a fool’s paradise, and that prosperity in this country must necessarily diminish and recede in the near future.”- E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928 “There will be no interruption of our permanent prosperity.”- Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928
3.”No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment…and the highest record of years of prosperity. In the foreign field there is peace, the goodwill which comes from mutual understanding.”- Calvin Coolidge December 4, 1928 “When the financial and business history of 1929 is finally written, developments of the past fortnight will occupy a prominent place in what will doubtless be the chronicle of an exceptionally brilliant twelve month period.”- The New York Times, July 1929 “It becomes increasingly evident that, in many respects, 1929 will be written into the commercial history of the country as the most remarkable year since the World War in point of sustained demand for goods and services.”- The New York Times, August 1929:
4.”There may be a recession in stock prices, but not anything in the nature of a crash.”- Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929 “Stock prices will stay at high levels for years to come, says Ohio economist”- The New York Times, II, Page 7, Col. 2, Oct 13, 1929
5.”Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher than it is today within a few months.”- Irving Fisher, Ph.D. in economics, Oct. 17, 1929 The market went into decline until Monday, October 21st, 1929 “He dismissed yesterday’s break in the market as a ‘shaking out of the lunatic fringe that attempts to speculate on margin.'” – Irving Fisher, The New York Times, Oct. 22, 1929 “security values in most instances were not inflated””The nation is marching along a permanently high plateau of prosperity””any fears that the price level of stocks might go down to where it was in 1923 or earlier are not justified by present economic conditions” – Irving Fisher, speech to a banking group, Oct. 23, 1929 “This crash is not going to have much effect on business.”- Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929 Flashback to “Black Thursday,” Oct. 24, 1929:
Stocks opened moderately steady in price, but traders whose margins were exhausted began selling heavily… at one o’clock the stock ticker was recording prices from half past eleven… stocks dropped 11% intra-day… After a bankers’ consortium sent NYSE Vice President Richard Whitney to the stock exchange floor to offer to purchase in the neighborhood of twenty or thirty million dollars’ worth of stock at the previous selling price [most likely above their quotations], the market eventually closed with only a 2% loss. Ref: Only Yesterday: An Informal History of the 1920’s, Frederick Lewis Allen, Chap. XIII. Not long after, the stock market plummeted in two days of panic: October 28 became known as “Black Monday” (13.47% decline in the Dow), and October 29 as “Black Tuesday” (11.73% decline in the Dow). Between October 23rd and November 13th, 1929, the Dow fell by 39%. “There will be no repetition of the break of yesterday… I have no fear of another comparable decline.”- Arthur W. Loasby (President of the Equitable Trust Company), quoted in NYT, Friday, October 25, 1929 “We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices.” – Goodbody and Company market-letter quoted in The New York Times, Friday, October 25, 1929 “The fundamental business of the country, that is production and distribution of commodities, is on a sound and prosperous basis.”- President Herbert Hoover, October 25th, 1929 “They have lost a few tail feathers but in time they will grow again, longer and more luxurious than the old ones.” – The Wall Street Journal, between Oct 24 and Oct 29, 1929 “The investor who purchases securities at this time with the discrimination that as always is a condition of prudent investing may do so with confidence.”- New York Times, October 28, 1929
6.”This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.”- R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929 “Buying of sound, seasoned issues now will not be regretted” – E. A. Pearce market letter quoted in the New York Herald Tribune, October 30, 1929 “Some pretty intelligent people are now buying stocks… Unless we are to have a panic — which no one seriously believes, stocks have hit bottom.” – R. W. McNeal, financial analyst in October 1929
7.”The decline is in paper values, not in tangible goods and services…America is now in the eighth year of prosperity as commercially defined. The former great periods of prosperity in America averaged eleven years. On this basis we now have three more years to go before the tailspin.”- Stuart Chase (American economist and author), NY Herald Tribune, November 1, 1929 “Hysteria has now disappeared from Wall Street.”- The Times of London, November 2, 1929 “The Wall Street crash doesn’t mean that there will be any general or serious business depression… For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game… Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before.” – Business Week, November 2, 1929 “…despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation…” – Harvard Economic Society (HES), November 2, 1929
8.”… a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall.” – HES, November 10, 1929 “The end of the decline of the Stock Market will probably not be long, only a few more days at most.” – Irving Fisher, Professor of Economics at Yale University, November 14, 1929 “In most of the cities and towns of this country, this Wall Street panic will have no effect.”- Paul Block (President of the Block newspaper chain), editorial, November 15, 1929 “Financial storm definitely passed.”- Bernard Baruch, cablegram to Winston Churchill, November 15, 1929
9.”I see nothing in the present situation that is either menacing or warrants pessimism… I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.” – Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929 “I am convinced that through these measures we have reestablished confidence.” – Herbert Hoover, December 1929 “[1930 will be] a splendid employment year.”- U.S. Dept. of Labor, New Year’s Forecast, December 1929
10.”For the immediate future, at least, the outlook (stocks) is bright.” – Irving Fisher, Ph.D. in Economics, in early 1930
11.”…there are indications that the severest phase of the recession is over…” – Harvard Economic Society (HES) Jan 18, 1930
12.”There is nothing in the situation to be disturbed about.” – Secretary of the Treasury Andrew Mellon, Feb 1930
13.”The spring of 1930 marks the end of a period of grave concern…American business is steadily coming back to a normal level of prosperity.” – Julius Barnes, head of Hoover’s National Business Survey Conference, Mar 16, 1930 “… the outlook continues favorable…” – HES Mar 29, 1930
14.”… the outlook is favorable…” – HES Apr 19, 1930
15.”While the crash only took place six months ago, I am convinced we have now passed through the worst — and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us.” – Herbert Hoover, President of the United States, May 1, 1930 “…by May or June the spring recovery forecast in our letters of last December and November should clearly be apparent…” – HES May 17, 1930 “Gentleman, you have come sixty days too late. The depression is over.”- Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930
16.”… irregular and conflicting movements of business should soon give way to a sustained recovery…” – HES June 28, 1930
17.”… the present depression has about spent its force…” – HES, Aug 30, 1930
18.”We are now near the end of the declining phase of the depression.” – HES Nov 15, 1930
19.”Stabilization at [present] levels is clearly possible.” – HES Oct 31, 1931
20.”Executive Order 6102 Forbidding the Hoarding of Gold Coin, Gold Bullion and Gold Certificates By virtue of the authority vested in me by Section 5(b) of the Act of October 6, 1917, as amended by Section 2 of the Act of March 9, 1933, entitled “An Act to provide relief in the existing national emergency in banking, and for other purposes”, in which amendatory Act Congress declared that a serious emergency exists, I, Franklin D. Roosevelt, President of the United States of America, do declare that said national emergency still continues to exist and pursuant to said section to do hereby prohibit the hoarding of gold coin, gold bullion, and gold certificates within the continental United States by individuals, partnerships, associations and corporations and hereby prescribe the following regulations for carrying out the purposes of the order… All persons are hereby required to deliver on or before May 1, 1933, to a Federal Reserve bank or a branch or agency thereof or to any member bank of the Federal Reserve System all gold coin, gold bullion, and gold certificates now owned by them or coming into their ownership on or before April 28, 1933, except the following: 1. Such amount of gold as may be required for legitimate and customary use in industry, profession or art within a reasonable time, including gold prior to refining and stocks of gold in reasonable amounts for the usual trade requirements of owners mining and refining such gold. 2. Gold coin and gold certificates in an amount not exceeding in the aggregate $100.00 belonging to any one person; and gold coins having recognized special value to collectors of rare and unusual coins. 3. Gold coin and bullion earmarked or held in trust for a recognized foreign government or foreign central bank or the Bank for International Settlements. 4. Gold coin and bullion licensed for the other proper transactions (not involving hoarding) including gold coin and gold bullion imported for the reexport or held pending action on applications for export license…” Franklin D. Roosevelt The Whitehouse April 5, 1933
A whole raft of prognostications in classic style from Indian commentators on the 265 point (3.1%) crash in the Sensex on Thursday 22nd Sep 2005: “At 8,000 points, when we were all smiling, I see no reason for long faces when the Sensex is at 8,200… Such a correction was needed and has come… Wise investors who were either sitting on cash or had bought fundamentally good stocks have no cause for worry. It is the people in the penny stocks – they are not investors but speculators – who have been caught on the wrong foot.” – Parag Parikh, Chairman of the Mumbai-based Parag Parikh Financial Advisory Services “…good pressure release in a market that had been overbought. Another 200-250 point fall should not worry investors who are invested in top-rung companies because fundamentally nothing has changed for the good companies…” – Sandeep Shenoy, Strategist at Pioneer Intermediaries Pvt Ltd “…inevitable and a welcome shakeout from which good is bound to come… The market is bound to bounce back for those who are invested in quality; but for those holding kachhra [garbage] stocks, there is going to be no tomorrow” – Arun Kejriwal, Director of KRIS “There is no need to panic” – Sebi Chairman M. Damodaran “There is no scam in the market, but there could be one or two ‘adventurous’ players in the market” – Finance Minister P. Chidambaram “We have had a long run so far, so this correction was long overdue.” – Vibhav Kapoor, Chief Investment Strategist, IL&FS The Indian Express, Sep. 24 2005: Day after, Sensex swings to end flat Sify finance, India, Sep. 23 2005:‘Market fall a welcome shake-out’ The Hindu Business Line, Sep. 23 2005:‘Market fall a welcome shake-out’
“The U.S. economy is, by all appearances, starting to purr like a well-tuned engine”- CNN Money, August 14, 2003
“I think all the stars are aligned for the economy to pick up… It’s been growing, it just hasn’t been growing fast enough to create new jobs but I think the tax package on top of easy money will probably kick it over… I think there’s so much slack that we can have very large rates of growth without it causing a problem… Very likely the backup in rates recently reflects a better expectation about the economy and if you expect the economy to start growing, you can’t have those interest rates as low as they had gotten…”- Dallas Federal Reserve President Robert McTeer, on CNNfn’s Money Morning program, July 22 2003
“The US economy is coiled like a spring and ready to go”- US Treasury Secretary John Snow, in an interview with The Times, July 17, 2003 It’s not just boosterism: the US upturn is for real–Times Online
“We do believe there is quite a bit of evidence that we are in the early stages of an economic recovery period”- Treasury Secretary Paul O’Neill, at a meeting of business leaders and officials from the Chicago futures and options exchanges, Monday February 25, 2002.
“First quarter GDP growth would be quite modest. Second quarter GDP growth a little bit more robust, and then very robust in third and fourth quarters… The recovery will be under way throughout the year”- Glenn Hubbard, chairman of the White House Council of Economic Advisers, Thursday January 24, 2002.
“We believe that the fundamentals are in place for a return to … a 3 percent to 3.5 percent real rate of growth, clear, as we move through the 12 months of this year… I think the balance is now decidedly on the positive side and I think it foretells movement back into significant positive growth as we go through the year”- U.S. Treasury Secretary Paul O’Neill, at an annual meeting of the National Retail Federation, Tuesday January 15, 2002.
“We’re probably a little closer to the end (of the recession) than we are the beginning. There are the signs that we’re beginning to turn the corner”- Commerce Secretary Donald Evans, in an interview with NBC’s ”Meet the Press”, Sunday January 13, 2002.
“It is too early to pick a precise date for the recession trough, but there is a bottoming out feel to the data”- Federal Reserve Bank of St. Louis President William Poole, Friday January 11, 2002.
“So what stocks should you buy?… In energy, Cohen favors industry leader Enron. The stock has stumbled lately, and she now sees it as a “good value.” She also singles out AOL Time Warner (MONEY’s parent) as a “content-rich global leader” in the media business…” – “Guru” Abby Joseph Cohen, Chief U.S. portfolio strategist at Goldman Sachs2001 Ultimate Investment Club, Business 2.0, October 2001 Issue
“Over maybe the next year, I certainly expect it (U.S. economic growth) to return to those kind of levels of (potential) growth” [between 3.0 percent to 3.5 percent]- US Commerce Secretary Don Evans to a Washington news conference, Wednesday August 29, 2001.
“[the country is] on the edge of a golden age of prosperity… I think we’re not doing badly for the kind of correction that we’re in right now… It’s easy to find gloom and doom, but consumers are hanging in there, their spending rates are still quite good… The contraction occurred … in the investment sector, where we had an overexpansion.”- Treasury Secretary Paul O’Neill, on ABC’s “This Week.”, Sunday June 24, 2001. Treasury Secretary Sees ‘Golden Age’
“Despite the current slowdown, however, intermediate and longer-term prospects for the U.S. economy are still very bright”- Federal Reserve Bank of Richmond President Alfred Broaddus, in a speech to the Virginia Housing Coalition, June 14, 2001.
“The U.S. has entered a new era of wealth that is only beginning”- Economist Brian Wesbury (who published a book titled “The New Era of Wealth” in October 1999), Wall Street Journal, October 21st, 1999.
Note: Without an authoritive source such as a newspaper from the relevant era, or a learned journal, or a book, or traceable reference with ISBN or Library of Congress numbers, prudent skepticism should always be applied to quotations found on the internet. You are encouraged to do your own research, and check references for yourself.
Greenspun family server: A Blast From The Past (1929)
“Only Yesterday” by Frederick Lewis Allen and “The Great Crash 1929″ by John Kenneth Galbraith (mainly HES quotes) [thanks to Susan J. Barretta]
For Further Reading:
Black Thursday: October 24, 1929 – Before the Crash
The 1929 crash [Newspaper headlines with charts]
Bang! went the doors of every bank in America“… on March 6, 1933, Franklin Roosevelt, just sworn in for his first term as President, suddenly shut all 18,000 banks in America, aiming to overhaul them as fast as possible, and so reestablish people’s faith in government and America’s banking system…”
The Great Depression and the New Deal“… when the banks reopened, the American public entrusted them with their money once more, which actually made the banks solvent. Merely by restoring public confidence in the banking system of America, Roosevelt saved it…”
Understanding How Glass-Steagall Act Impacts Investment Banking and the Role of Commercial Banks“… by 1933 the U.S. was in one of the worst depressions of its history. A quarter of the formerly working population was unemployed. The nation’s banking system was chaotic. Over 11,000 banks had failed or had to merge, reducing the number by 40 per cent, from 25,000 to 14,000. The governors of several states had closed their states’ banks and in March President Roosevelt closed all the banks in the country…”
BANKING ACT OF 1935“AN ACT To provide for the sound, effective, and uninterrupted operation of the banking system, and for other purposes”
Main Causes of the Great Depression [Gusmorino, Paul A., III., (May 13, 1996)]
Updated: Sep 30th, 2005 End leftcontent container –>