Henry Howard Harper

“ The many thousands of brokerage offices throughout the country were jammed to the doors by eager onlookers and participants who devoted themselves exclusively to the market from the opening to the close. Office boys, elevator men, manicures, hotel waiters, hairdressers, cab drivers, and even rural farmers initiated themselves into the game and discussed mergers, split-ups, stock dividends, and all such subjects in high finance with more profuseness and profundity than was ever displayed at a bankers’ convention. ”

“ The extra profits to be derived from over-trading are scarcely ever worth the risk incurred.
To sum up the whole situation in a word, those who would make money speculating in the stock market should first understand that it requires as much caution and business acumen as any other money-making enterprise, plus some knowledge of the psychological handicaps; also plus the rare faculty of maintaining a complete mastery over one’s impulses, emotions and ambitions under the most heroic tests of human endurance. ”

“ If the bankers are buying, why shouldn’t the public buy? Another popular device was to broadcast reports accredited to Messrs. Coolidge & Mellon, to the effect that after scanning the speculative horizon they could discover no reason why the market should not keep on going up. With such a bulwark of confidence there was but little reason to be afraid. It did not matter whether stocks paid small dividends, or no dividends. It did not matter if money loaned at ten, twelve, or fifteen per cent. The rise in values would take care of all that, with ample to spare. ”

“ The old split-up, consolidation and stock-dividend chestnuts are being industriously warmed over and the few scattering traders who saved something out of the recent smash are beginning to nibble at the bait. All of which shows that people are quick to forget their stock market troubles and to return for more punishment. ”

“ The public was thus taken into these co-operative partnerships and enabled to enjoy all the advantages to be derived from the superior genius and directorship of the giants of wealth and commerce. The small investors and speculators, highly flattered by the opportunity of being admitted into such society, threw their savings into the melting pot with more confidence than as if they were putting them into a savings bank. ”

“ The theory advanced by some of the economists that the trading public merely lost their paper profits, and practically nothing else was either gained or lost in the tremendous rise and fall of stocks, is a little misleading. One authority says: “For the shrinkage of thirty-five or forty billions of dollars in stock exchange securities nobody is any poorer but on account of things possessed and consumed too soon.” Assuming that the market started at a given point in 1924 and reacted to that point in 1929, it would mean a loss of many hundreds of millions in commissions and interest. ”

“ The Federal Reserve System, instead of being responsible for the crash, was the one agency that saved the whole community, including the banks and brokers, from complete financial chaos by furnishing at the critical moment an abundance of money and credit at low rates. ”

“ There are now six industrial companies with an aggregate capital of 171,927,540 shares outstanding; and from the side lines it looks as if there ought to be time enough to start another boom when the stock market gets over its present case of indigestion.
In the final analysis the following essentials should be constantly borne in mind: The stock and grain markets are always capable of playing new tricks on you—of doing things you never dreamed of. ”

“ They harp persistently on the fact that stocks are cheap,—not because of their dividend return, but because they are selling much below the boom prices. Their calculations are drawn mostly from figures at the big end of the measuring tape. Improved business—which exists more in the imagination than in fact—is employed as a smoke screen to hide the fact that the great majority of the active stocks are still [22] selling far above a reasonable investment basis. ”

“ The collapse of the Florida real estate boom—which carried down dozens of banks,—the great Mississippi flood, the devastating earthquakes in California, the failure of a hundred or more banks throughout the Northwest and such-like calamities had no more effect on the Wall Street psychology than they would have had in quelling an epidemic of smallpox. ”

“ Nor did it matter that brokers’ commissions had nearly doubled, and that this gigantic “kitty” was taking millions of dollars in toll every day. It works on the same principle as poker: if seven players sit into a game with a “kitty,” it’s only a question of time when at least six of them will go broke. I heard one trader proudly declare that in three years he had paid his broker upward of half a million dollars in commissions, and nearly twice that amount in interest. ”

“ All speculations, and even the most conservative investments, have at least some slight element of risk; all lines of business are more or less a gamble; marriage is a gamble; political preferment is a gamble; in fact nearly everything in life, including our very existence, is an uncertainty ”

“ Business was good, the country was rich and prosperous, and it was argued that a [6] financial structure built upon such confidence and prosperity could not be shaken by anything short of a universal earthquake. Basic values had become so stabilized in the minds of the people that there was no more reason to expect them to crumble than there was to expect the Washington Monument to topple over. ”

“ One eminent economist has lately written many pages of more or less convincing argument to prove that the liquidation started in London, Paris and Berlin—as if it made any real difference where or how it started. ”

“ On a thousand shares of General Electric he had a profit of nearly three hundred thousand dollars. In response to my inquiry if he did [16] not think it wise to cash in a part of his profits, he regarded me with amazement. “That,” said he, “is what everybody told me two years ago. Stocks are all in strong hands; and this market is going on up for at least three more years. ”

“ Whereas in the past the bulls and bears had regarded each other as friendly antagonists, the bulls now came to look upon the bears as the deadly enemies of bullish society, and for a time this animal was threatened with total extinction. Anyone discovered short of stocks was viewed in about the same light as one caught with stolen goods ”

“ Many of these so-called investment trusts accumulated thousands upon thousands of highly speculative common shares that paid less than 2% income on their market value. Indeed one day in September, 1929, a statistician figured that the twelve most active stocks on the New York Stock Exchange averaged a return of only one and three-fifths per cent. ”

“ Every sort of industry was incorporated and over-capitalized, and notwithstanding the hundreds of millions of new shares lately issued it was currently reported that stocks were very scarce; that they had nearly all gone into “strong hands;” ”