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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: tradermike_1999 who started this subject	10/29/2000 10:26:40 PM
From: tradermike_1999	Read Replies (1) of 74559

Some more on Morgan Stanley and the 1929 CrashBy background I’m trained to be a historian. I have a Master Degree in history and was two years into a PHD program at one of the top 10 public universities before I left and pursued trading. The largest stock market crashes in history have ended the same way and I expect this one will do the same. Today people list Bill Gates as the wealthiest man in the world, although I’m not sure that is still true. He is not the most powerful. I don’t know who is, but I am sure it is not him. In 1900 the most powerful man in the world was J.P. Morgan. He was the baron of Wall Street and became the most powerful international banker in the world during World War I. He worked mostly behind the scenes, never out in the open. One of his main advisors, was a Colonel House, who also happened to be the main advisor to President Woodrow Wilson. House had his hands in the creation of the Federal Reserve Board and the World War I peace treaty. When the stock market collapsed in 1907 it was a freefall. The selling didn’t stop until J.P. Morgan stepped up and personally pumped so much money into the market that he was able to stabilize it. After seeing what he was doing other Wall Street firms joined in the buying and supported the market. In 1929 stock market crash the public got massacred. It was hard to find an uptick. It was called Black Thursday John F. Kennedy’s father was short and made a fortune. So was Jesse Livermore. The Bank of Morgan was already cashed out and was sitting on the sidelines. Thomas Lamont, who took over the operations of the bank after J.P. Morgan died, called up a committee of men, made up of the heads of the nations largest banks, and held a meeting. They left the meeting a few hours later and walked on to the New York stock exchange floor. Lamont walked up to the booth for U.S. Steel and bid 205 for twenty thousand shares. $410,000 worth of stock. The other men went to other booths and did the same. They spent a total of around $125 million dollars. No small sum in 1929. Traders on the floor took notice and began buying. The market rallied into the afternoon and for several days. But it wasn’t enough. The next Tuesday the market completely collapsed. In two days it fell another 25%. The reputation of the Morgan Bank and Wall Street was destroyed. Once elected, the new President, Franklin Roosevelt took steps - through the use of regulation - to limit the power of the Bank of Morgan and reverse the policies they - and other large banks - encouraged and the Federal Reserve carried out in the 1920s which helped to lead to the crash and depression. Chiefly being adherence to the gold standard and higher interest rates while the country was in a recession and the European economies were in a depression caused by World War I and war debts owed to the Morgan Bank and other international banks. It was the end of a dynasty. As Roosevelt said in his inaugural, he was going to “throw the moneylenders out of the temple.” Now someone will talk about throwing the oracle out - Greenspan - if this current mess doesn’t stabilize..... wrote this the night of the April market crash

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