WALL STREET CRASH.

New Zealand Herald, Volume LXII, Issue 19195, 8 December 1925, Page 7

WALL STREET CRASH.

" WILDEST DAY " ON RECORD, BROKERS FIGHT AND RAVE. FRENZY OF THE "BEARS." With a crash that reverberated through the' narrow canyons of Wail Street, and "wiped out" thousands of small investors the length and breadth of the land, the bottom fell out of the stock market on November 11, says a New York correspondent. The wildest day in the history of the New York Stock Exchange in which a record number of 5a1e5—3,427,000 shares—were recorded, camo technically to an end at 3 p.m. «n the following day, with stocks "off" fr<om 5 to 25 points. The writer says:—"What happened was easy to understand. The great bull market of 1925 had been inflated far beyond reason by the avcr-confidencc of hundreds of thousands of small investors. Somebody cried 'Wolf!* and the bears did the rest. The advance in prices of almost all the leading stocks listed on the Stock Exchange this year had gone too far. The exchange had become a potential powder barrel, and it needed just a spark to touch it off and blow the invested savings of men and women throughout the country into smithereens. "It is the 'little man,' as the investor of moderate means is known in 'the street,' who has suffered the full force of the blow from the bears' paws. Few if any of the millionaires or prominent traders were caught. The avalanche of selling, which started at the opening of the market and gained momentum throughout the day until frantic brokers tore collars from they- necks and shirts from their backs and fought with their bare fists to save millions for their customers, was precipitated by a simple little news item. "The Federal bank of Boston advanced its rediscount rate from 3g per cent to 4 per cent. This caused the speculative community to jump to the conclusion that a similar increase was contemplated in New York, and traders started to unload. Like a snowball that gathers speed and weight as it hurtles down a hill, a sweeping recession of prices got under way. 'Stop loss' orders that had been placed by traders during the rapid advance of the market were engulfed and added momentum to the decline. Brokers Fight Feverishly. "While brokers fought feverishly, amid a maelstrom of selling orders, and investors who had been trading on narrow margins saw their slender funds wiped out, records were -broken for markets of all time. The sales of 3,427,000 shares exceeds the previous record of 3,281,200 established 24 years ago. It was just before the Northern Pacific corner that the latter turnover was achieved on April 30, 1901. "Trading in the last hour, when brokers could only croak hoarsely and struggle feebly, and every brokerage house rushed in its reserves like substitutes in a football game, also established a record. The hour's turnover was 1,051,500 shares. Prior to this, the heaviest turnover for an hour was on May 9, 1901, when sales from 11 a.m .to noon totalled 1,034,000 shares. " The last previous '3,000,000 share day* was December 21, 1916, when trading totalled 3,176,000 shares, and prices declined from one to thirty-three points, on the occasion of the ' peace note leak.' It was a war market and some one had reported that Mr. \\ oodrow Wilson had prepared a peace note to Germany and the Allies. " The increase in the rediscount rate of the Boston bank was of no particular significance and could not be compared to the spark that blew up the market in 1916. Wall Street experts had been expecting just some such insignificant event to take the props from beneath the current inflation of prices. These same experts declared on the previous night that impaired marginal accounts would undoubtedly cause increased selling in the morning. The telegraph companies were swamped with demands from brokers for margin and with orders from customers to sell at the tick of 10 o'clock. The Lesson of Wall Street. " It was thirty minutes after the market closed before those caught in the decline knew the worst, for the ticker tape ran that far behind the sales made on the floor of the exchange. There was no one to rescue the small investors as the wave of sales engulfed them, ner was there any sign of resistance to the bear movement. The market probably was weakest at the close. So were the brokers, many of whom limped off the floor with marks of combat upon them. And so were the small investors, who had been taught once more the lesson of Wall Street."