96 Years Ago, the NYSE Shuts Down

On July 30, 1914, the Dow plunged 6.9% — from 56.20 to 52.32. There apparently were some difficulties in Europe. The NYSE then decided to shut down. Gary Alexander explains it:

The Federal Reserve was finally formed in 1913 – in the nick of time, right before one of the scariest bank crises of the 20th Century. Early in the morning of Friday, July 31, 1914, the London Stock Exchange announced that it would suspend trading until further notice, the first time it had done so in its centuries-long heritage. World War I was beginning all over Europe, and stock markets had already closed in Vienna, Rome and Berlin. The U.S. stock market was in a state of panic, with blue chip stocks falling 20% or more on July 30, on record volume. If the New York Stock Exchange opened for trading on July 31, it would be the only open stock market in the world. Since markets were then connected by undersea cables, all the world’s sellers would converge on Wall Street. In fact, the overnight sell orders “at any price” were lined up for the opening bell, so the NYSE governors decided to close for only the second time in its history.
The NYSE was effectively closed from July 31, 1914 to the middle of April, 1915. But on that fateful Friday, July 31, 1914, U.S. banks stayed open, and the rush to convert cash to gold wiped out many banks. From July 27 to August 7, $73 million in gold was withdrawn from New York banks alone. But the presence of the Federal Reserve insured that most of those banks survived.

Here’s the NYT‘s story.

Posted by on July 30th, 2010 at 10:09 am

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