A Precipitous Decline
Dow Jones 30 Industrial Stocks on the New York Stock Exchange dropped from a September 3, 1929 high of 381 to 299 when the exchange opened on October 28, 1929. Over the next two trading sessions, the stocks crashed further. When the New York exchange closed on October 29, the Dow Jones stood at 230, a 40 percent drop in fewer than eight weeks. Before October 24, 1929, the record volume of stocks traded was 8,246,740, which occurred on March 26, 1929. From October 24 to 28, intensely heavy trading elevated the volume of almost every session to near or above the March 26 record. On October 29 the volume peaked at 16,410,030, double that of March 26. This overwhelmed the stock exchange.
A Veritable Bedlam
In the early morning hours of October 29, anxious men and women jammed into the two local stock clearing-houses, the Seattle Stock Exchange and Seattle Curb Exchange (both located in the Exchange Building at 821 2nd Avenue). And, as soon as the doors opened, people crowded into any broker's offices with New York Exchange stock ticker tapes or quotation boards. Black Tuesday in the Seattle brokerage houses was described as follows:
"A veritable bedlam of activity reigned in leading stock brokerage houses in Seattle today as the greatest avalanche of security selling known to history was launched on New York exchanges. Executives and clerks, worn by almost constant application to duty for days past, and with little respite gained by the Saturday afternoon and Sunday intermission breasted the great tide of buying and selling orders with philosophical resignation. And the orders poured in from the floors of the board houses, over teaming batteries of telephones, and by telegram. Curiosity seemed to prompt attendance of the greater part of the milling throngs in the board rooms" (The Seattle Times, October 29, 1929).
The local stockbrokers normally closed at noon, but on this day the New York Exchange stock market ticker tape was so far behind that closing prices were not known until late in the afternoon.
They Held On and Lost
At the Seattle Stock Exchange and Seattle Curb Exchange, trading was light and what was traded, for the most part, avoided precipitous drops. United National Corporation was the biggest local loser. At the close of business on October 28, no United National stockholders wanted to sell their stock at the offered low price of 45 5/8. The following day United National stock dropped to 36. The 9-point reduction was the largest one-day drop in price in the history of the Seattle Stock Exchange. Marine Bancorporation, an active stock traded by 7,000 stockholders, opened on October 28 at the Seattle Stock Exchange at 32 per share. By the following day the stock price dropped 15 percent to 27. At the Seattle Curb Exchange, which traded mainly mining stock, Fulton Petroleum stock sales plummeted from its near high of 15.30 on October 25 to a range of 5 to 8 on October 29.
The biggest losers were stock market speculators who purchased stock on margin. They would buy stock from a broker for a small percentage of the value of the stock, in effect receiving a loan from the broker. They would not have to pay the balance until they sold the stock. This meant that a small increase in the price of stock resulted in immense profits for the speculator. But if the stock declined more than the percentage they had put down, the speculator would have to cover the difference or lose their stocks along with the margin down payment they had paid. On October 24 the stocks plummeted so drastically that many of these investors found their investments wiped out.
The collapse of the stock market didn't seem to affect King County's retail trade. Right below the Seattle Daily Times October 29 front page headline "STOCKS HIT LOWEST LEVELS" in larger type was another headline: "HOLIDAY PROSPECTS Bright. Merchants Prepare for Rush, Enthusiastic One Forecast." The article stated: "While Wall Street is somersaulting, Seattle merchants and those throughout the Pacific Northwest are making plans for what they predict will be a 'bumper' holiday season. Never before, according to the merchants, has the city looked forward to a brisker holiday trade." Frank McL. Badford, President of the Bon Marche Department Store in Seattle, said, "We're planning a tremendous Christmas this year. Last year was the biggest in our history. This year we expect far to surpass it" (The Seattle Times October 29, 1929).
It would be another year before the severity of the 1930s Great Depression hit Washington state and King County, but early signs hinted of what was to come. On October 29, 1929, the day the market crashed, Fraser, Goodwin, and Colver, an eight-year-old Seattle investment firm with about 500 active accounts, went into voluntary receivership. The same day Russell H. Phinney, a real estate and investment broker, filed for bankruptcy and listed liabilities of $143,474 and assets (furniture and clothing) at $750.
The free fall in stock prices continued for the next two weeks. On November 13, 1929, the Dow Jones 30 Industrials closed at 198.69, nearly 50 percent of its value in 10 weeks. For the next 30 months the market continued to decline until it reached its nadir in mid-1932.