Conditions in 1929 Leading up to the Crash

Conditions in 1929 Leading up to the Crash 條件在1929年導致崩潰

As long as there has been money and it has been lent, the biggest issue has been the value of the money. Since being paid back with goods (e.g., wheat) doesn’t work well for many reasons, debts are typically denominated in money, but lenders need some assurances that governments won’t just print up a lot of it and devalue their claims. In the 1920’s, these assurances were made by governments promising to exchange their money for gold at a fixed exchange rate. In other words, the world was on a gold standard back then. This played an important role in determining how events transpired in the 1920’s, leading up to the crash, but I won’t get into that now. The important thing to know is that the world was on a gold standard then.

只要钱已经借出，最大的问题就是钱的价值。由于许多原因偿还货物（例如小麦）不能正常运作，债务通常以货币计价，但贷款人需要一些保证，即政府不会打印很多，而是贬低其索赔。在20世纪20年代，这些保证是由政府承诺以固定汇率兑换黄金的。换句话说，当时世界是黄金标准。这在确定20世纪20年代发生的事件中起到了重要的作用，导致了坠机事件，但我现在不会介入。重要的是要知道世界是黄金标准。

1929 was a year of spectacular economic growth10 which was great for both workers and investors. The unemployment rate was down to less than 1%, which was the lowest since 1920, and corporate profits were the highest that they had ever been. The stock market’s strength seemed to benefit everyone. Credit was readily available which allowed a lot of borrowing to buy stocks, houses, investment assets and many other things at high prices. Prior years were similar, though less extreme.

1929年是经济增长十年的一年，对工人和投资者来说都是伟大的。失业率下降到1％以下，是1920年以来的最低水平，企业利润是过去最高的。股市的实力似乎使每个人都受益。信贷很容易获得，允许大量借款以高价购买股票，房屋，投资资产和许多其他东西。前几年是相似的，尽管不那么极端。

Stockbrokers fueled the rapid expansion of their business by offering easy credit terms. The call loan market, a relatively new and rapidly growing market, rose rapidly, quite like the securitized debt market grew in 2005-07. The diversion of funds to invest in the call loan market by corporations, foreigners, and individuals reflected a speculation in credit, motivated by attractive interest rates, that fueled the speculative mania in stocks of the period in much the same way the carry trade did in 2006-2007

证券经纪人通过提供轻松的信贷条件，促进了业务的快速扩张.通话贷款市场是一个相对较新的，快速增长的市场，迅速上涨，非常像2005 - 07年证券化债务市场的增长。公司，外国人和个人投资贷款市场的资金转移反映了以吸引力的利率为动机的信贷投机，这促使了这一时期股市的投机狂躁与外汇交易中的投机行为大致相同2006-2007.

Stocks sold at extremely high multiples financed by borrowing (i.e., margin). Many stocks were valued as much as 30 to 50 times earnings. Then money started to tighten. In May 1928, the Federal Reserve System began tightening credit, raising its discount rate to 4 1⁄2%. It was raised again to 5% in July 1928 and to 6% in August 1929.

股票以借款（即保证金）资助的极高倍数出售。许多股票的收益高达30至50倍。然后钱开始收紧。1928年5月，美联储开始收紧信贷，提高贴现率至4 1/2％。1928年7月再次提高到5％，1929年8月又上升到6％

Required margin deposits also rose before the crash. Most brokers became concerned about the extent of their margin loans at the high stock prices and in the face of higher interest rates in midsummer of 1929. So brokers began to raise the margin requirements on loans from 10%-25% to 50% by the Crash. Also, prior to the Crash, brokers tried to reduce their call loan exposure on margin accounts.

崩溃前所需的保证金存款也上涨。大多数经纪人担心他们的高利润贷款的程度在高价格和1929年的盛夏的利率上升。所以经纪人开始把贷款的保证金要求从10％-25％提高到50％崩溃。此外，在崩溃之前，经纪人试图减少在保证金账户上的通话贷款风险。

Banks were strong going into the Crash and not over-leveraged. The leading banks had great strength because they had deposits that were not more than seven times their capital and surplus. This was a conservative ratio, especially when only 60% of bank assets were typically in loans and up to one-third of those were call loans, which were short-term.

银行强势进入崩溃而不是过度杠杆。领先银行的实力雄厚，因为存款不超过其资本和盈余的七倍。这是一个保守的比例，特别是当银行资产中只有60％通常是贷款，最多只有三分之一是短期贷款.

In August, the Fed eased a bit16 because the economy slowed in reaction to the earlier tightening, so production peaked in most industries in the first half of the year, before the Crash.

8月份，由于经济放缓，由于经济放缓反弹，美联储在过去几年收紧幅度有所放缓，所以在崩溃之前，上半年大部分行业的产量达到顶峰。

The peak in the market occurred on the first trading day in September, at 381 on the Dow Jones Industrial Index. Keep this price in mind as we will track the Dow’s level through this timeline. Most people were bullish at the time, but a few notable, knowledgeable and independent thinkers gave warnings. For example, Roger Babson had “become shrill” in predicting the coming collapse of prices because of “tight money,” so he recommended selling stocks in September and again in October.

市场高峰期是9月份的首个交易日，道琼斯工业指数为381。保持这个价格，因为我们将通过这个时间线跟踪陶氏的水平。大多数人当时都是看涨的，但是有一些值得注意的知识渊博的独立思想家发出警告。例如，由于“货币紧张”，罗杰·巴布森（Roger Babson）在预测价格即将崩盘时已经“变得尖锐”，所以他建议9月份和10月再出售股票。

In the first week of October there was a big drop in stock prices. The Dow Jones Industrial Index declined in two days from 344 to 325, or 6%. Margin calls were numerous. 18 Some brokers were rumored to be in trouble because of the heavy slate of initial public offerings which continued unabated. But, in the second week of October, prices bounced back to 352, though they soon started to slip again.

10月份的第一个星期，股价大幅下挫。道琼斯工业指数在两天内从344下跌至325，即6％。保证金通话很多。传闻有些经纪人因为首次公开发行的惨重而继续陷入困境。但是，在10月的第二个星期，价格反弹到352，虽然他们很快就开始下滑了。

It became widely known that big margin calls and sell orders existed on October 24th, so everyone who worked on the exchange was alerted to be prepared. Then the collapse and panic came. There was a tidal wave of panic, not a gradual loss of confidence. The streets of the financial district were in an uproar from shortly after the opening of the Exchange as investors heard of the disaster and, unable to gain information through normal channels, went to the Exchange to seek information firsthand.

众所周知，10月24日存在大额保证金和卖单，所以每个在交易所工作的人都被提醒准备。然后崩溃和恐慌来了。有一阵恐慌的浪潮，而不是渐渐失去信心。金融界的街道在交易所开幕后不久，由于投资者听到灾难，无法通过正常渠道获取信息，哗然，纷纷到交易所寻求信息。

An attempt to stabilize the market was made by a small group of the biggest bankers known as “the Bankers’ Pool,” who committed to buy $125 million in shares at about 12:00 noon. At midday Richard Whitney, the president of the Exchange, went on to the floor to the post for U.S. Steel and bid $205 for 25,000 shares (over $5 million) and other members of the pool behaved similarly. This caused a big bounce in the stock market. The leading stocks had been down 15%-20%, but they bounced early as fast as they had gone down. Professionals, speculators, and coolheaded investors bought aggressively as they believed that we had seen a correction that was a great buying opportunity. The Dow Jones Industrial Index bounced back 26 points from a low for the day of 272 (down 33) to close at 299 (down 6). This classic pattern of big moves to support the market leading to big accompanying bounces would repeat numerous times throughout the bear market.

稳定市场的企图是由一小群最著名的“银行家银行”银行家做出的，他们承诺在中午12点左右购买1.25亿美元的股票。交易所总裁理查德·惠特尼（Richard Whitney）中午，在美国钢铁公司的职位上发布了25,000股（超过500万美元）的205美元，池中的其他成员表现相似。这引起股市大幅反弹。主要股票下跌了15％-20％，但是它们早已反弹回升。专业人士，投机者和冷静的投资者积极购买，因为他们认为我们已经看到了一个很好的购买机会。道琼斯工业指数反弹了26点，从272日（下跌33点）的最低点回落至299点（下跌6点）.这种经常出现的支撑市场导致大幅反弹的大动作将会重复多次在整个熊市场。

At the end of Black Thursday, a second organized effort to help the market was formed by a group of brokers. Some 35 leading brokers accounting for 70% of NYSE business assembled at the offices of Hornblower & Weeks and agreed that the worst was over and that they should act to reassure their customers. They took out a full page ad in the New York Times the next day, confidently telling the public that it was a great time to buy. This would not be the last time that those who listened to the confident advice of their brokers and advisors would be misled. Prices started to slide again. Over the weekend, margin calls went out and foreign banks were reported to be switching out of brokers call loans and buying bankers acceptances, to seek safety. At the same time, prices were bid up for U.S. government and high grade railroad bonds, as investors sought safety.

在黑色星期四结束时，由一群经纪人组成的第二次有助于市场的努力。在纽约证券交易所业务部门，约有35位领先经纪商占据了纽约证券交易所业务总部的70％，并同意最坏的情况已经结束，他们应该采取行动向客户放心。他们在第二天在“纽约时报”上发表了一整页的广告，自信地告诉大众，这是一个很好的时机.这听起来是他们经纪人和顾问的自信建议的最后一次会被误导价格再次开始下滑。周末，保证金通知已经出来，外国银行据报正在切换经纪人通话贷款和购买银行承兑汇票，寻求安全。同时，由于投资者寻求安全，因此美国政府和高档铁路债券的价格上涨。

On Monday night, margin calls were enormous, and heavy Dutch and German selling came in overnight for the Tuesday morning opening. On Tuesday morning, out-of-town banks and corporations pulled $150 million of call loans and Wall Street was in a panic before the Exchange opened. The Fed responded, as central banks typically do in such circumstances, by providing liquidity. The immediate problem to be dealt with by the Federal Reserve and the New York City banks was the collapse of the call loan market,22 as it withdrew the credit that investors had used to fund their positions. So, the Federal Reserve Bank of New York bought $25 million in U.S. securities to inject funds into the banking system so the banks could increase their call loans.

星期一晚上，保证金通话是巨大的，荷兰和德国的沉重打击在星期二早上开放一夜。周二上午，外滩银行和公司提取了1.5亿美元的通话贷款，而华尔街在交易所开通之前就处于恐慌之中.美联储响应，正如中央银行在这种情况下通常提供流动性一样。联邦储备银行和纽约市银行处理的直接问题是通话贷款市场的崩溃，它撤回了投资者用于资助其职位的信贷。所以纽约联邦储备银行买了2500万美元的美国证券，将资金注入银行系统，所以银行可以增加通话贷款。

Once again, opportunistic buying came into the market and the market rallied in the last 15 minutes of Tuesday, October 29th, triggering optimism. Nonetheless, the combined decline in the Dow Jones Industrial Index for Monday and Tuesday was 20%. So, the contraction in wealth and the problems of leveraged holders of assets had begun.

再次，机会主义买入进入市场，市场在10月29日星期二的最后15分钟内上涨，引发乐观.尽管如此，周一和周二道琼斯工业指数合并下滑了20％。那么财富的萎缩和杠杆资产持有人的问题已经开始了。

On Wednesday morning, October 30th, the stock market opened strong. The NYSE announced after Wednesday’s close that trading on Thursday, October 31st, would begin at noon and that the Exchange would close on Friday and Saturday to catch up on paperwork.

10月30日星期三上午，股市开盘走强。纽约证券交易所周三收盘后宣布，10月31日（星期四）的交易将于中午开始，交易所周五和周六将关闭文书工作。

Then the Federal Reserve Bank of New York cut its discount rate from 6% to 5% in coordination with the Bank of England, which cut its bank rate from 6 1⁄2% to 6%. Classically, the announcements stimulated strong buying when the exchange opened, but not enough to cause prices to go to new highs. So the rally didn’t last, as leveraged longs were being squeezed.

然后纽约联邦储备银行与英格兰银行协调，将其贴现率从6％降至5％，该银行将其银行利率从6 1/2％降至6％.经典​​地，公告激发了强劲的买入交易所开盘，但不足以使价格上涨至新高。所以拉力并没有持续下去，因为杠杆的长期被挤压。

Stocks continued to plunge the next week, starting with a stampede to sell when the NYSE opened on Monday, November 4th. On Tuesday the exchanges were closed for Armistice Day. On Wednesday, November 6th, the stock markets opened with heavy selling. Stocks continued to fall the next week

纽约证券交易所11月4日（星期一）开市时，股市继续下挫，开始卖空。周二交易所在停战日结束。11月6日星期三，股市开盘大涨。库存在下周持续下跌。

The Crash helped high grade and railroad bonds and hurt BAA and other lower quality bonds. The yields on BAA industrial and utility bonds dropped a little, in contrast to high grade bonds, so that the yield spreads between BAA and AA bonds became the widest in 1929.

“崩溃”帮助高档铁路债券，并伤害了BAA等优质债券。与高档债券相比，BAA工业和公用事业债券的收益率下降了一点，使得BAA和AA债券之间的收益率扩大成为最广泛的。

Municipal bonds constituted one of the larger securities markets in 1929, second only to the U.S. government bond market. In 1929 the municipal bond market behaved much like the corporate bond market. Bond prices declined enough to raise yields by 1⁄4% to 1⁄2%, a progression throughout the year in response to the investor surge into the stock market and tightening short-term credit conditions and then prices rose and yields declined during the Crash as investors leaving the stock market created a strong demand for high quality municipals.

929年，市政债券成为较大的证券市场之一，仅次于美国政府债券市场。1929年，市政债券市场表现得很像公司债券市场。债券价格下跌足以将收益率提高1/4％至1/2％，这是全年的一个进展，因为投资者涌入股市和紧缩短期信贷条件，然后价格上涨，收益率在崩溃期间下降因为离开股市的投资者对高质量的市政府产生了强烈的需求。

However, some regions where there was a financial bubble, such as Florida, were already in default. More Florida defaults were anticipated, including a default by Miami, whose bonds yielded 5.75%, 1% above any other major city’s bonds.

然而，一些有经济泡沫的地区，如佛罗里达州，已经是违约。更多的佛罗里达州的预期是预期的，包括迈阿密的违约，其债券收益率为5.75％，比其他主要城市的债券高出1％。

On Wednesday, November 13th, John D. Rockefeller placed a bid for 1 million shares of Standard Oil (N.J.) at $50, down $33 from its 1929 high of $83. Then, the administration felt that it had to do something so, after the close on November 13th, Treasury Secretary Mellon announced that the United States would reduce corporate and individual income taxes by 1% to stimulate confidence, and they prohibited short selling. In response to these moves and to stocks appearing cheap, the market bottomed on November 14th and rallied 25% through December.

11月13日星期三，约翰·洛克菲勒（John D. Rockefeller）以100美元的标准油（N.J.）的价格为50美元，从1929年的83美元高点下跌33美元。那么行政当局呢觉得呢这样做呢，在11月13日结束之后，财政部长梅隆宣布，美国将把企业和个人所得税减免1％来刺激信心，禁止卖空。为应对这些举动，股价看涨，市场在11月14日触底，并在12月27日上涨了25％

Most everyone thought the problems were over and many regretted not buying when prices were cheap. Speculators resumed their past activities. The Chairman of the Chase National Bank reinvested heavily in stocks. William Durant created a new pool in Radio Corp. of America stock. The Chairman of General Theatres Equipment, Inc., organized a new pool in his own company’s 6% convertible debentures with Chase Securities, etc.

大多数人都认为这些问题已经结束了，许多人都很遗憾，当价格便宜时，买不起。投机者恢复过去的活动。大通国家银行董事长大量再投资股票。威廉·杜兰特（William Durant）在美国无线电股份公司（Radio Corp. of America）创造了一个新池总影院设备公司主席在自己公司的大通证券等6％可换股债券中组织了一个新的池。

Government Policies

Herbert Hoover had been president only seven months when the Crash occurred. The day after the Crash he issued his famous statement: “The fundamental business of the country, that is production and distribution of commodities, is on a sound and prosperous basis.”

赫伯特•胡佛（Herbert Hoover）总统只有七个月的时间才发生。在崩溃的第二天，他发表了他的著名声明：“国家的根本业务，即商品的生产和分配，是一个健康和繁荣的基础”。

Contrary to what is popularly believed, the Hoover Administration was prompt and positive in its reaction to the Crash. For example, Hoover arranged for a committee of 400 businessmen to advise the President on business conditions. It was led by a “Committee of 72”, which was made up of men who seemed like titans in the business and social world of the 1920s,29 so it consisted of the best of the best. The Hoover Administration hoped that the Crash would destroy excessive speculation but not the economy,30 much the same way the Bush administration viewed the initial declines as a healthy correction of speculative excesses. The federal government also expanded its public works plans to $250 million for 1930. This constituted the most active and direct role in the economy taken by the federal government in generations, and the policy appeared to work.

与普遍认为的相反，胡佛政府对“崩溃”的反应迅速而积极。例如，胡佛安排一个由400名商人组成的委员会，就业务条件向总统提供意见。它由一个“72委员会”领导，由20世纪20年代的商业和社会世界中的巨人组成，他们是最好的。胡佛政府希望，崩溃会摧毁过度的投机，而不是摧毁经济，30与布什政府认为初步下降是一种健康的反叛过度的调整一样。联邦政府还将其公共工程计划扩大到1930年的2.5亿美元。这是联邦政府几代人在经济中最积极和最直接的作用，政策似乎奏效。

Also, Hoover’s policy supported the Federal Reserve in its policy of credit easing. President Hoover’s attack on the impending Depression, together with the easy money that the Fed provided, were generally expected to produce an economic upswing by mid-1930.

此外，胡佛的政策支持了美联储的信贷宽松政策.胡佛总统对即将来临的大萧条的袭击以及美联储提供的轻松资金一般预计将在1930年中期之前产生经济上涨。

As mentioned, the Fed eased aggressively when the crash occurred. The day before Black Thursday the New York Federal Reserve reduced its buying rate for bankers acceptances from 5 1/8% to 5%. Then, during the Crash, the New York Federal Reserve reduced its discount rate from 6% to 5% on November 1st and to 4 1⁄2% on November 15th. On the same dates, it reduced its buying rate for bankers acceptances to 4 3⁄4% and 4 1⁄4%. Another reduction to 4% on November 21st prevailed until January 31st, 1930.

如上所述，美联储在发生坠机事件时积极缓和。在黑星期四之前，纽约联邦储备委员会将其银行承兑人的接受率从5 1/8％降至5％。然后，在崩溃期间，纽约联邦储备委员会的贴现率从11月1日的6％降至5％，11月15日降至4 1/2％。在同一日期，银行承兑汇票的购买率下降至4 3/4％和4 1/4％。1921年11月21日下降至4％