Whether the Great Sell-Off on Wall Street signaled a stock market crash or only represented an extraordinary correction in prices could not be answered definitively when the closing trading bell mercifully sounded late yesterday afternoon.
But there was no doubt that Wall Street and the world had experienced a day unlike any other, one that rekindled fears of 1929 and is certain to have political and economic consequences.
The similarities between the crash days of October 1929 and the tremors of October 1987 are as striking as the differences. The differences are reassuring.
For all the dramatic, stunning losses recorded rapidly yesterday, the country was not seized by a sense of panic as in 1929. Unlike 1929, people everywhere yesterday knew the situation between then and now was fundamentally different for several major reasons. Today's economy is far sounder and inflation is basically under control.
Another difference lies in attitudes.
The America that awoke to face the grim realities of the Great Depression, after the market crashed on Black Tuesday, Oct. 29, 1929, was unprepared for the shocking changes in personal fortunes that lay in store -- and the country then had made no preparations to help people facing the day of the wolf.
Americans then had been conditioned to think they lived in a period of permanent prosperity and endless boom. Their economic and political leaders repeatedly reassured them in cheering public statements, and confidently predicted even more glowing days to come. Cruelly, Americans learned their optimism was wrong.
Nothing was secure. There were no national safety nets. Bank accounts were not insured. Deposits were not guaranteed by the federal government. Panic runs ensued. When banks closed across the country, lifetime savings were wiped out in a single, despairing moment.
So, too, with the loss of jobs. Unemployment benefits were virtually nonexistent. The social-welfare programs taken for granted now were not in place. When people lost their jobs, they were out on the streets -- and largely forced to fend for themselves in a law-of-the-jungle, survival-of-the-fittest environment. Major public-works programs were still in the future. So were price-support programs underwritten by the federal government to assure farmers their crops would be purchased.
All these formed the legislative reforms wrought by Franklin D. Roosevelt's New Deal. They have been ratified by every president since. They are still in existence today. They provide a fundamental sense of security absent 60 years ago, and one that virtually every American recognizes.
Another difference involves Wall Street. The speculative fever that fueled the great stock market boom of the Twenties took place in a permissive, anything-goes environment in which government was not wanted and declined to intrude. While Wall Street recently has been wracked by insider trading scandals, market regulation mechanisms are in place -- and so are the policing mechanisms in the form of federal rules and regulations.
As to similarities between the two dramatic stock market plunges, the greatest lies in one small, compelling word -- fear.
In 1929, and again yesterday, real fear gripped the markets. It sent ripples of emotion around the world. As one Wall Street analyst put it, in words that chillingly evoked the Depression era remarks of FDR, "This is what happens when fear feeds upon fear."
From the opening bell yesterday until the frantic close, fear, if not panic, moved the markets. The result was a frenzy of selling that produced the greatest single day's decline and the greatest volume of shares traded in Wall Street history. Not even in 1929 had stock values sunk so far so fast. Never had the markets been so volatile.
Yesterday's Dow Jones averages fell 508.00 points and far eclipsed the value lost on Black Tuesday 58 years ago this month. An astonishing 604.5 million shares were traded. When the selling frenzy was over, stock prices had been rolled back so far that all the gains recorded between Jan. 1 and last August, a period of continually soaring prices, were wiped out.
Something else about yesterday's market stirred old, troubling memories. As in 1929, the market reports yesterday were running far behind the actual buy and sell times. If you tuned in your TV or radio to find out what was happening, no one could tell you with any accuracy: the prices quoted were at least an hour or more old.
Gallows humor was evident everywhere. "It's the traditional way to celebrate a disaster," a young London stockbroker was quoted as saying as he sipped champagne after the markets closed, "and believe me, today has been a disaster."
But for all the pandemonium, there was nothing like the mass psychosis that followed the crash of '29, when suicidal Wall Street brokers and bankers jumped from office buildings and countless people around the country felt their lives had been shattered forever.
For one thing, aside from the economic safeguards guaranteed by government programs, Americans have become accustomed of late to extraordinary record-breaking stock market highs and lows.
By last April, for instance, Wall Street had experienced the five greatest single-day point declines in the history of the Dow Jones industrial averages -- all in a nine-month period. Each historic low was followed by a historic high. Record after record was shattered, with no apparent ill effect.
At the same time, for years investors in the Reagan era have heard warning after warning about the dangers of historically high federal budget deficits and equally high trade deficits placing the United States in a debtor nation status for the first time since World War I -- and people had learned to dismiss them. The fears proved unfounded, or so it seemed. The day of reckoning did not come.
A sense of false optimism characterized the 1920s boom-and-crash too, and seems chillingly reminiscent of the way Frederick Lewis Allen described the period just before the crash in his classic history, "Only Yesterday":
"As people in the summer of 1929 looked back for precedents, they were comforted by the recollection that every crash of the past few years had been followed by a recovery and that every recovery had ultimately brought prices to a new high. Two steps up, one step down, two steps up again -- that was how the market went. If you sold, you only had to wait for the next crash (they came every few months) and buy in again . . . .
"Time and again, the economists and forecasters had cried wolf, wolf and the wolf had made only the most fleeting of visits. Time and again, the Federal Reserve Board had expressed fear of inflation, and inflation had failed to bring hard times. Business in danger? Why, nonsense! . . . . What the bull operators had long been saying must be true after all. This was a new era. Prosperity was coming into full and perfect flower."
Even before yesterday's tumult, few Wall Street bulls subscribed to that kind of national economic scenario. Now, in the wake of the crash/correction, they await signs of whether stock market history will repeat itself.