made by me, but as the result of the newspaper article." Mitchell pointed out that the Federal Reserve Bank of New York was kept informed of the actions of National City Bank and did not object to its actions.
The March 25-26, 1929, stock market price declines were a dry run for October. The March declines were probably triggered by the high cost of call money. Mitchell and National City Bank received credit for stopping the selling panic and saving the day, but we cannot be sure of the effect of National City's offer to lend $25 million. The bank loans were to be at 16 percent to 20 percent interest cost. At these rates investors could not hold stocks with confidence. The turnabout in stock market prices might have resulted from Mitchell's offer to lend, or it could be that the good business news could not be ignored and at the lower prices investors stepped in and bought.
There is one thing that the New York bankers learned. Washington would be very upset if the banks repeated the actions of National City Bank in any future crash. Surprisingly, in October the New York banks did try to stop the crash.
After March the stock market resumed its climb, reaching its peak in September. This was looked at by Washington as the result of more speculation. Washington thought the additional speculation was made feasible by Mitchell (actually Harrison and the New York Federal Reserve Bank deserved a large share of the credit). By September the market had risen above the March level, thus had further to fall and the consequences would be more severe. Mitchell was blamed for the more severe consequences.
In October when the real crash happened, the actions taken by the banks were not effective in stopping it. It is not obvious that National City Bank acted decisively or effectively in March, but many people (especially those in Washington) thought it did. They also thought the action was ill-considered. In October they would learn that not even the powerful Wall Street bankers could stem the tide of a selling panic.
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Book title: The Causes of the 1929 Stock Market Crash:A Speculative Orgy or a New Era?. Contributors: Harold Bierman Jr. - Author. Publisher: Greenwood Press. Place of publication: Westport, CT. Publication year: 1998. Page number: 50.
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