History 301: City’s measured response to 1929’s ‘Black Tuesday’

ABOVE: The Direct Credits Society, a group that wanted to bypass the banking system during the Great Depression, in a photo at the Soldiers and Sailors Monument in the 1930s. INDIANA HISTORICAL SOCIETY


Contributing editor

An epic stock market boom of early 1929 ended in a cataclysmic bust on Black Tuesday, Oct. 29, 1929. The Federal Reserve writes on its website that the Dow declined nearly 13 percent that day. The following day, Black Tuesday, the market dropped another 12 percent. By mid-November, the Dow had lost almost half of its value. The slide continued and the Dow closed at its lowest value of the 20th century in the summer of 1932, 89 percent below its peak. The country was in the Great Depression.

How did Indianapolis respond to the crash? Immediately following it, The Indianapolis Star printed a three-times-  normal-size headline across the front page: “BANKERS HALT FRANTIC MARKET    STAMPEDE.” The article in the right column: “Step in to Check Plunge as Prices Nearly Collapse” documented the wild roller coasting of the previous day from top of page to bottom and continued onto page three. Things didn’t look good.

The Indianapolis Times took a calming approach. Although the Times ran a page-one story on the market losses, both the font size and the tone were more moderate than The Star’s. “Stock Market on Upward Trend, As Buying Orders Serve to Brace Confidence,” the Times headline assured readers above a relatively short article on the issue. Another article, on page 15, had an equally reassuring headline: “Stock Market ‘Comes Back’ in Many Cities.”

The Indianapolis News also offered reassurance, not panic. Since both The News and the Times were evening papers, as opposed to The Star, readers might have been reassured that the worst was over by the end of the day.

If so, they were wrong. A short article was headlined: “Stocks Hold Up In Strong Recovery.” The News also    featured a unique view of the crash with an article from New York: “Never Again, Say Women Who Speculated In Wall Street.” The subhead (the headline below the main one) of that article claimed that “Society Matrons, Debutantes, Teachers and Stenographers Go Back to Jobs, or to Bridge Tables, Poorer and Wiser—Some Hysterical over Losses.”

Speaking of hysteria – those stories we’ve all heard about the rash of suicides following the 1929 crash – those aren’t true. Historian Kenneth Galbraith, in his book, “The Great Crash, 1929,” revealed that suicides were “substantially higher” before the crash than they were after it in 1929. No stock market-related suicides were reported in Indianapolis.

Over the remaining months of 1929 the market and news reports fluctuated with better and worse news. The News reported on the front page on Nov. 21, 1929, that “Stocks Do Not Rule Trade, [Henry] Ford Asserts.” Another front-page article also sought to reassure, “Stocks Close Strong After Early Decline” The News reported.

The Times reported on Christmas Eve under the headline “Steel Mergers Aid Business for Next Year,” that “a moderate decline in employment during the last several weeks is generally attributed to seasonal conditions rather than to any serious let down in trade.” The News remained encouraging as the end of the year approached: “Many Favorable Factors in Business Situation” a large font headline proclaimed on New Year’s Eve 1929.

Elmer W. Stout, president of Fletcher American National Bank and the Indiana Bankers Association, was quoted in an article with the headline “Leaders Hope for Good Year in 1930.” He said that “every time there is a slackening in the pace of business the public is inclined to become alarmed and begin worrying about the future.”

Despite the encouragement of the Indianapolis newspapers, the economy began to fail as early as 1930. The Encyclopedia of Indianapolis states that the U.S. Census reported that almost 17,000 persons in the Marion County’s workforce of 182,000 (9.3 percent) were out of work in early 1930. By September that year, employment here was 17 percent lower than it had been in 1929.

Indianapolis welfare societies helped the unemployed in 1930. The Community Fund gave tens of thousands for relief in 1931. Local make-work projects started to provide employment and wages and then federal New Deal relief came to the aid of the tens of thousands of unemployed in Indianapolis and Marion County.

In November 1933, Indiana State rep. William H. Larrabee supported a project to elevate the Belt Railroad with Federal New Deal dollars in order to provide employment for Marion County residents, according to The News.

Indianapolis was slow to recover from the Great Depression that the stock market crash set into motion. Businesses and manufacturers closed and new construction came to a near standstill. As late as 1937, the Encyclopedia of Indianapolis reports that in Indianapolis the number of wage earners was only 77 percent of the 1929 level. In the country generally, recovery was higher, up to 87 percent recovery. A higher percentage of Blacks were affected than whites and by 1937 Indianapolis wages were only 58 percent of what they had been in 1929.

Alfred Lawson, founder of the Direct Credits Society, drew huge crowds in Indianapolis during the Great Depression. Lawson, an aviator, blamed the country’s economic woes on the nation’s banking system and wanted the federal government to provide interest-free direct loans to citizens. He was popular among the cash-strapped residents of Indianapolis.

In 1938 The Indianapolis News reported that he drew a crowd of 3,000 followers to his lecture at Tomlinson Hall. In 1939, local followers gathered for a photograph at the Soldiers and Sailors Monument, but Lawson’s ideas ultimately provided no relief and his influence dwindled.

Eventually the coming war in Europe stimulated manufacturing and helped employment rates recover, starting in the late 1930s. By 1940, recovery was strong enough that Indiana politician Wendell Willkie – President Franklin Roosevelt’s challenger for the presidency – felt comfortable taking aim at New Deal programs. They were “Dictator Ways,” he said, according to The Star, under which “the spirit of Democracy sickens and dies.”

Willkie lost. The country entered World War II and exited the Great Depression. Black Tuesday became a dark memory for the parents of the young soldiers, sailors and airmen who returned and kicked the 1950s economy into full recovery. Still, in the midst of the post-WWII boom, it took until 1955 before the stock market finally recovered its pre-Crash levels.

Then, in the 1980s, those young men and women who survived WWII and brought about a great economic recovery, saw their own dark day on the stock market, another crash not very originally known as Black Monday.

Connie Zeigler holds a master’s degree in history. She enjoys digging up a surprising, forgotten story and sharing her pirate’s booty with Urban Times readers.