Wall Street History

---

Wall Street History

11/21/2003

November 22, 1963

With the 40th anniversary of the assassination of President John
F. Kennedy, I thought it was worth going back to that day to see
what was being written as to the reaction on Wall Street.

Following were the headlines from the New York Times the day
after, Saturday, November 23, 1963.

“Financial and Commodities Markets Shaken; Federal Reserve
Acts to Avert Panic”

“Exchanges Close As Traders React”

“Stocks Plunge in a Sudden Rush of Sales, but Prices Are Mixed
Elsewhere”

---

This was the Times report from the 23rd as filed by John M. Lee

President Kennedy’s assassination had an immediate and
crushing impact on the nation’s financial and commodities
markets yesterday.

Securities and commodities markets closed soon after 2 P.M.
when news of the shooting was circulated.

The New York Stock Exchange experienced some of its heaviest
trading in history, as prices broke sharply in the worst drop since
the market plunge of May 28, 1962. Other markets conducted
mostly by telephone came to a standstill, but prices were
generally mixed.

The Federal Reserve System moved quickly to prevent panic
when the markets reopen and issued an extraordinary statement
declaring there was agreement “that there is no need for special
action in the financial markets.” The statement was issued at
5:20 P.M. by the Federal Reserve Bank of New York.

The expression of confidence by Alfred Hayes, president of the
New York bank, was taken as an avowal that the Federal Reserve
and European central banks would work in concert to thwart any
speculation against the dollar in foreign exchange markets in this
country.

Word of the shooting spread during the lunch hours, and heavier-
than-usual crowds filled the narrow streets of the financial
district. The air was described by one observer as “one of
stupefaction.” Bells tolled from historic Trinity Church at the
head of Wall Street.

Normal operations in factories, offices and stores throughout the
nation were disrupted as news of the President’s death passed
through corridors by word of mouth and into offices by transistor
radios.

Several large corporations, such as the Standard Oil Company
(New Jersey), closed offices throughout the nation and sent
employees home .

Most businesses were in no mood to discuss the impact on the
economy. Some, however, feared that confidence would be
affected and that a delicately poised stock market, which has
shown little tendency to rise on favorable business news, could
be in for a further decline.

General Lucius Clay, former Allied Supreme Commander and
now a partner in the investment banking firm of Lehman
Brothers, said, when asked for comment. “I rather think there
would be an immediate depressing effect on the market.”

“However,” he added, “I think firm underlying factors will carry
it through this critical period.”

The market collapse yesterday erased about $11 billion in paper
values from the stocks listed on the Big Board.

Robert P. Baruch, chairman of the executive committee of the
securities firm of H. Hentz (sic) & Co., said “hasty liquidation of
sound investments is ill advised at this time. It is our conviction
that when sober judgment prevails, confidence in the economy
will assert itself,” he added.

A quick sampling of national business sentiment by The
Associated Press concluded that business would go into a lull
because of the assassination but that there would not be any real
slump.

An anonymous executive of a large metals producer was quoted
as having said, “Business will certainly stop, look and listen, and
they will surely postpone expansion plans. It’s quite a shock to
confidence.” .

Many businessmen believe the economy is in a strong position
now to sustain a shock. Corporate profits this year are expected
to beat the 1962 record by a substantial margin, capital spending
is advancing and consumer attitudes are regarded as favorable.

However, some corporate executives have emphasized that a tax
cut was needed to stimulate the economy and prevent it from
stagnating at a high level.

Stock market activity has been disquieting to some observers.
Prices have failed to rise appreciably in recent weeks despite a
wave of favorable business developments, including higher
dividends. Instead, the market has reacted adversely to an
imbroglio over soybean oil.

In addition, some businessmen observed that although there had
been differences with President Kennedy over certain issues,
they at least knew where he stood. President Johnson
represented to them something of an unknown

The Dow Jones industrial average, which had been rising before
the news flashed on the exchange floor at 1:41 P.M., was off
21.16 points when the Board of Governors closed the exchange
at 2:07 P.M. The market usually closes at 3:30 P.M .

Yesterday was the first time that the market had closed during a
session since Aug. 4, 1933, when the floor was pervaded by gas
fumes. Keith Funston, president of the exchange, said a flood of
orders of any type that remained unexecuted when trading was
stopped had expired .

Volume on the New York exchange was extremely heavy for the
five-and-a-half hour session, climbing to 6.63 million shares
from the 5.67 million shares traded the preceding day .

Advertising was canceled by many companies. More than 100
pages of retail store advertising were dropped from the Sunday
main section of the New York Times alone.

---

Here are the closing prices for the Dow Jones Industrial Average.

Nov. 18 734.85
Nov. 19 736.65
Nov. 20 742.06
Nov. 21 732.65
Nov. 22 711.49* (market closes early due to assassination)
Nov. 26 743.52 (market closed on Nov. 25 for the funeral)
Nov. 27 741.00
Nov. 29 750.52 (Thanksgiving, Nov. 28)

Dec. 31 762.95

So, in other words, after the initial shock the markets rebounded
quickly. It’s also interesting to note just how low the daily
volume on the New York Stock Exchange was. Back then, the
average was about 5 million shares. Today, it’s in the 1.3-1.5
‘billion’ range.

And in doing a little research of the year 1963 I see that the
Federal budget was $98.8 billion, with a projected deficit of
$11.9 billion. Today, the budget is close to $2.2 trillion, with a
deficit for the recently completed fiscal year of $374 billion.

And while I’m not familiar with what the soybean issue noted
above was all about, there was a “chicken war” going on at the
time as a result of a trade conflict between the U.S. and the
Common Market. U.S. losses were placed at $26 million as
Europeans levied a tariff on American birds. Washington then
retaliated. Sound familiar?

Finally, on a lighter note, Arnold Palmer was golf’s money
leader in ’63, earning $128,000. This year Vijay Singh was #1 at
$7,573,000.

[Sources: “The New York Times: Great Stories of the Century;”
“The Encyclopedia of American Facts and Dates” edited by
Gorton Carruth; “The Dow Jones Averages: 1885-1995” edited
by Phyllis S. Pierce]

Wall Street History will return December 5.

Happy Thanksgiving.

Brian Trumbore

---