Wall Street History

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Wall Street History

10/07/2005

Eisenhower's Heart Attack

This past September 24 represented the 50th anniversary of a
rather important market moving event, President Dwight D.
Eisenhower’s heart attack. I first wrote of this back in June 2001
and thought I’d reprise the piece, as well as add some new
material from sources not initially referred to.

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When Dwight Eisenhower was inaugurated as our country’s 34th
president on January 20, 1953, the Dow Jones industrial average
stood at 288. By September 23, 1955, the key index had risen
69% to 487.

The first thing Eisenhower did upon taking office was to seek an
end to the Korean War and a cease-fire was reached in July of
‘53. Meanwhile, except for a mild slowdown in ‘54, the U.S.
economy was rocking and rolling, though in the realm of foreign
affairs we were in the midst of the Cold War.

But, luckily, in 1955 there weren’t any specific international
crises or immediate domestic issues for the president to deal
with. I say ‘luckily’ because on September 23, President
Eisenhower, on vacation in Denver, Colorado, completed 27
holes of golf but went to bed that evening in some discomfort.
He then had a massive heart attack in the wee hours of Saturday,
September 24. As the president would later remark, “I had thrust
upon me the unpleasant fact that I was indeed a sick man.”

Times were different back then. Supplying details to the press
on medical issues was not like it is today and the nation had no
idea what the true extent of his illness was.

And so it was that on Monday, September 26, Wall Street
panicked. The Dow Jones plunged 6.5%, 32 points, to 455. The
total paper loss for the day was $14 billion, the largest ever,
while volume on the exchange was 7,720,000 shares, the highest
since July 1933. [Compare the volume to today...amazing.]

It proved to be one of those classic “one-day” events. Two days
later the turmoil had subsided some and the Dow recovered to
472.

But Ike was far from well. In fact, were it not for the heroic
work of his doctor, Paul Dudley White, he probably would have
died. As it was, Eisenhower didn’t take his first steps until
October 25. For its part, the Dow Jones slid back to 438 on
October 11, the low for the crisis.

For the first few weeks, the president was incapable of any work.
Vice President Nixon was running the show back in Washington,
taking pains to make clear that he was just standing in for Ike
during his absence. Eisenhower wanted to make sure that Nixon
was visible in overseeing the cabinet and National Security
Council meetings. This served an extremely useful purpose, as it
showed the rest of the world that the government was continuing
to function.

[Ike’s chief of staff, Sherman Adams, was also a key figure in
running the government, taking orders from Eisenhower’s
bedside.]

When Ike finally took his first steps, he emerged in bright red
pajamas bearing the legend “Much Better, Thanks” and he
returned to the White House on November 11. By then the Dow
Jones had recovered to the 476 level.

Republicans, while happy to have him back, were nonetheless
worried. The party feared that Eisenhower would not be able to
run for reelection in 1956 and everyone knew that his doctors
wouldn’t rule on the issue until February. That month he was
ruled fit for office and the president went on to another landslide
victory in the fall; but not before he had a second medical
problem to deal with, a serious bout of ileitis (inflammation of
the intestine) which required surgery that June, though this time
market reaction was muted.

The nation was fortunate that Dwight Eisenhower’s heart attack
was in the fall of 1955 and not the following year. 1956 was the
year of the Suez Canal Crisis as well as the Soviet Union’s
putdown of the Hungarian Revolution. Without a president who
was firmly in charge, these events may have taken a few scary
twists, beyond what ultimately occurred. And the market’s
reaction would not have been a good one.

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Following are two descriptions of the time I came across since
doing the original piece. From the book “Dwight Eisenhower”
by Tom Wicker.

“In Washington, (press secretary) Jim Hagerty got the news via a
call from his assistant at about 4:30 P.M. (on 9/24). He notified
Vice President Nixon, commandeered an air force plane, and
flew immediately to Denver .

“The next day, the noted heart specialist Dr. Paul Dudley White,
who had been summoned by (White House physician) Dr.
Howard Snyder, examined Eisenhower and confirmed Snyder’s
prognosis: the president, he said, had had ‘a slightly more than
moderate heart attack – grade 3 out of five grades.’

“Taking charge of press relations, Hagerty initiated with family
and medical approval a historic policy of full disclosure of the
president’s condition, as described by Drs. Snyder and White.
This policy was in sharp contrast to the secrecy that previously
blanketed presidential illnesses, like Woodrow Wilson’s stroke
in 1919 and Grover Cleveland’s cancer operation in 1889. Full
disclosure of Eisenhower’s condition also was a departure from
the unadmitted physical disabilities that had made Franklin
Roosevelt’s pursuit of a fourth term in 1944 medically unwise.
Hagerty’s informative regular bulletins for the White House
press corps – which had transferred itself to Denver – also
contrasted with the silence that officially but not entirely
successfully covered an arcane political power struggle in
Washington .

“Fortunately, both the national and international scenes remained
quiet as Eisenhower recovered rapidly. The president and his
wife were able to return to Washington on November 11, less
than two months after his heart attack, and went almost
immediately to the Gettysburg farm for his further recuperation.
But he had not regained health rapidly enough to quell
speculation about whether he would run for a second term, and it
was not until late February 1956, after numerous tests and
assurances from his doctors, that Eisenhower finally said he
would be a candidate for a second term.

And this from Richard Nixon’s “In the Arena,” the best book on
politics I’ve ever read.

“When Eisenhower had his heart attack, he went through a long
period of deep depression. He talked like a man who felt his
public career was finished. He did not even want to discuss the
possibility of running the following year. The Republican
national chairman, Len Hall, was naturally terrified. When
reporters asked him about the election, his stock reply was that
the ticket would be Ike and Dick. Finally, one reporter asked the
dreaded question: ‘What happens if Eisenhower decides not to
run?’ Hall blurted out, ‘We will jump off that bridge when we
come to it.’ Fortunately, he did not have to make that fatal
decision. Eisenhower finally recovered his health and his will to
live and to win. He was reelected by a landslide in 1956.”

Wall Street History returns next week.

Sources:

“Facts About the Presidents,” Joseph Kane
“American Heritage: The Presidents,” Michael Beschloss
“The Presidents,” Henry Graff
“Wall Street: A History,” Charles Geisst
“In the Arena,” Richard Nixon
“Dwight D. Eisenhower,” Tom Wicker

Brian Trumbore

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