America's Money Machine

21.
The Crumbling of the Dikes
ON AUG U S T 2, I 9 2 7, Calvin Coolidge, then vacationing in the
Black Hills ofSouth Dakota, issued a cryptic twelve word message:
"I do not plan to be a candidate for re-election in 1928." Its effect in the
stock market was such as the assassination ofJuliusCaesar may have had
in the trading precincts of the Roman forum: there followed, as the New
York Times reported, "a pell-mell scramble to sell stocks and opening
prices were from 2 to 15 1/4 points lower than the previous day's close."
The market flutter was short lived as banks, institutions, investors
rushed in for bargains, and the Times took comfort in the "demonstration
of the market's inherent strength."
Actually, the market was showing signs ofinstability that foreshadowed
the later collapse. The market had behind it a long period of advances,
which were mainly perpendicular during the preceding month. The short
interest, which usually cushioned a fall, had been driven out. A week later
the tenuous condition of the market became evident when a pool* in
Manhattan Supply Co. collapsed-presumably because their credit ran
out, this in turn because they could no longer find buyers at still higher
prices-and the quotations plummeted 60 points. This was to halve the
value of the stock, and the loss of so much paper value ruined a good
many investors.
The Manhattan Supply blowup had not been the first. The year before
had seen similar bubbles pricked-Devoe & Raynolds, and the Founda-
*Meaning a more or less loosely organized group of traders, speculators, or investors.
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