During the week of December 3 1927, the share volume of stocks traded on the NYSE set a record, topping the previous total number of shares changing hands any previous week in the entire history of the Exchange.

Courtesy of a much debated summer discount rate cut (from 4 to 3.5%), engineered by majordomo Benjamin Strong, Governor of the Federal Reserve Bank of New York, the wildly rampant speculation in the US stock markets remained unabated. The loosened purse strings easily added fuel to the flames via generous bank loans to brokers to carry margin accounts. In 1927 alone, those sums had dramatically increased from $2,818,561,000 to $3,558,355,000. In turn, brokers required razor thin margins of only 10-20% cash down for stocks from a mania dazed general public, desperate to pile on to the financial markets’ gravy train. Amazingly, broker loans to speculators had shot up to $4.43 billion from the still astounding 1926 amount of $3.29 billion.

The previously boring arcane conversations about the stock prices of Houston Oil, Chemical Bank, or Commonwealth Edison, were now subjects du jour- as everyday folks, and then some, owned hundreds of shares. Early afternoon newspaper editions, printing the 1:30PM quotations from Wall Street, were eagerly snatched up while stories of expensive blow-ups by a few publicly held companies were seemingly ignored. It’s as if the entire nation – from urban city slickers to rural farmers – could reel off ticker symbols and percentage price increases of Studebaker or American Telephone & Telegraph by heart.

This Week in Wall Street History

12/3/07