Thursday, July 30th, 1914

A monochrome press photograph looking down into a narrow lower Manhattan street from an upper window on a bright afternoon in July 1914. A clerk in shirtsleeves draws a folding shutter across a brokerage window, another man padlocks the grille of the doorway beside it, a newsboy walks away with a bundle under his arm, and two men in straw boaters stand at the kerb with their backs turned. The street is emptier than the hour warrants. Standing still in the one slab of sunlight on the pavement, small and casting a long shadow, is a clown whose face is split down the middle into one pale half and one dark half, his hair mirrored against it and a pale ruffled collar at his throat. Everyone else in the photograph is moving.

The last print

DOW JONES 52.32 · −3.88 · −6.90% · and then nothing, for four months

A closing price is normally the least permanent thing in the world; it is superseded within a day and nobody looks at it again. This one was not superseded. The governors met early the next morning and shut the Exchange rather than watch every European holder liquidate American securities for gold in a single session, and so the number produced by that Thursday afternoon stayed on the boards, in the papers and in the ledgers, correct and useless, until the middle of December. For four months and twelve days it was not the latest price. It was the only price.

The photograph Candles at the Shuttered Door

The day's protagonist

The gold — no symbol.

Move: out — as fast as American securities could be sold to send it

The mechanism that closed the Exchange was not fear of falling prices but a balance-of-payments emergency. European holders owned a great deal of American stock, Europe was going to war, and every one of those holders wanted gold at home rather than paper abroad. Selling that stock in New York and shipping the proceeds converted American securities into a run on the American gold supply, and it was arriving all at once: the exchanges of the continent had already begun shutting, and London closed on the 31st. The governors of the New York Stock Exchange met early on Friday morning, before the opening, and closed it. Bond trading resumed in a limited way in late November; stocks did not trade again until December 12. It remains by a wide margin the longest closure in the institution's history, longer than the Civil War suspension and longer than any single event since, including 1929, 1933 and September 2001.

The deeper account

The archive has no page for the four and a half months that follow this one, and cannot have: there were no trading days. The next page is December 12, and the two are neighbours on the shelf despite the gap, which is the only honest way to file them.

This is the origin of one of the most durable errors in market history. Because the average was restated in 1916 and back-calculated only as far as December 1914, this July close was left on the old basis while the December one was written on the new. Comparing them across the gap manufactures a fall of 24.39 percent that no one alive that day experienced. The next page in this archive is about that.

The Exchange closed rather than be the instrument of its own country's gold drain. It is the clearest case in the record of a market being switched off deliberately, by people who could see exactly what leaving it on would do.

A closing price is a sentence the market expects to finish the next morning. This one was left unfinished for a season.

The artifact

RECEIVED THIS DAY CABLEGRAMS NEW YORK · THURSDAY, JULY 30, 1914 LONDON · 6.40 A.M. SELL ALL · AT MARKET · REMIT GOLD PARIS · 7.15 A.M. SELL ALL · REMIT GOLD BERLIN · 8.05 A.M. SELL · REMIT GOLD · NO LIMIT orders to sellALL orders to buyNONE proceeds required inGOLD CLERK'S HAND they do not want our paper. they want the metal, and it is our metal. the industrials closed at 52.32 · −6.90% THE EXCHANGE DID NOT OPEN AGAIN FOR FOUR MONTHS AND TWELVE DAYS.
The cable blank — every order the same order, in three languages

The Exchange did not close because prices were falling. It closed because of what the falling meant in the settlement. Europeans held a great deal of American stock; Europe was mobilizing; and every holder wanted his money at home and in gold. Selling in New York and shipping the proceeds turned American securities into a claim on the American gold supply, arriving all at once and from every capital simultaneously. London shut on the 31st, the continental exchanges had begun shutting already, and the governors of the New York Stock Exchange met before the opening on Friday morning and did the same. The last session had closed at 52.32, down 6.90 percent, and that number then sat on the boards, correct and useless, for a hundred and thirty-four days. The cables reproduced here stand for the traffic of that morning rather than transcribing particular messages.

Read the cables

Printed text is shown plain; the clerk's entries are shown in script.

CABLEGRAMS · RECEIVED THIS DAY — New York, Thursday, July 30, 1914

  • LONDON · 6.40 A.M. — SELL ALL · AT MARKET · REMIT GOLD
  • PARIS · 7.15 A.M. — SELL ALL · REMIT GOLD
  • BERLIN · 8.05 A.M. — SELL · REMIT GOLD · NO LIMIT
  • orders to sell: ALL · orders to buy: NONE · proceeds required in: GOLD
  • CLERK'S HAND: they do not want our paper. they want the metal, and it is our metal.
  • the industrials closed at 52.32 · −6.90% — THE EXCHANGE DID NOT OPEN AGAIN FOR FOUR MONTHS AND TWELVE DAYS.

Thursday, July 30, 1914 was the last session of the New York Stock Exchange before it closed on the morning of the 31st; the London Stock Exchange closed the same day. Bond trading resumed in a limited way in late November and stocks did not trade again until December 12. On the twelve-stock basis then in use the July 30 close was 71.42; the continuous twenty-stock series carries it as 52.32. It remains the longest closure in the institution's history.

The ledger — what actually happened

Measure Close Change Marginalia
Dow Jones 52.32 −3.88 · −6.90% the last session; on the twelve-stock basis then in use the close was 71.42
The silence 4 months, 12 days July 31 to December 12, 1914 — 134 days with no price for a share of American industry
London closed July 31 the continental exchanges had already begun shutting; New York was closing into a closed world
Why gold, not prices European liquidation of American stock was a claim on the American gold supply, arriving all at once

Sources

  1. MeasuringWorth — Daily Closing Values of the Dow Jones Average (July 27 – August 3, 1914, queried directly; the series stops at July 30 and does not resume until December 12) — https://www.measuringworth.com/datasets/DJA/
  2. The 1914 closure of the New York Stock Exchange — the July 31 shutdown before the opening, the gold-drain rationale, and the December 12 reopening for stocks
  3. The twelve-stock close of 71.42 on July 30, 1914, and the 1916 restatement that left it stranded on the old basis