We are approaching the 100th anniversary of a rather significant
event in American history, the assassination of William
McKinley, the 25th president of the United States. The reason
why I”m writing about it in this space is because I was curious as
to the market reaction back then. Yes, there was lots of activity
on Wall Street in those days. The economy was humming and
folks like J.P. Morgan were in the midst of creating their
business empires.
As for McKinley, he was a true transition figure. Elected for his
first term in 1896, McKinley was the last Civil War veteran to
become president. He had already had a long political career,
serving in Congress for 24 years as well as being governor of his
home state of Ohio. He then led America through the Spanish-
American War (1898-99), which planted the flag halfway around
the world, thus shedding the nation”s isolationist past. And in
1899 he became the first president to ride in an automobile when
he took a ride in a Stanley Steamer. It was an age of invention,
progress and prosperity. The historian Don Young writes of his
presidency:
“At home, he had aided the growth of big business and industry,
which were already obliterating the world in which he had grown
up. Abroad, he helped to thrust America onto the world stage
and set a course that would lead to great events in the next
century. McKinley was a wise, thoughtful man. He remains a
divided figure, both the last president of the nineteenth century
and, barely, the first president of the twentieth.”
McKinley had been re-elected in 1900, once again defeating William
Jennings Bryan. Teddy Roosevelt was his vice president (Garrett
Hobart was the VP during McKinley”s first term). On September 5,
1901, McKinley was up in Buffalo, NY at a trade show where he gave
a presentation, proclaiming, that isolationism was “no longer
possible or desirable,” as well as repeating his pro-business
sentiments. The following day, September 6, he went out into the
crowd to shake hands with the exhibition attendees when an
anarchist, Leon Czolgosz, concealing a pistol under a handkerchief,
shot the President twice (in the chest and abdomen). McKinley,
upon being shot in this vast throng of humanity, walked steadily
to a chair and reassured his aides, “I am not badly hurt, I assure
you.” He was then removed in an ambulance.
It was about 4:00 PM on a Friday and the financial markets had
been closed for the day. Bulletins immediately flew across the
country. But by 10:00 PM that evening, McKinley”s physicians
released the first medical report, saying “no serious symptoms
have developed (following surgery). He is resting well.his
condition at present justifies hope of recovery.”
The next morning, headlines in the September 7 edition of the
New York Times read: “Confidence in Financial Circles.No
Occasion For Excitement. (sub-headline) They Point Out that
Whatever the Outcome of the Buffalo Tragedy, the Nation”s
Prosperity and Stability Will Be Unaffected.”
The main Times report dealing with the financial implications
began thusly:
“In Wall Street, as to security market values – the one question,
the one test involved in consideration of the tragedy at Buffalo, is
as to whether common sense shall rule..
“Much was heard of what Wall Street experienced twenty years
ago (at the time of President Garfield”s assassination).Shown
with notable clearness was the fact that they whose interests are
largest, they who are most in touch with what in the financial
world is biggest, were least of all exercised, least of all
pessimistic.
“Of course the speculating ”bear” was present, and he was very
woeful. An immediate panic, the tottering of everything to ruin,
was among his milder prophecies. Here was evidence of anarchy
rampant, he insisted, and European investors must forthwith
abhor us. Much he had to say also of uncertainty in national
policies, Roosevelt succeeding McKinley.
“Scant grace was, however, commanded by sorry talk like this.
For the most part the manner of mind that Wall Street men were
in was of the utmost confidence in the lasting quality and
influence of American prosperity, lamenting, earnestly though
every confident man did, this third Presidential assassination
atrocity.”
James J. Keene, one of the two or three Wall Street leaders of
that day remarked:
“Sane men will not for an instant forget that it is the country”s
leader, not the country itself, that is sacrificed.
“Even if the most woeful of results, the President”s death, should
follow, we have left to us still those extraordinary conditions of
prosperity for which he has stood, and concerning which he has
to the very last testified eloquently.”
J.P. Morgan was still in his offices when word broke late that
afternoon. Morgan was stunned, telling aides (with reporters
present), “This is, indeed, very, very sad news. It is impossible
to say anything as to the effect upon the market and upon
conditions in general.”
Most other comments made that fateful day were of the
optimistic variety. R.H. Thomas, Governor of the New York
Stock Exchange said, “(If McKinley should die), such a
misfortune does not signify a National calamity in the sense of
the word that the Nation itself must suffer. Instead, the Nation
will go on as ever, because it is greater than the individual. The
country is wonderfully prosperous.I think that there should be
no fear of any bad break in the stock market, which but
represents in one form this great prosperity. The people will
stand by their guns, and you will find that the market will be
well-protected.”
All of the common merchants on the streets of New York echoed
similar thoughts, the prosperity was too entrenched to be
impacted by McKinley”s possible death.
But dining at Delmonico”s that evening (for those of you not
from the New York area, this establishment remains a New York
institution to this day), Charles Schwab (the grandfather of the
current Charles Schwab, and then president of U.S. Steel), said,
“Should the President die, it would certainly have a most
depressing effect upon business and industry. The effect would
be but temporary, however, for business is in such shape now
and businessmen are in such a position that even the death of the
President could cause only a temporary calamity.”
The Dow Jones Industrial Average had closed trading on
September 6 at 72.27. Despite the reassurances from the
business community, and the seemingly calm words from the
President”s doctors, however, the Dow fell 4.5% on the 7th (the
markets traded a half-day on Saturday”s back then) to 69.03.
But when the Street opened back up for trading on Monday
September 9, the nation was convinced the President would
make it. The Dow finished at 70.69 and rose to 71.45 on the
10th. On Friday, September 13, though, news began to leak that
McKinley was seriously ill again. What the doctors really didn”t
know after the initial surgery was that gangrene set in along the
line of the bullets path. By the evening of the 13th death was
certain. So Wall Street took it on the chin that day, losing
4.3% to the 67.25 level.
President McKinley died at 2:15 AM on the 14th. His last words
to his wife were, “Nearer, my God to Thee, Nearer to Thee.”
The financial markets were then closed on Saturday, September
14. When they reopened on Monday, the Dow staged another
snapback rally to 70.01 (+4.1%). But by September 25 the index
was back to 66.22. The business community was not initially
enamored with the “liberal” thinking of Teddy Roosevelt. In
fact, the Republicans had made him vice president because they
didn”t want to have to deal with him as an “outside” force in the
party. At age 43, Roosevelt thus became the youngest president
in our nation”s history. As you know, things worked out pretty
well for him, despite the naysayers.
*One note concerning the Dow Jones. The industrial average
was first introduced on May 26, 1896. The then 12 stock
average reached its lowest point in history on August 8 of that
year, 28.48. After the Crash of 1929 however, the Dow fell to an
eventual low of 41.22 on July 8, 1932. In essence, from 1896 to
1932 the average rose from 28 to 41.that”s it.
Sources:
“American Heritage: The Presidents,” Michael Beschloss and
Don Young
“The Encyclopedia of American Facts and Dates,” Gorton
Carruth
“The Dow Jones Averages,” Phyllis Pierce
Brian Trumbore
