Wall Street History

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Wall Street History

06/29/2001

Eisenhower's Heart Attack

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. But internationally, we were
in the midst of the Cold War.

Luckily, though, 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 on 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 was 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.



Sources:

"Facts About the Presidents," Joseph Kane
"American Heritage: The Presidents," Michael Beschloss
"The Presidents," Henry Graff
"Wall Street: A History," Charles Geisst

Brian Trumbore

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