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Quote of the Day
“There is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.”
Edwin Lefèvre, Reminiscences of a Stock Operator
July 21st – This Day in Stock Market History
July 21st, 1861 – First Battle of Bull Run and the Birth of Mass-Market Finance
On a hot Sunday in July 1861, spectators from Washington rode out with picnic baskets to watch what they assumed would be a quick suppression of the rebellion at Manassas Junction, Virginia. What they witnessed instead was a Union rout. Panicked federal troops streaming back toward the capital that shattered the fantasy of a short war.
The market relevance of this battle lies not in any stock index (the Dow Jones Industrial Average would not be published until 1896) but in what the defeat did to the structure and general operation of American finance. Treasury Secretary Salmon P. Chase suddenly confronted a war that was costing more than $1 million a day against a federal government whose total annual expenditure in the 1850s had averaged under $60 million.
The financing improvisations that followed became the permanent architecture of modern American markets. In December 1861 the banks and then the government suspended gold payments. Congress passed the Legal Tender Act of 1862, creating the “greenback”, the first widespread federal fiat currency. It levied the first federal income tax.
And it turned to a Philadelphia banker, Jay Cooke, who ultimately invented the modern bond drive. Cooke’s firm sold the entire $500 million “five-twenty” bond issue authorized in 1862 and, in 1865, disposed of three series of notes totaling $830 million in total.
By May 1864, American Heritage records, “Cooke was selling bonds so successfully that he was actually raising money as fast as the Union could spend it” – roughly $2 million a day.
The consequences compounded across generations. The national debt, a minuscule 93 cents per person in 1857, stood at roughly $75 per person eight years later. More important, Cooke had demonstrated that a mass public could be mobilized as important investors for a government.
That template of democratized securities ownership foreshadowed the Liberty Bond drives of World War I and the equity culture of the 1920s.
Interesting final note: Cooke himself later overreached financing the Northern Pacific Railway, and his firm’s failure on September 18, 1873 triggered the Panic of 1873 — a reminder that the same financial innovator can build the system and later break it.
July 21st, 1933 – The Reflation Bubble Bursts, Dow Falls 7.8%
In the spring and summer of 1933, hope became a speculative frenzy. After Franklin Roosevelt took the U.S. off gold and signaled aggressive reflation, the Dow rocketed from its March 15 close of 62.10 to a July 18 peak of 108.67 — roughly a 75% surge in four months.
July 19th and 20th were significant down days, but this day in 1933 saw true panic, and the most violent trading the commodity markets had ever seen.
On this day, the Chicago Board of Trade would shut down all commodities and futures trading, and trading would be suspended the following day as well. To stabilize prices, the CBOT was forced to institute strict new rules, including daily price limits (restricting how much a price could move in a single day) and minimum margin requirements to prevent retail traders from over-leveraging.
The rapid decline in prices would lead to margin calls and eventual bankruptcy for noted speculator Edward Crawford.
The New York Times would report on July 24th, 1933 that Crawford’s positions were:
“…pictured as so vast that he was within striking distance of one of the nation’s biggest fortunes.”
But this vast fortune was built on significant leverage. These 3 days of declines would completely wipe out Crawford, and he would eventually declare bankruptcy in early August.
The panic jumped from commodities to equities. On Friday, July 21, 1933, the Dow Jones Industrial Average fell 7.55 points to close at 88.71 — a decline of 7.84%, one of the steepest single-session losses in the index’s history.
Many individual stocks were down 10% or more on the day:
July 21, 1969 – NYSE Closed for Apollo 11 Landing
To celebrate the Apollo 11 lunar landing the day prior, The New York Stock Exchange closed on this day in celebration.
When the exchange reopened on Tuesday, July 22, the Dow fell about 1.94%.
Humanity had just accomplished the single greatest technological feat in history, an achievement watched by hundreds of millions, and Wall Street’s response upon returning to work was a shrug and a modest sell-off. The market did not rally on national pride, but instead resumed pricing corporate earnings, interest rates, and the deteriorating conditions of 1969, a year sliding toward a bear market that would bottom in May 1970.
July 21, 2022 – The ECB’s First Hike in 11 Years
For eight years, the European Central Bank had held its deposit rate in negative territory. But on July 21, 2022, that world ended. Confronting euro-area inflation of 8.6% in June, the Governing Council raised its three key rates by 50 basis points — lifting the main refinancing rate, marginal lending rate, and deposit rate to 0.50%, 0.75%, and 0.00% respectively.
The U.S. Federal Reserve had acted a few months earlier, raising 0.25% on March 16, 2022.
It was the ECB’s first rate increase in 11 years and its largest single hike since 2000.
The Council paired the hike with a new tool, the Transmission Protection Instrument (TPI), an “anti-fragmentation” mechanism designed to let the ECB buy the bonds of vulnerable members like Italy if their borrowing costs rose in a “disorderly” way unjustified by fundamentals. The backdrop was acute: Italian Prime Minister Mario Draghi’s government was collapsing that very week, threatening exactly the kind of periphery bond stress the TPI was meant to contain. President Christine Lagarde justified the outsized move plainly: “Inflation continues to be undesirably high and is expected to remain above our target for some time.”
Read of the Day
Roy Neuberger, So Far, So Good: The First 94 Years
Written when Roy Neuberger was 94, this memoir traces a Wall Street life that began seven months before the 1929 crash. He famously survived the great depression by shorting RCA to protect his capital, and ran through the founding of Neuberger & Berman and the crash of 1987.
The book is part social history, part investment lesson, and part personal reminiscence. It interleaves market wisdom from one of the era’s great investors with his parallel life as a contemporary-art collector who gave hundreds of works to museums. Neuberger is a living embodiment of the series’ core thesis: that keeping your head when the crowd loses theirs is the whole game.
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