May 4th – This Day in Stock Market History

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May 4th – This Day in Stock Market History

May 4th, 1893 – National Cordage Company declares bankruptcy after a failed attempt to corner the hemp market.  At the time, National Cordage was the most traded stock and the selloff of shares quickly spread across the market. National Cordage was assumed to be a healthy, prosperous company, so it’s failure was a surprise to Wall Street.

New York Times Coverage of the failure of National Cordage Co.
New York Times Coverage of the failure of National Cordage Co.

Shares of National Cordage opened at 39 but fell to 20 as the general market dropped in panic as well. General Electric fell from 88.5 to 79.5 (a decline of about 10%) on the day, and Union Pacific railway fell equally, from 34 3/8 to 31 7/8.

The fear would spread into the next day, May 5th 1893 which would become one of the most volatile days in stock market history at the time, and remain so until 1929. (Just to give you an idea of the volatility…On May 5th, shares of GE would decline as far as 58, a 34% decline from its peak just a days prior!)

Sources:  New York Tribune May 5, 1893 page 1, The Evening Star May 5 1893 page 1 and Panic, Prosperity and Progress

The Panic of 1893 would turn into one of the worst economic depressions in the nation’s history. 14,000 businesses would close and unemployment would rise to 20%. The depression would last 4 years before the country began to recover.

Hard-Times-1893

The panic of 1893 would lead to massive strikes, marches on the capital, mass unemployment and stock market declines. The panic would produce what would become the worst economic depression in history, and remain so until 1929.



Best May 4th in Dow Jones Industrial Average History

1906 – Up 3.04% or 1.93 points.

 

Worst May 4th in Dow Jones Industrial Average History

1970 – Down 2.60%, or 19.07 points

<– Go To Previous Day: May 3rd: 1999 – The Dow crosses 11,000 for the first time, just 24 days after reaching 10,000.

Go To Next Day: May 5th: The Panic of 1893 is underway as the market has one of its worst days in history–>