On September 3, 1929 the Dow–Jones industrial index of common stock prices reached a new all-time high at 381. This was more than double its level in early 1929, and, as it happened, the record established was to stand for the next twenty years. Serious slippage in stock values occurred in early October and the trend was downward throughout most of the month. Even before the panic conditions of “Black Thursday,” October 24, and “Black Tuesday,” October 29, it appeared that the long-anticipated readjustment had begun. Interpreting its scale and significance was another matter. Interruptions in the upward momentum of the bull market had occurred before, most recently in December 1928 and in March 1929, and had shortly thereafter been reversed. It was not implausible to argue that a similar “technical reaction” was now underway and that the forward momentum would soon be resumed.

After the October erosion had begun (though before Black Thursday, October 24), Hoover observed in private conversation that he had “noted with satisfaction the break and decline in stocks,” but that he had been “dubious about doing anything for fear that more harm than good might result.” On October 25 (the day after the first major panic on the New York Stock Exchange), Hoover had a different reading of the situation available to him.