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Law Quadrangle (formerly Law Quad Notes)

Abstract

Between September 1, 1929, and July 1, 1932, the value of all stock listed on the New York Stock Exchange shrank from a total of nearly $90 billion to just under $16 billion - a loss of 83 percent. In a comparable period, bonds listed on the New York Stock Exchange declined from a value of $49 billion to $31 billion. 'The annals of finance," the Senate Banking Committee would write, "present no counterpart to this enormous decline in security prices." Nor did these figures, staggering as they were, fully gauge the extent of the 1929-1932 stock market crash. During the post-World War I decade, approximately $50 billion of new securities were sold in the United States. Approximately half or $25 billion would prove near or totally valueless. Leading "blue chip" securities, including General Electric, Sears, Roebuck, and U.S. Steel common stock, would lose over 90 percent of their value between selected dates in 1929 and 1932.

The SEC itself was created at the conclusion of the Senate Banking and Currency Committee's 1932-1934 investigation of Stock Exchange Practices, usually called the Pecora Hearings, in recognition of the decisive role played by the committee's counsel, Ferdinand Pecora.

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