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But while the failure was a shock, it was not entirely unexpected. The actual news merely substantiated one of many persistent rumors which flooded W:all Street. Where originated all these wild tales, no man could tell. But no man could stop them. Cool brokers fought to quell them, only to catch the disease themselves. Denial seemed to lend authority. Some firms sent memorandums to all employes, warning them that to discuss another firm's financial position, even among themselves, was a breach that could not be tolerated. But as stocks kept falling, the stories flew faster. Weakness in certain issues, notably Fox, corresponded with rumors concerning houses sponsoring them. Cause and Effect became confused.
Not only the U. S. markets felt the repercussions of the failure of this 52-year-old firm with membership on the Exchange, Curb, Chicago Exchange and Curb, and the Cleveland Exchange, with seven branch offices, with about 9,000 customers and collateral loans estimated at $35,000,000. News of the failure shocked London, where Prince & Whitely did a large arbitrage business, was said to be interested in International Nickel and Brazilian Traction. This, added to the failure of two small London houses, sent prices reeling in that market. It was likewise a blow to Paris. Said La Liberté: "This firm is one of those which recently have been installed in France and have contributed to drain our national savings for the profit of American speculators."
While no other houses in Manhattan closed, two withdrew from the Stock Exchange. Buell & Co. announced it was selling its seat in order to concentrate on the investment banking business. William Schall & Co. likewise sold their membership, and sold their Boston office of E. A. Pierce & Co., credited with being the largest wirehouse.
A sensational closing rally saved Friday, Oct. 10, from being remembered as one of the gloomiest, most unnerving, that the Street has experienced for years. (In that one day Fox went from 38 to 29 to 38.) The shadow of real financial Panic had been over lower Manhattan, cold, terrifying. For weakness among the rich & powerful is disconcerting, and, recalled oldsters, sometimes contagious.
That the decline should follow on the heels of the Stock Exchange's announcement that bear-raiders would be prosecuted was regarded as only coincidental. Bear-selling could not have played more than a small part, a fact admitted by President Richard I. Whitney when he spoke last week to the Illinois Chamber of Commerce, defended true short selling, said: "It is impossible for any individual or group of individuals to buy or sell securities in sufficient volume to affect the whole list." Brokers saw that the Exchange's attitude was against the bear who uses unethical means (such as rumormongering) to depress prices, was perhaps essentially a move to forestall investigation by Congress. Agitation of this sort was commencing last week. Congressman William I. Sirovich of New York notified the Exchange that if conditions were not remedied he would ask President Hoover to act. Quite to the contrary, shrewd observers noted as a happy sign that many a "little fellow" was now selling short.