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Posted on 20 April 2011 | 6,318 views

Goldman Sachs Stock Price After Market Crash from 1929 to 1931

Marcus Goldman began trading in promissory notes in 1869. Goldman’s son-in-law, Samuel Sachs, joined the business in 1882. The firm expanded into a general partnership in 1885 as Goldman, Sachs & Co. when Goldman’s son Henry and son-in-law Ludwig Dreyfus joined the group.

In 1906, one of the firm’s clients, United Cigar Manufacturers, announced its intention to expand. Goldman, Sachs, which had previously provided the company with short-term financing to maintain inventories, advised United Cigar that its capital requirements could best be met by selling shares to the public. Although Goldman, Sachs had never before managed a share offering, it succeeded in marketing $4.5 million worth of United Cigar stock; within one year United Cigar qualified for trading on the New York Stock Exchange.

On the strength of this success, Goldman, Sachs next co-managed Sears Roebuck’s initial public offering (IPO) that same year. Henry Goldman was subsequently invited to join the boards of directors of both United Cigar and Sears. The practice of maintaining a Goldman partner on the boards of major clients became a tradition that continues today.

Goldman Sachs was trading at $75.00 per share before (Black Monday, October 28, 1929) on the New York Curb Exchange then was trading at $35.125 after (Black Tuesday, October 29, 1929) to finally come close to a bottom on December 16, 1931 at $2.00 per share.

In the aftermath of the 1929 stock market crash, Congress passed the Securities Act of 1933. This act created the Securities and Exchange Commission, which required that every investment be accompanied by a detailed prospectus. These often contained confusing small-print passages. As a conservative and practical securities dealer, Goldman Sachs worked to reduce investor confusion by providing concise information in common language.

Back in 1929, as today, Goldman Sachs foolishly participated in the creation of dangerously leveraged investment vehicles that were toxic for investors. Then it was a pyramid of investment trusts led by the infamous Goldman Sachs Trading Co., which lost over 90% of its value and almost went out of business, but Walter Sachs sold his yacht and fancy chandelier and put the proceeds into the firm.

Resources:

The Pittsburgh Press
Spokane Daily Chronicle

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2 Comments »

  • Jessica Johnson said:


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