On the morning of July 31, 1914, the New York Stock Exchange was meant to open as usual. Instead, as panic over World War I spread through global markets, Wall Street closed its doors.
The issue was not only the war in Europe; it was the rush for cash that followed. Foreign investors were selling American securities, and under the gold standard, those sales could quickly become demands on U.S. gold reserves. As money left the country, officials worried about confidence in the dollar and the broader financial system.
Treasury Secretary William G. McAdoo saw the risk. If the NYSE stayed open while other markets closed, New York could become the main outlet for foreign investors trying to unload American securities. So it was decided that the NYSE would remain closed until further notice.
It was a drastic step, and it lasted far longer than anyone today would expect from a market halt. The NYSE remained closed for nearly four months, the longest shutdown in its history.
But trading pressure did not disappear just because the official market was closed. Within days, an informal market emerged on New Street, behind the exchange, where brokers continued to trade in cash transactions away from the official floor. The activity was limited, and prices were not supposed to be reported publicly, but it showed that investors still needed some way to find prices and liquidity.
The reopening came slowly. Bond trading resumed first, on Nov. 28, under restrictions. Stocks returned in stages in December, and the Dow Jones Industrial Average fell sharply when stock trading resumed, showing how fragile confidence still was.
Still, the closure helped buy time. It slowed foreign access to American securities and gave officials room to steady the financial system.
By the end of 1914, trading had returned.
