Financial History Issue 113 (Spring 2015) | Page 25
© Richard Levine/Demotix/Corbis
John Whitehead and New York Senator Hillary Rodham Clinton at an LMDC press conference in 2002.
historian Richard Sylla [now chairman of
the Museum of American Finance], which
was recorded as part of the Museum’s oral
history project, Whitehead detailed his
momentary but critical role in limiting the
damage from the Crash of 1987.
“The next day, after the Crash, was
really a key decision-making day,” said
Whitehead. “John Phelan, who was
the chairman of the [New York] Stock
Exchange, called the President. “Purely by
coincidence I was having lunch with the
President in the upstairs quarters of the
White House that day. It was a meeting
with the visiting president of Mali. In the
middle of the luncheon a messenger came
in and asked Reagan to leave the meeting.
Soon the messenger came back and asked
Howard Baker, Reagan’s chief of staff, to
leave. A couple of minutes later, Baker
appeared at the door of the dining room
and beckoned me.”
Whitehead continued, “This was very
embarrassing, but I excused myself and
went out. There was President Reagan on the phone with Phelan about
whether or not he should close the stock
exchange. Phelan had asked the President
to announce he was closing the exchange.”
Whitehead explained that it was already
lunchtime, and Phelan’s problem was that
many of the big stocks had not yet opened.
“Therefore, there was no market at all. It
was beginning to feel panicky, and nobody
could get a quote because with no opening price, you couldn’t say whether the
market was down more or up more,” he
said. “Half the Dow Jones Industrial Average stocks hadn’t opened, so there was no
average to announce. And his efforts to
get the specialists to open the stocks were
unavailing because the specialists weren’t
very bold after losing all that money in
their inventories the day before.”
According to Whitehead, Phelan was
giving an impassioned plea to the President
to close the exchange, while Baker was trying to get the President back into the Mali
meeting. “So Howard got the President off
and said he’d take charge of it. I had been
on the board of the stock exchange for a few
months just before I went to Washington,
and Phelan was a good friend. I was telling
Howard what he should tell Phelan, which
was to keep the market open. So when
Phelan started arguing with Baker, Baker
said to Phelan, ‘I don’t know anything
about these things, but Whitehead is here,
and I’m going to put him on.’ So I took
the phone and told Phelan ‘I don’t know
what you should do, [