The Wall Street Journal called "Black Monday" the stock market's "...worst one day plunge ever." The Dow Jones Indus trial Average dropped a frightening 508 points, or 22.6 percent. The relative decrease in the value of the market exceeded the 12.8 percent decline of October 28, 1929 which triggered the Great Depression. Investors lost some $500 billion dollars.
"It was the worst market I've ever seen," said Big Board chairman John J. Phelan, "and as close to financial meltdown as I'd ever want to see." To some economic fore casters, Black Monday signaled the end of an era of relatively free spending.
With its confidence shaken and the shadows of huge federal trade and budget deficits overhead, the market dipped again in December 1987. In early 1988, investors cautiously pumped the market back over the 2,000 mark but then, toward the end of March, it dropped an additional 100 points. Investors still appear to be haunted by last October's crash.
Some six months after Black Mon day, the ultimate economic effects on the nation's economy are still not certain. As in 1929, last year's "Bear Market" brought on a period of uneasy months while the business com munity counted its losses. Meanwhile, the public keeps a nervous eye on jobs and cuts back on discretion any pending in fear of a further downturn. The prospect of an election in November adds additional variables to the economic picture.
So how has the limousine industry been affected by the financial and emotional fallout of Black Monday? Has corporate spending for limousine travel tightened? Do limousines appear an ostentatious display of wealth as they did to many people in the aftermath of the 1929 collapse? Has it become more difficult for livery operators to secure capital for their businesses?
Limousine & Chauffeur asked operators and observers around the country whether or not their business has been affected by Black Monday.
Attila Fenyes - Royal Coach Livery; Encino, CA
Yes. From those clients directly around stocks we had some heavy cancellations. We have one broker age firm whose business practically died out on Black Monday. In fact, that same day, they cancelled a big trip that would have been about $10,000 worth of business.
We're still feeling the effect. People who are heavily involved with the stock market are not coming around as much as they used to. I'm thinking specifically of some businessmen who used to travel frequently from New York to Los Angeles. They just don't travel as much anymore.
Lon Kaufmann - Lon's Limo Scene; Santa Rosa, CA
Yes I did notice that October and November were much slower in '87 than in '86. Also in my area, it seems like the competition is just going berserk and I think this had something to do with it also. Having polled some of the other operators in the area, I found that I was not alone.
I think it affected all across the board...every income level. Things have seemed to pick up. December was a great month for me. February was fine and this month is going well. January is traditionally slow. It's picking up well and I'm quite pleased. The plus of being a one-car opera tor is that you can survive slow times easier than multi-car outfits.
George Heyman - Simply Corporate; Beverly Hills, CA
We noticed it most the first few days after the crash. There was a certain kind of silence. We lost out on a lot of as directed business from people like stock brokers who would normally come in and keep a car all day. We noticed that for a couple of weeks. With clients like studio people, we probably didn't notice it all that much.
Thank God many of our corporations are pretty solidified. Mostly it was the brokerage firms.
Janet Valentino - Ms Limo; Cherry Hill, NJ
We did not see that much of an effect. I think it was more of a scare. Everyone talked about it but I don't think the people we deal with have all their money tied up in the stock market. Naturally it was a big concern to everyone. It was probably more psychological than anything else.
Carol Whelihan - Allegro Service Dolton, IL
No I don't think anybody's business was really affected. I know our business is getting stronger and stronger. Maybe we lost a few nights on the town, or things of that nature, but people who travel' on business are doing it anyway and their company is still picking up the tab. So I really don't see any problem.
Peter Halaka - Royal Viking Express; Maspeth, NY
I noticed a big effect. Let me give you an example. 87.2 percent of my clients are from Wall Street. The quantity that they used to give me before October was reduced by at least 43 per cent. I would say we felt the effects about a week after.
It's coming back but not as much as it was. The philosophy has changed. People are looking at cutting overhead and costs in all corners. They are using black cars instead of using big cars because they are paying half the price. And it's affecting all the operators. I think these changes will remain with us at least another year. Until after the election.
I will change my philosophy. I will go out of that market and enter another market. I tried the black car market but got rid of them right away. They are a headache and I don't want to compete with a large number of big operators. That business is based on volume, and also on the quick capital they build by selling franchises.
As far as the corporate limousine market is concerned, instead of concentrating on one or two of the big brokerage firms, you have to have 10 or 15 of them so you can come up with the volume you need.
You also have to expand beyond that market and find a different market. What I have done is go to the garment industry. The garment industry was hurt a little bit but not as much as the brokerage firms. They are still there and I am picking up a little here and there. That's the only way I can get back on my feet.
It affected everybody. After the crash, if you had gone to any of the garages of big limousine companies, you would have found that 50 per cent of their cars were sitting there day and night.
People don't know what's going to happen in November and who's going to be in the White House. After the election, if we see that the same philosophy is in the White House, we'll go back again to where we were. But at this particular time, everybody's afraid.
Richard Hundley - The Limousine Connection; Los Angeles
Yes I have noticed some effects. I guess I would attribute some of that to the companies we deal with who are stock brokerages. One effect I've noticed is that it takes longer to get paid than it did, and these are people who have been in business for some time.
Another effect is that there is much less business in stretch limousines and more in Town Cars, sedans, and that type of thing. They're looking at reduced bucks and not quite the same kind of flamboyant image that they had before. I have noticed that among people who have been historically involved with investments and stocks.
I've been told that there is concern about a recession and one of the results is that people have moved to more conservative vehicles for the sake of image. They don't want to be seen in the more flamboyant stretch limousines and that type of thing.
I saw this beginning to happen even before the crash. It wasn't as accelerated before that period, but corporate people were going to the more conservative vehicle....either a formal or a Town Car or sedan. Our Town Car business has been growing steadily which is all right with me because it's actually more profitable than running stretches. It's a general change that was accelerated somewhat by the stock market crash.
As far as limousine purchases, our fleet balance will probably be a little different in the coming year. We will probably have more sedans. We have three of them now and we had one previously.
As far as limousine purchasing, it really has nothing to do with the stock market crash but the last few stretches we've bought have been late model repos with no miles on them. We've been trying to lower our monthly payment schedule and still have top-of-the-line cars. Instead of having payments of $1200 a month, you might pay $650 or $700 a month on one of these repos and there are a lot of them around. The failure rate of limousine operators seems to have slowed down a little but there are still a lot of them going under. You see these $50,000 or $60,000 cars that are a few months old and are suddenly available for a lot less money than they were originally.
Don Dailey - Carey International, Washington, D.C.
We mainly felt the effect in limousines rather than sedans. Limousine business in corporate areas' did decline but I would say it was less than five percent. At the same time, our sedan business increased.
Mario Bello - Westwood Limousine Sales; Emerson, NJ
I'm not sure if it was the stock market crash or if it was just a slow sea son. February has always been slow. There may be some ripple effect from the stock market crash but we probably won't really know what it was until we total up at the end of the year.
Steve Spencer - London Town Cars; Long Island City, NY
The crash hasn't affected our volume of business. What I have found is that some of the top people with the brokerage firms have moved to other companies. The Mayor's Office did a survey that showed that foreign banks have picked up some of the investment bankers. Of course we may still feel some effects. When the market crashed in 1929 it took several months for the major effects to be felt...