"...people believed that everything was going to be
great always, always. There was a feeling of optimism in the air that you
cannot even describe today."
"There was great hope. America came out of World War I with the economy
intact. We were the only strong country in the world. The dollar was king. We
had a very popular president in the middle of the decade, Calvin Coolidge,
and an even more popular one elected in 1928, Herbert Hoover. So things
looked pretty good."
"The economy was changing in this new America. It was the dawn of the
consumer revolution. New inventions, mass marketing, factories turning out
amazing products like radios, rayon, air conditioners, underarm
deodorant...One of the most wondrous inventions of the age was consumer
credit. Before 1920, the average worker couldn't borrow money. By 1929,
"buy now, pay later" had become a way of life."
"Wall Street got the credit for this prosperity and Wall Street was
dominated by just a small group of wealthy men. Rarely in the history of this
nation had so much raw power been concentrated in the hands of a few
businessmen..."
"One of the most common tactics was to manipulate the price of a particular
stock, a stock like Radio Corporation of America...Wealthy investors would
pool their money in a secret agreement to buy a stock, inflate its price and
then sell it to an unsuspecting public. Most stocks in the 1920s were
regularly manipulated by insiders "
"I would say that practically all the financial journals were on the
take. This includes reporters for The Wall Street Journal, The New York
Times, The Herald-Tribune, you name it. So if you were a pool operator, you'd
call your friend at The Times and say, "Look, Charlie, there's an
envelope waiting for you here and we think that perhaps you should write
something nice about RCA." And Charlie would write something nice about
RCA. A publicity man called A. Newton Plummer had canceled checks from practically
every major journalist in New York City... Then, they would begin to -- what
was called "painting the tape" and they would make the stock look
exciting. They would trade among themselves and you'd see these big prints on
RCA and people will say, "Oh, it looks as though that stock is being
accumulated. Now, if they are behind it, you want to join them, so you go out
and you buy stock also. Now, what's happening is the stock goes from 10 to 15
to 20 and now, it's at 20 and you start buying, other people start buying at
30, 40. The original group, the pool, they've stopped buying. They're selling
you the stock. It's now 50 and they're out of it. And what happens, of
course, is the stock collapses."
"The pools were a little like musical chairs. When the music stopped,
somebody owned the stocks and those were the sufferers. If small investors
suffered, they would soon be back for more. They knew the game was rigged,
but maybe next time, they could beat the system. Wall Street had its critics,
among them economist Roger Babson. He questioned the boom and was accused of
lack of patriotism, of selling America short."
"Roger Babson warned of the speculation and said, "There's going to
be a crash and the aftermath is going to be quite terrible." And people
jumped on Babson from all around for saying such a thing, so that people who
were cautious about their personal reputation, who did not want to call down
on themselves a lot of calumny, kept quiet."
"Politicians came and went, but in the 20s, the businessman was
king."
"With everyone trying to borrow money to cover the falling value of
their stocks, there was a credit crunch. Interest rates soared. At 20
percent, few people could afford to borrow more money. The boom was about to
collapse like a house of cards."
"...the National City Bank would provide $25 million of
credit...immediately, the credit crisis was alleviated. In fact, within the
next 24 hours, call money went from 20 percent to eight percent and that
stopped the panic, then, in March [1929]"
"Everything was not fine that spring with the American economy. It was
showing ominous signs of trouble. Steel production was declining. The
construction industry was sluggish. Car sales dropped. Customers were getting
harder to find. And because of easy credit, many people were deeply in debt.
Large sections of the population were poor and getting poorer."
"Just as Wall Street had reflected a steady growth in the economy
throughout most of the 20s, it would seem that now the market should reflect
the economic slowdown. Instead, it soared to record heights. Stock prices no
longer had anything to do with company profits, the economy or anything else.
The speculative boom had acquired a momentum of its own."
"It was this nature of mass illusion. Prices were going up, people
bought. That forced prices up further, that brought in more people. And
eventually, the process becomes self-perpetuating. Every increase brings in
more people convinced of their God-given right to get rich."
"The 20s was a decade of all sorts of fast money schemes. Three years
earlier, everyone was buying Florida real estate. As prices of land
skyrocketed, more people jumped in, hoping to make a killing. Then,
overnight, the boom turned to bust and investors lost everything."
"On September 5th, economist Roger Babson gave a speech to a group of
businessmen. 'Sooner or later, a crash is coming and it may be terrific.'
He'd been saying the same thing for two years, but now, for some reason,
investors were listening. The market took a severe dip. They called it the
"Babson Break." The next day, prices stabilized, but several days
later, they began to drift lower. Though investors had no way of knowing it,
the collapse had already begun."
"...the market fluctuated wildly up and down. On September 12th, prices
dropped ten percent. They dipped sharply again on the 20th. Stock markets
around the world were falling, too. Then, on September 25th, the market
suddenly rallied."
"Reuben L. Cain, Stock Salesman, 1929: I remember well that I thought,
"Why is this doing this?" And then I thought, "Well, I'm new
here and these people" -- like every day in the paper, Charlie Mitchell
would have something to say, the J.P. Morgan people would have something to
say about how good things were -- and I thought, "Well, they know a lot
more about this market than I do. I'm fairly new here and I really can't see
why it's going up." But then, when they say it can't go down or if it
does go down today, it'll go back tomorrow, you think, "Well, they
really are like God. They know it all and it must be the way it's going
because they say so."
"As the market floundered, financial leaders were as optimistic as ever,
more so. Just five days before the crash, Thomas Lamont, acting head of the
highly conservative Morgan Bank, wrote a letter to President Hoover.
"The future appears brilliant. Our securities are the most desirable in
the world."
"Practically every business leader in American and banker, right around
the time of 1929, was saying how wonderful things were and the economy had
only one way to go and that was up."
"There came a Wednesday, October 23rd, when the market was a little
shaky, weak. And whether this caused some spread of pessimism, one doesn't
know. It certainly led a lot of people to think they should get out. And so,
Thursday, October the 24th -- the first Black Thursday -- the market,
beginning in the morning, took a terrific tumble. The market opened in an
absolutely free fall and some people couldn't even get any bids for their
shares and it was wild panic. And an ugly crowd gathered outside the stock
exchange and it was described as making weird and threatening noises. It was,
indeed, one of the worst days that had ever been seen down there."
"There was a glimmer of hope on Black Thursday...About 12:30, there was
an announcement that this group of bankers would make available a very
substantial sum to ease the credit stringency and support the market. And
right after that, Dick Whitney made his famous walk across the floor of the
New York Stock Exchange.... At 1:30 in the afternoon, at the height of the
panic, he strolled across the floor and in a loud, clear voice, ordered
10,000 shares of U.S. Steel at a price considerably higher than the last bid.
He then went from post to post, shouting buy orders for key stocks."
"And sure enough, this seemed to be evidence that the bankers had moved
in to end the panic. And they did end it for that day. The market then
stabilized and even went up."
"But Monday was not good. Apparently, people had thought about things
over the weekend, over Sunday, and decided maybe they might be safer to get
out. And then came the real crash, which was on Tuesday, when the market went
down and down and down, without seeming limit...Morgan's bankers could no
longer stem the tide. It was like trying to stop Niagara Falls. Everyone
wanted to sell."
"In brokers' offices across the country, the small investors -- the
tailors, the grocers, the secretaries -- stared at the moving ticker in numb
silence. Hope of an easy retirement, the new home, their children's
education, everything was gone."
"At the end of 1929, as they celebrated New Year's Eve, all that lay in
the future. Nobody knew that the Great Depression was coming -- unemployment,
bread lines, bank failures -- this was unimaginable. But the bubble had
burst. Gone was that innocent optimism, the confidence, the illusion of
wealth without work. One era had ended. They toasted the coming of the 30s,
but somewhere, deep down, they knew the party was over."
