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The Crash of 1929 The Great Depression — Transcript

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0:12the tremendous crowds which you see
0:13gathered outside the stockies J are due
0:16to the greatest crash in the history of
0:18the New York and market
0:27[Applause]
0:28prices
0:32[Applause]
0:34December 31st New Year's Eve a crash and
0:38its terrible consequences were still in
0:40the
0:41future Financial leaders everyone
0:45celebrated what had been a decade of
0:47prosperity and boundless
0:49optimism they thought the party would
0:51last forever they called it the new
0:56[Applause]
0:58era
1:021929 all the hope and promise and
1:06illusion of the 20s converge in that one
1:09[Music]
1:16year the United States is Afflicted with
1:20new
1:22eras let us not think for a moment that
1:25the uh illusion the aberration of the
1:301920s was unique it is intimately a part
1:34of the American
1:42character the mood of the era I think
1:45can best be remembered by the hit song
1:49was that 1929 blue skies in the 20s yes
1:53blue
1:55skies nothing but blue skies do I see
1:59never the sun shining so bright never
2:02saw things going so right gray days all
2:06of them gone nothing but blue SK from
2:11[Music]
2:22the that was the whole uh tenor of the
2:25day I mean people believed that
2:28everything was going to be great always
2:31always there was a feeling of optimism
2:33in the air that you cannot even describe
2:36today and everybody seem to uh have uh
2:40an interest in the stock market
2:42certainly the uh boot black uh the
2:46tailor the grosser own shares of one
2:49kind or
2:51another this was the first time that
2:54many ordinary Americans had begun to
2:55invest in
2:57stocks a stock a share of of a company
3:00is bought and sold here on the floor of
3:03the New York Stock
3:05Exchange the stocks themselves have no
3:08fixed value as in an auction if the
3:11stock is in demand its price goes up no
3:14demand and the price goes
3:17down for almost eight straight years
3:20stock values had been rising by 1929
3:24there seem to be no upper limits in this
3:26world of paper numbers and dreams
3:31it was an arena of unbounded opportunity
3:34where somebody like my grandfather could
3:36come into it and make a fortune so many
3:39people made so much money in the the
3:41market that late in the 20s it it seemed
3:44that uh you just couldn't go wrong
3:46buying stocks in American
3:49companies here was a whole new way to
3:52make a fortune unlike the carnegies and
3:55the Rockefellers of previous decades who
3:57built steel mills and dug oil wells men
4:00like Michael
4:01mean Jesse Livermore and Charles
4:04Mitchell had amassed their fortunes
4:07buying and selling stocks pieces of
4:10paper the public was fascinated Bankers
4:14Brokers and speculators had become
4:16celebrities and they lived like
4:19royalty I can hardly believe that a
4:23family lived in this kind of a house I
4:26mean today it would be almost
4:29unbelievable
4:30six
4:31stories and these great big rooms
4:35enormous we counted it up the other day
4:38we had uh 16 Livin help in this
4:44house the show food nothing counting the
4:46chauffeurs yeah aside from all the help
4:49we had in The Tuxedo Park house and the
4:52Southampton house as well but those days
4:55are gone forever I should say but we
4:57never thought of it as being Grandy
5:00because practically everybody we knew
5:03seemed to live in the same
5:05way Jessie Livermore had a ticker tape
5:09in every home that he owned they
5:13had a beautiful house on 76th Street in
5:17Manhattan on the west side of Central
5:20Park they had a floor at 8813 Fifth
5:25Avenue because Daria did not like to go
5:27to the West Side to change her clothes
5:30so they had a house in Great Neck they
5:33had a summer house in Lake
5:35plen they had house in Palm Beach they
5:39had private railroad
5:42car uh two
5:44Yachts oh they lived they really
5:51lived few Americans lived Like Jesse
5:54Livermore but there was a rising
5:56expectation that everyone could have a
5:58piece of this prosperity
6:00during his presidential campaign of
6:031928 candidate Herbert Hoover would make
6:05this extraordinary promise given a
6:08chance to go forward with the policies
6:11of the last 8 years we shall soon with
6:15the help of God be in sight of the day
6:19when poverty will be banished from this
6:23[Applause]
6:25nation there was great hope America came
6:28out of World War I with a the economy
6:30intact we're the only strong country in
6:32the world the dollar was King we had a
6:34very popular present in the middle of
6:35the decade Calvin coolage and an even
6:37more popular one elected 1928 Herbert
6:39Hoover so uh things look pretty
6:52good the economy was changing in this
6:55new America it was the dawn of the
6:57consumer Revolution new inventions Mass
7:01marketing factories turning out amazing
7:04products like
7:06radios
7:09rayon air
7:11conditioners underarm
7:16deodorant this is a period in which the
7:18American household gets the washing
7:20machine gets a
7:22refrigerator goes off gas light and gets
7:24electricity in some cities this is a
7:26period in which people would buy little
7:28plugs to put into the uh outlets in the
7:30wall so the electricity wouldn't leak on
7:32the
7:34floor what will they think of next was a
7:361920 saying this new thing is
7:38continually coming out and there were
7:40new things which you could enjoy not
7:42just for the
7:45few one of the most wondrous inventions
7:48of the age was Consumer
7:51Credit before 1920 the average worker
7:54couldn't borrow money by
7:571929 by now pay later had become a way
8:01of
8:02life so uh there were changes many
8:05changes in the way people viewed the
8:06world and all of them
8:08optimistic you extrapolate the curve and
8:10what do you have permanent Prosperity
8:12that was a ter term one heard in the
8:14late 1920s we entered an age of
8:15permanent
8:19Prosperity Wall Street got the credit
8:21for this prosperity and Wall Street was
8:24dominated by just a small group of
8:26wealthy men rarely in the history of
8:28this nation had so much raw power been
8:32concentrated in the hands of a few
8:34businessmen men like William C
8:38Durant it's almost impossible to realize
8:42the power and the significance of the
8:45man uh in Flint when Mr Durant came to
8:48Flint occasionally people used to say
8:50Durant is in town just like that Durant
8:53is in town he was bigger than life
8:58earlier in the C Century Durant had
9:00founded General
9:02Motors now he made his money on Wall
9:04Street backed by Midwestern Auto
9:07industrialists he controlled so much
9:09money that he could singlehandedly drive
9:11up the price of a stock and then sell
9:14reaping huge
9:17profits he was just at the apotosis at
9:19the maximum of his power he
9:22managed according to the voices of the
9:25time according to what was said anywhere
9:27between 2 to 5 billion
9:30which in those days were
9:32fabulous the market was filled with
9:34bulls and he was the Bull of the
9:39Ws Durant came to Wall Street as one of
9:42the titans of Industry Jesse Livermore
9:46whose Fortune was estimated at over $100
9:49million never did anything in his life
9:52but play the
9:53market everything Jesse limore touched
9:55turned to Gold it seemed all he had to
9:57do is to press a button and the stock
9:58would go up 10 points and uh that meant
10:01of course that Jesse limore make a lot
10:02of money so uh the average American
10:05would look at this and say gee if I if
10:07only I knew what he was doing I could
10:09make money too how do you get in on
10:10Jesse livermore's
10:14brains livor was a Speculator pure and
10:17simple he didn't study the health of a
10:20company he didn't care whether it made a
10:21profit or paid a
10:23dividend for him the stock market was an
10:26abstract game of numbers
10:30money was not the end for this man at
10:32all money was a very peripheral thing
10:35for him but beating the odds winning the
10:42game that was that was his
10:45objective he was a numbers man he lived
10:48by the Numbers he took an elevator by
10:51the Numbers he came into town by the
10:53Numbers everything was done by
10:56numbers when he left his house in the
10:58morning he did not leave at 8:10 he left
11:00at
11:018:07 all of the policemen knew because
11:04of his time schedule that he would be
11:06going down Fifth Avenue let's say at
11:108:37 well of course traffic lights were
11:13hand operated then had policemen on
11:16boxes so the instant that they saw his
11:19car the lights were green he never
11:22stopped for red
11:25light the success of large speculators
11:28like Liv and Durant lured smaller
11:31investors to Wall Street but Charles
11:33Mitchell president of National City Bank
11:36virtually invented the idea of mass
11:39marketing stocks and bonds to the
11:40general public this was a totally new
11:43idea and a huge
11:45success the bank prior to father's being
11:49elected uh president in
11:511921 was geared mainly to doing business
11:55with large corporations father pointed
11:58the bank for the first time in the
12:01direction of uh going after the little
12:05man and call him the little man it was
12:08every man well Yan all right how old was
12:11he then 38 years old and uh the National
12:15City company had uh four offices I know
12:19within 3 years there were over 50
12:21offices and by 1929 it was the largest
12:24distributor of Securities in the
12:27world even at the height of the
12:29speculative frenzy only a small
12:32percentage of the American public
12:33actually invested in
12:36stocks but the market had entered
12:38popular culture Wall Street became Main
12:42Street everyone was talking stocks
12:45watching the ticker became a national
12:48sport popular magazines covered
12:50financial news dozens of best sellers
12:53promised investors the inside track what
12:58a got me feeling bigger and better
13:03[Music]
13:05than the characters in the popular comic
13:07strip Gasoline Alley were investing in a
13:10company called rubber
13:13keyho stock tips came from
13:15everywhere some investors followed the
13:18advice of evangelin Adams an
13:22astrologer she was able to calculate the
13:25variations of the stock exchange so
13:28accurately that there was practically no
13:30difference to having have read it in in
13:33a ledger
13:34somewhere among her more interesting
13:37clients were Charles Chaplan uh Mary
13:41pford and jpon
13:44Morgan in February Evangel and Adams
13:47looked at the stars and predicted a
13:49dramatic upswing in stock prices for the
13:52coming months I'm looking up at the sky
13:55I see the clouds rolling by hello
13:58sunshine
13:59hello I'll say you long the stock market
14:03once considered a highly risky place to
14:05put your money was now beginning to
14:07attract a whole new group of amateur
14:10speculators among the new players was
14:12one Julius Marx everyone knew him by his
14:15stage name
14:17grouo but they were
14:19poor and my father it always affected my
14:22father because he was always kind of
14:24Thrifty and uh worried about his future
14:27and where it would be become a him when
14:29no one else wanted him as an actor
14:31anymore so he was always saving money
14:34turning off the lights and turning off
14:35the water around the house even after he
14:37was in Hollywood and making a lot of
14:40money of all the Marx Brothers grouo was
14:43the most financially conservative in
14:461929 he took his life savings and put it
14:49in a sure thing the stock market he was
14:53always uh phoning a broker and getting
14:56hot tips and wanting to know what the
14:58stocks were that how they were doing and
15:00uh if he wasn't on the phone he would
15:02take me into Great Neck which was a
15:03little village at the time but they did
15:05have a stock Booker called Newman
15:07brothers and worms and all these men who
15:10are investing in the market would all
15:12sit there in chairs like a little
15:14theater and watch the ticker tape go
15:17by grouo along with record numbers of
15:20smaller investors was borrowing money to
15:23buy stocks it was called buying on
15:26margin you only needed 10% down
15:29just $11,000 would get you $10,000 worth
15:32of
15:33stock suddenly you were in the same
15:35league with the big players or so it
15:39seemed but the stock market was not a
15:41Level Playing
15:43Field in the 20s and 30s one of the big
15:47features of the uh stock market is the
15:49fact that it wasn't
15:51controlled and that operators could do a
15:55lot of things that are not permitted
15:57today one of the most common tactics was
16:00to manipulate the price of a particular
16:03stock a stock like radio Corporation of
16:07America RCI was in the 20s what Xerox
16:13was in the 60s what was a great growth
16:16stock uh the stock went from I can't
16:20remember the exact numbers but from
16:21something like 20 to 400 split many
16:23times and made many people including my
16:26grandfather very wealthy uh it it was
16:29one of the stocks that was um
16:32manipulated by a
16:34pool wealthy investors would pull their
16:37money in a secret agreement to buy a
16:39stock inflate its price and then sell it
16:42to an unsuspecting
16:44public most stocks in the 1920s were
16:47regularly manipulated by insiders like
16:50RCA specialist Michael
16:54mean in those days that was legal and um
16:58it was quite common practice for a group
17:01of um wall streeters to take a stock in
17:04hand and um they would acquire a
17:08position in the stock early on and then
17:11um they would see to it that there was
17:13good press on the stock a lot of
17:17publicity I would say that practically
17:19all the financial journals who on take
17:21this includes reports for the Wall
17:23Street Journal the New York Times The
17:24Herald Tribune uh you name it so uh if
17:28you were um uh a pool operator you'd
17:31call your friend at the times and say
17:33look Charlie there's an envelope waiting
17:34for you here and we think that perhaps
17:37um you should write something nice about
17:39RCA and Charlie would write something
17:41nice about RCA publicity man called a
17:44Newton plumber had cancel checks from
17:46practically every major journalist in
17:47New York City then they would begin to
17:51what was called painting the tape and
17:53they would make the stock look exciting
17:56they would trade among themselves and
17:57you'd see these big prints in RCA and
18:00people will say oh it looks as though
18:01that stock is being
18:03accumulated now if they are behind it
18:05you want to join them so uh you go out
18:07and you buy stock also and what's
18:09happening is the stock goes from 10 to
18:1115 to 20 and now it's a 20 and you start
18:13buying other people St buying 30 40 the
18:16original group the pool they stopped
18:17buying they're selling you the stock Now
18:2050 and they're out of it and what
18:22happens of course is the stock
18:24collapses on March 8th 1929 Michael me
18:29began one of the most successful pools
18:31on Wall Street from the 8th to the 17th
18:35me and the pool pushed up the value of
18:37RCA almost
18:4050% on March 18th they sold and divided
18:44up their profits in today's money they
18:47had made $100 million for one week's
18:52work the pools were a little like
18:54musical chairs when the music stopped um
18:58somebody owned the stocks and those were
19:02the
19:05sufferers if small investors suffered
19:07they would soon be back for more they
19:10knew the game was raped but maybe next
19:13time they could beat the system
19:16in if you want the
19:20rainbow you must have the
19:27way
19:30[Music]
19:39Wall Street had its critics among them
19:42Economist Roger Babson he questioned the
19:45boom and was accused of lack of
19:47patriotism of selling America
19:49short Roger Babson warned of the
19:52speculation said there's going to be a
19:55crash and uh the aftermath is going to
19:59be quite terrible and people jumped on
20:03Babson from all around uh for saying
20:07such a thing so that people who were
20:11cautious about their personal reputation
20:14who didn't not want to call down on
20:17themselves a lot of
20:18calamy uh kept
20:22quiet mobster Al Capone was not a
20:25cautious man from his Chicago
20:27headquarters he condemned the wild
20:30speculation on Wall Street it's a racket
20:33he said those stock market guys are
20:36crooked Capone invested his money in a
20:39$100 million bootleg liquor business
20:43business was good on Valentine's Day
20:451929 he had just eliminated the
20:50[Music]
20:54competition March 4th Inauguration Day
20:58Republican President Calvin kulage had
21:00run his administration on the belief
21:02that business was the basis of America's
21:06Prosperity government should not
21:09interfere Herbert Hoover had won a
21:11landslide Victory promising to carry on
21:13the
21:16tradition this was a time in our history
21:20when governments did not as now take
21:24responsibility for the economy they
21:27presided over over it but uh the level
21:31of government of economic activity and
21:34the level of economic growth and the
21:37stability of prices were not yet
21:39everyday concerns of the
21:42president and um uh what coolage did was
21:48to uh say how wonderful times were how
21:52happy everybody was going to be and how
21:56prosperous everyone was going to be
21:59and Hoover's
22:02responsibility was to continue that
22:06optimism herit
22:08Hoover you solemnly
22:11swear politicians came and went but in
22:14the 20s the businessman was King New
22:18York City had a Dapper corrupt and
22:21vastly popular mayor Jimmy Walker but
22:24behind the scenes were powerful
22:26Financial leaders like Charles Mitchell
22:29Jimmy Walker was high wide and fancy
22:33with the city finances one day father
22:36called mayor Walker up here uh and he
22:40had some other Bankers with him and
22:41mayor Walker was sort of put on the
22:43grill in the upstairs library and while
22:47these Bankers read the riot act to him
22:49to try and get some fiscal
22:52responsibility uh instilled into him and
22:55I know that after the meeting uh someone
22:58took me into the library and pointed
23:00pointed me out the chair that the mayor
23:02had been sitting in and he'd been so
23:04nervous or those Lou Cur uh chairs with
23:07all the little Lou K chairs with all the
23:10little um TS in there brass TXS and he
23:13pulled out almost all the brass tacks
23:15they were sitting on the floor out of
23:17sheer
23:20nerves the stock market too was getting
23:22a severe case of nerves on Friday March
23:2622nd all eyes were on that aug
23:28government body in Washington the
23:30Federal Reserve board the board
23:32distrusted the boom they saw the
23:35speculation as Reckless and dangerous
23:37because it was based more and more on
23:39the shaky Foundation of borrowed money
23:42margin the board had the power to curb
23:45the borrowing but the market was now
23:47dependent on borrowed money without
23:50margin it would collapse the board met
23:53day after
23:54day would they ask for regulation of the
23:57stock market they issued no public
24:00statements their silence was
24:06terrifying get my broker say get my
24:08broker to to
24:12to on Monday March 25th investors began
24:16to
24:17sell Blue Chip stocks plunged Tuesday
24:21another wave of selling swept the market
24:24as it fell people holding stock on
24:26margin were HIIT hard they put only 10%
24:29down but the value of their stock
24:32dropped more than 10% so their down
24:35payment was gone to hold their stocks
24:38they'd have to put up more money on
24:40March 26th millions of investors
24:43suddenly found themselves in deep
24:45trouble your broker would call you and
24:47say we need more money you're wiped out
24:50unless you could give them more money he
24:51would then sell the stock now he would
24:53sell the stop which would cause the
24:54stock to go down to 8 85 86 and now more
24:57margin calls are triggered
24:59so one Margin Call triggers another
25:00Margin Call triggers another Margin Call
25:02and it goes all the way
25:05down with everyone trying to borrow
25:08money to cover the falling value of
25:09their stocks there was a credit crunch
25:12interest rates
25:13soared at 20% few people could afford to
25:16borrow more money the boom was about to
25:19collapse like a house of
25:21cards Charlie Mitchell was horrified his
25:25success his entire career his personal
25:27Fortune had been based on a rising
25:30market if nobody else was going to stop
25:32the crash Charles Mitchell
25:35would far at that point stepped in and
25:38announced that the National City Bank
25:40would provide $25 million of credit
25:43which was all very well and very
25:45necessary but he added the Fateful words
25:50whatever the Federal Reserve board
25:52thinks and uh Senator carig glass who
25:55had been sort of the father of the
25:57federal Reserve Act in 1913 took that as
26:01a direct slap across the face but
26:05whatever Senator glass thought
26:07immediately the credit crisis was uh
26:10alleviated in fact within the next 24
26:13hours call money went from 20% to 8% and
26:17that stopped the Panic then in
26:20March the next day the market
26:23rallied the Federal Reserve board
26:25remained silent tacitly accepting defeat
26:29the hero of the day was Charlie Mitchell
26:32he had single-handedly stopped the crash
26:34of
26:4129 with the start of the baseball season
26:44people quickly forgot the break in the
26:46market new events filled the papers
26:49there was a crisis in Nicaragua where
26:51the Nationalist hero austo sandino was
26:54threatening American Marines tragedy in
26:57the British Mandate of Palestine as Jews
26:59and Arabs clashed over control of the
27:02sites in
27:04Jerusalem and in Antarctica Commander
27:07bird was at his base camp Little America
27:09waiting for a break in the weather his
27:12elaborately planned flight over the
27:14South Pole was still on
27:18Ice the news reels had come into their
27:20own now in living sound patrons could
27:24keep a breast of the important events of
27:26the day the biggest news of the day is
27:29not the naval agreement not even
27:32prohibition but the return of the
27:34natural waste
27:36[Music]
27:45line Dorothy
27:47Livermore was a typical flapper she has
27:51to embody their funes she would
27:54do almost anything on an Impulse she had
27:57some Priceless pieces of 18th Century
28:00Furniture but the house had settled and
28:05the floors were not level but Mrs
28:09Livermore didn't like to spend money
28:11that didn't show so instead of having
28:13the Hoist put underneath she simply
28:17solved the problem by having the legs of
28:19the furniture cut off to fit the sloping
28:23floors so that the tops of all the
28:26furniture were level but of course the
28:29legs were on different
28:31angles and this was her typical solution
28:34it as long as the tops were level
28:36everything was
28:38fine everything was not fine that spring
28:40with the American economy it was showing
28:43ominous signs of
28:45trouble steel production was declining
28:48the construction industry was
28:51sluggish Car Sales dropped customers
28:55were getting harder to find and because
28:57of easy credit many people were deeply
28:59in
29:01debt large sections of the population
29:04were poor and getting
29:07poorer just as Wall Street had reflected
29:10a steady growth in the economy
29:12throughout most of the 20s it would seem
29:14that now the market should reflect the
29:16economic
29:18slowdown instead it soared to record
29:21Heights stock prices no longer had
29:23anything to do with company profits the
29:25economy or anything else the spe
29:28speculative boom had acquired a momentum
29:30of its
29:30own this is the nature of mass illusion
29:35prices were going up um people bought
29:39that forc prices up further that brought
29:41in more people and eventually the
29:43process becomes self-perpetuating every
29:47increase brings in more people uh
29:50convinced of their god-given right to
29:52get rich the 20s was a decade of all
29:55sorts of Fast Money schemes 3 years
29:58earlier everyone was buying Florida real
30:01estate as prices of land skyrocketed
30:04more people jumped in hoping to make a
30:07killing then overnight the boom turned
30:10to bust and investors lost everything
30:13why the folk sunshine sunshine Perpetual
30:15Sunshine all the year around let's get
30:17the auction started before we get a
30:19tornado right this way step forward
30:21every in May the marks brothers were
30:23before the cameras with their first film
30:25the Coconuts it subject the Florida land
30:28boom now in
30:311929 the gullibility of those naive
30:34speculators was something to laugh about
30:36800 wonderful residences will be built
30:39right here why they're as good as up
30:40better you can have any kind of a home
30:42you want to you can even get stucko oh
30:44how you can get stuck out now is the
30:46time to buy while the new boom is on you
30:48remember that old saying a new boom
30:50sweeps clean and don't forget the
30:51guarantee grouo marks would film these
30:53scenes and then rush to his broker to
30:56put more of his savings into the bo
30:58Market on margin of
31:01course Max Gordon the Broadway producer
31:03was also heavily in the market and
31:05Gordon could never get over the fact
31:07that the market was going up and up and
31:09up all the time and he said to my father
31:13how how long has this been going on Gro
31:15and my father said I don't know but my
31:17broker down in great Nick tells me that
31:20it's because there's a worldwide market
31:21for American goods and it's never going
31:23to go down the market will just keep
31:25going up and up and up may 192 9 stock
31:29prices were going up and up with so much
31:32money to be made people were borrowing
31:34more money than ever before to buy
31:36stocks Market leaders like William
31:38Durant far from being worried were
31:41ecstatic off on his annual visit to
31:44Europe he announced that everything
31:46would be fine as long as we all continue
31:48to
31:49believe confidence not halfway
31:52confidence but 100% confidence is the
31:55real basis for our prosperity
31:59astrologer evangelin Adams was now
32:01putting out a newsletter her 100,000
32:04subscribers learned how the Zodiac could
32:06influence stock prices her advice for
32:09the coming summer
32:13buy hid the ceiling hidden the ceiling
32:19breaking through to the
32:21sky they thought this was a ride that
32:24was never going to end it just goes on
32:27and on and on and every day they got
32:29more money and they're counting up their
32:30paper profits and they're selling and
32:33buying and buying and selling and
32:34they're doing
32:36[Music]
32:40great she I go to get a shoe shine and
32:43say how's the market you to the bar get
32:47head how's the market everybody was in
32:49the
32:50[Music]
32:54market they were uh people who were
32:56looking for the uh one lucky
32:59break uh people who are just hoping that
33:01they they strike it right you know take
33:03a rifle you aim it in the ocean and you
33:05hope to hit a
33:07fish along with the market temperatur
33:09soar that summer it was a record heat
33:12rate and a record 3 months at the
33:15exchange some stocks doubled in
33:18value in June the New York Times index
33:21of stocks Rose 52 points in July another
33:2625
33:31in the middle of the summer the graph
33:33Zeppelin was completing his first
33:35leisurely trip around the world The Mock
33:38Brothers had finished shooting their
33:39film the
33:41Coconuts Commander bird was still at his
33:44base camp near the South Pole he too had
33:47money in the market and radioed his
33:49broker for the latest
33:51quotes back in Cleveland George Herman
33:54Ruth hit his 500th home run
33:59and on the radio they were playing the
34:01latest hit tune I'm in the market for
34:05you I want a thousand shares of your
34:08caresses
34:10too we'll count the hugs and kisses when
34:14Dividends are due cuz I'm in the market
34:19for
34:23you on August 17th Michael mean's
34:26brokerage firm launched a new
34:28surface one of uh my grandfather's
34:31Innovations was putting brokerage houses
34:33on the ocean liners uh the first went on
34:36the Bering area and that allowed you
34:39during the whatever it was six or S day
34:41passage to Europe if you were such a a
34:43stock market addict that you couldn't
34:45stand the withdrawal for that period you
34:47could walk into the office and place
34:49your order to buy or sell 100 shares or
34:51General Motors or general electric or
34:53whatever and they would radio that order
34:55back to New York was being very modern
34:58at the time they were very wealthy
34:59people on the transatlantic liners and
35:02it it gave them something to
35:04do at Sea and on land everyone seemed to
35:08be making money it was a stampede of
35:10buying and major speculators like John
35:13Jacob Ras cob whipped up the frenzy he
35:16told readers of the Ladies Home Journal
35:19that now everyone could be
35:24rich September 2nd Labor Day it was the
35:28hottest day of the year the markets were
35:30closed and people were at the
35:33beach a reporter checked in with
35:35astrologer evangelin Adams to ask about
35:37the future of stock prices her answer
35:40the Dow Jones could climb to heaven the
35:44very next day September 3rd the stock
35:46market hit its all-time
35:53high my father and I had an ongoing
35:57discussion
35:58about the stock market and I used say
36:01pop everybody's getting rich but you you
36:05know you you work so hard and and and
36:07you're never going to make a nickel all
36:09you do is you keep delivering these
36:10newspapers and that's about it the the
36:13guy who's shining shoes is in a stock
36:15market the grocery CL is in the stock
36:18market the school teacher in the stock
36:20market the teller at the bank is in the
36:22stock market everybody's in the stock
36:24market you're the only one that's not in
36:26the stock market and to laugh and say
36:29you'll see you'll see you'll
36:32see on September 5th Economist Roger
36:35Babson gave a speech to a group of
36:37businessmen sooner or later a crash is
36:40coming and it may be terrific he'd been
36:43saying the same thing for two years but
36:46now for some reason investors were
36:49listening the market took a severe dip
36:53they called it the Babson
36:55break the next day prices St ized but
36:58several days later they began to drift
37:01lower though investors had no way of
37:04knowing it the collapse had already
37:07begun in the weeks to follow the market
37:10fluctuated wildly up and
37:13down on September 12th prices dropped
37:1610% they dipped sharply again on the
37:1920th stock markets around the world were
37:21falling too then on September 25th the
37:25market suddenly rallied
37:28I remember well and I thought why is
37:31this doing
37:32this and then I thought well I'm I'm new
37:38here and these people like every day in
37:41the paper Charlie Mitchell would have
37:43something to say the JP Morgan people
37:45would have something to say about how
37:48good things were and I thought well they
37:51know a lot more about this Market than I
37:53do I'm fairly new here and I really
37:56can't see who I that's going up but then
37:58when they say it can't go
38:01down or if it does go down today it'll
38:03go back
38:05tomorrow you you think well they really
38:07are like God they they know it all and
38:11uh it must be the way it's going because
38:15they say so as the market floundered
38:18Financial leaders were as optimistic as
38:20ever more so just 5 days before the
38:24crash Thomas Lamont acting head of the
38:27highly conservative Morgan Bank wrote a
38:30letter to President Hoover the future
38:33appears brilliant our Securities are the
38:35most desirable in the world Charles
38:38Mitchell assured nervous investors that
38:41things have never been better
38:43practically every business leader in
38:45America and Banker right around the time
38:48of 1929 saying how wonderful things were
38:51and the economy had only one way to go
38:54and that was up unfortunately he didn't
38:56have a crystal ball
38:58to predict the
38:59future there's an old saying on Wall
39:01Street that the two most important uh
39:03emotions are fear and greed and you go
39:06from Fear to Greed in about a fraction
39:08of a second so you're very very greedy
39:10and you say to yourself I want to make
39:11more and then the market goes down 10
39:14points you get and you get frightened I
39:15want to get what I keep what I have so
39:17you sell everything and that's how you
39:19have a panic so you have a panic on the
39:22upside people rushing in to get him
39:24before the train takes off and a panic
39:26on the downside get off the train before
39:28uh disaster
39:30hits Monday October 21st Hoover along
39:34with a political and financial leaders
39:36of the country arrives in Dearborn
39:38Michigan to celebrate the 50th
39:40anniversary of Edison's invention of the
39:43light Bu The Host is Henry Ford the
39:46country is reminded that in 50 short
39:48years men like Ford Durant and Edison
39:52had transformed America from a third
39:54rate power into the industrial giant of
39:57the world
39:59and while they
40:00celebrated their world was beginning to
40:03fall
40:05apart there came a Wednesday October
40:0923rd when uh the market was a little
40:12shaky weak and whether this caused some
40:16spread of pessimism uh one doesn't know
40:20it certainly led a lot of people to
40:22think they should get out and so on
40:26Thursday
40:27October the 24th the first black
40:31Thursday uh the market beginning in the
40:34morning took a terrific
40:43tumble the market opened in a absolutely
40:46free
40:48fall and some people couldn't even get
40:51any bids for their shares and it was
40:54wild
40:55panic and uh uh an ugly crowd gathered
40:59outside the stock exchange and uh it was
41:02described as making uh weird and
41:05threatening
41:09noises it was indeed uh one of the worst
41:12days that had ever been seen down
41:15[Applause]
41:17there there was a glimmer of hope on
41:19black Thursday directly across from the
41:22New York Stock Exchange was a low
41:24stately building the house of Morgan 22
41:28years earlier J Pier Pont Morgan had
41:31stopped the Panic of
41:331907 October 24th High Noon all eyes
41:38were now on acting head Thomas W
41:43Lamont Tom Lamont called uh a number of
41:47the other Bankers like Charles Mitchell
41:49of uh the National City Bank and
41:53uh uh people from the bank as trust and
41:56uh the ch W wig of the Chase Bank and so
41:59forth there were about a half a dozen of
42:01them there and they were gathered
42:03together to really discuss uh what they
42:06could do to uh stem this uh tremendous
42:10onslaught of uh selling stocks on the
42:12stock exchange that was taking place
42:15about 12:30 there was an announcement
42:18that uh this group of Bankers would make
42:21uh available a very substantial sum uh
42:24to uh ease the uh credit stringency and
42:28support the market and uh right after
42:31that dick Whitney made his famous walk
42:34across the floor of the New York Stock
42:38Exchange Richard Whitney vice president
42:40of the exchange was chosen by the
42:42bankers to be their representative at
42:451:30 in the afternoon at the height of
42:47the panic he strolled across the floor
42:50and in a loud clear voice ordered 10,000
42:54shares of us steel at a price consider
42:57higher than the last bid he then went
43:00from post to post shouting buy orders
43:03for key
43:04stocks stood up on one of the seats at
43:06the post and he said I give 45 for
43:1050,000 stand in oil and everybody
43:13started a p oh this the crash is over
43:17his Morgan's putting his money in maybe
43:19the crash is over and sure enough there
43:22seemed to be evidence that the bankers
43:24had moved in to end the panic and it
43:28they did end it for that day the market
43:31stabilized and even went
43:34up the New York Times uh uh said that
43:37thanks to the formation of this bank is
43:39pool they uh most observers felt that
43:43the panic and the great selloff was over
43:46and uh most people did feel that way Tom
43:48Lamont felt that way but uh Monday was
43:51not good apparently people had uh uh
43:56thought about things over the uh weekend
44:00over Sunday and decided maybe they might
44:02might be safer to get out and then came
44:07uh The Real Crash which was on Tuesday
44:11uh when the market went down and down
44:15and down uh uh without seeming limit
44:20October
44:2129th Morgan's Bankers could no longer
44:23stem the
44:25time it was like trying to stop Niagara
44:28Falls everyone wanted to sell AT&T down
44:3450% RCA wants $110 a share couldn't find
44:39buyers at
44:4126 Blue Ridge 100 plunged to
44:44$3 and still no
44:47buyers on the floor they had never seen
44:50anything like
44:53it and it was just like a nightmare
45:57and seit him it was unfortunate the
46:00forces were too great there was no one
46:02man they could have been so powerful to
46:05control the
46:07market there were some people however
46:09whose investment strategies made money
46:12on October 29th Jesse livermore's wife
46:15hearing of the crash ordered the
46:17servants to move all the furniture out
46:19of their mansion into a small cottage on
46:22the estate so when Mr Livermore got home
46:25that night we walked into a totally
46:28vacant
46:29house when she told him that she had
46:31affected the move because she was sure
46:33that they had lost all their
46:35money he told her that he had made more
46:38money that day than he had ever made
46:41before foremost others it was all over
46:46in broker's offices across the country
46:49the small investors the tailor the
46:51grossers the secretaries stared at the
46:55moving ticker in numb s
46:58hope of an easy
47:00retirement the new home their children's
47:03education everything was
47:07gone my father was uh ready to kill
47:11himself in the morning at the crash he
47:13got a call and it was Max Gordon and Max
47:16Gordon says Gro and my father said what
47:18and Gordon said Gro The Jig Is up there
47:22were all sorts of rumors and you'd see
47:23people going down the street looking up
47:26to see if they could catch
47:28somebody jumping out the window now it
47:31turned out there weren't as many people
47:33jumped out the window as they reported
47:35but some did and others committed
47:38suicide
47:39otherwise 500 mil from wal Street in the
47:42Atlantic the Luxury Line of the bararia
47:45was heading
47:47home from Michael mean's brokerage
47:49office word spread through the ship the
47:52bottoms fallen out of the market men
47:55came running out of their Turkish baths
47:56and towels card games ended
47:59abruptly everyone tried to jam into the
48:01tiny office yelling sell at
48:05Market they had left England wealthy men
48:09they docked in New York without a
48:16penny there's nothing unique about this
48:20it is something which uh uh happens uh
48:24every 20 or 30 years because that is
48:27about the length of the financial memory
48:30uh uh it's about the length of time that
48:34it requires for one new for a new set of
48:39suckers if you will a new set of people
48:42capable of wonderful self- delusion uh
48:46to come in and uh imagine that they have
48:51a new and wonderful fix on the
48:55future
48:59in the 1930s Charles Mitchell was
49:01hounded by Senate committees and the IRS
49:04the crash had left him $12 million in
49:07debt this house was taken over of course
49:11and um things
49:13changed and um I began to know what the
49:17real world was all
49:20about it was about time I was 19 years
49:24old Mitchell made a remk REM arable
49:27comeback he paid off his debts and died
49:30in 1955 a highly respected figure on
49:33Wall
49:34Street in 1936 William Durant filed for
49:39bankruptcy his only assets which he
49:42valued at
49:43$250 were the clothes on his
49:46back in the late 30s the founder of
49:49General Motors tried his hand at
49:52everything from running a bowling alley
49:54to selling a cure for dandruff he died
49:57in
49:581947 still talking about making a
50:03comeback Herbert Hoover spent much of
50:06the early 1930s fishing he explained in
50:09a speech that fishing is a constant
50:12reminder of humility and of human
50:14Frailty for all men are equal before
50:19fishes the game on Wall Street had
50:23changed a great deal for
50:25levermore and
51:15[Music]
51:27all that lay in the
51:29future nobody knew that the Great
51:32Depression was coming unemployment
51:35breadlines bank failures this was
51:38unimaginable then good luck came
51:41knocking
51:43not but the bubble had
51:46burst gone was that innocent optimism
51:50the confidence the illusion of wealth
51:53without
51:55work one era had ended they toasted the
51:59coming of the
52:0130s but somewhere deep down they
52:06knew the party was
52:09[Music]
52:11over sming at
52:15me nothing but Blue
52:19Sky do
52:21[Music]
52:25I
52:37there's more about the crash of 1929 and
52:39American Experience online visit
52:55pbs.org
52:59a

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