- 4/11/2025
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00:01Exclusive corporate funding for American Experience is provided by Liberty Mutual.
00:06Major funding by the Alfred P. Sloan Foundation.
00:09American Experience is also made possible by the Corporation for Public Broadcasting.
00:14And from viewers like you. Thank you.
00:17The tremendous crowds which you see gathered outside the Stock Exchange
00:31are due to the greatest crash in the history of the New York Stock Exchange in market prices.
00:47December 31st, New Year's Eve.
00:52The crash and its terrible consequences were still in the future.
00:57Financial leaders, everyone, celebrated what had been a decade of prosperity and boundless optimism.
01:05They thought the party would last forever.
01:08They called it the New Era.
01:111929. All the hope and promise and illusion of the 20s converged in that one year.
01:32The United States is afflicted with new eras.
01:37Let us not think for a moment that the illusion, the aberration of the 1920s was unique.
01:47It is intimately a part of the American character.
01:58The mood of the era, I think, can best be remembered by the hit song.
02:04Was that 1929, Blue Skies?
02:07In the 20s, yes.
02:08Blue Skies.
02:09How did that go?
02:10Smiling at me.
02:11Nothing but blue skies do I see.
02:13Nothing but blue skies do I see.
02:14Yes.
02:15Never saw the sun shining so bright.
02:17Never saw things going so right.
02:20Gray days, all of them gone.
02:23Nothing but blue skies from now on.
02:27Nothing but blue skies from now on.
02:38That was the whole tenor of the day.
02:41I mean, people believed that everything was going to be great always.
02:45Always.
02:46There was a feeling of optimism in the air that you cannot even describe today.
02:51And everybody seemed to have an interest in the stock market.
02:57Certainly, the boot black, the tailor, the grocer own shares of one kind or another.
03:07This was the first time that many ordinary Americans had begun to invest in stocks.
03:12A stock, a share of a company, is bought and sold here on the floor of the New York Stock Exchange.
03:21The stocks themselves have no fixed value.
03:24As in an auction, if the stock is in demand, its price goes up.
03:29No demand and the price goes down.
03:33For almost eight straight years, stock values had been rising.
03:37By 1929, there seemed to be no upper limits in this world of paper, numbers and dreams.
03:46It was an arena of unbounded opportunity where somebody like my grandfather could come into it and make a fortune.
03:54So many people made so much money in the market that late in the 20s,
03:58it seemed that you just couldn't go wrong buying stocks in American companies.
04:05Here was a whole new way to make a fortune.
04:09Unlike the Carnegies and the Rockefellers of previous decades who built steel mills and dug oil wells,
04:15men like Michael Meehan, Jesse Livermore and Charles Mitchell
04:21had amassed their fortunes buying and selling stocks, pieces of paper.
04:26The public was fascinated.
04:29Bankers, brokers and speculators had become celebrities and they lived like royalty.
04:35I can hardly believe that a family lived in this kind of a house.
04:41I mean, today it would be almost unbelievable.
04:45Six stories and these great big rooms.
04:49Enormous.
04:50We counted it up the other day.
04:53We had 16 live-in help in this house.
04:58Not counting the chauffeurs and others.
05:01Not counting the chauffeurs, yeah.
05:03Aside from all the help we had in the Tuxedo Park House and the Southampton House as well.
05:09But those days are gone forever.
05:11I should say.
05:12But we never thought of it as being grandiose because practically everybody we knew seemed to live in the same way.
05:21Jesse Livermore had a ticker tape in every home that he owned.
05:27They had a beautiful house on 76th Street in Manhattan on the west side off Central Park.
05:36They had a floor at 813 Fifth Avenue because Dorothea did not like to go to the west side to change her clothes.
05:45So they had a house in Great Neck.
05:48They had a summer house in Lake Placid.
05:51They had a house in Palm Beach.
05:54They had a private railroad car.
05:57Two yachts.
06:00Oh, they lived.
06:02They really lived.
06:06Few Americans lived like Jesse Livermore, but there was a rising expectation that everyone could have a piece of this prosperity.
06:15During his presidential campaign of 1928, candidate Herbert Hoover would make this extraordinary promise.
06:23Given a chance to go forward with the policies of the last eight years, we shall soon, with the help of God, be in sight of the day when poverty will be banished from this nation.
06:38There was great hope.
06:42America came out of World War I with the economy intact.
06:45We were the only strong country in the world.
06:47The dollar was king.
06:48We had a very popular president in the middle of the decade, Calvin Coolidge, and an even more popular one elected 1928, Herbert Hoover.
06:54So things looked pretty good.
06:56The economy was changing in this new America.
07:11It was the dawn of the consumer revolution.
07:14New inventions, mass marketing, factories turning out amazing products like radios, rayon, air conditioners, underarm deodorant.
07:30This is a period in which the American household gets the washing machine, gets the refrigerator, goes off gaslight and gets electricity in some cities.
07:41This is a period in which people would buy little plugs to put into the outlets and the walls so the electricity wouldn't leak on the floor.
07:50What will they think of next was a 1920s saying.
07:53There's new things continually coming out.
07:55And there were new things which you could enjoy, not just for the few.
07:59One of the most wondrous inventions of the age was consumer credit.
08:06Before 1920, the average worker couldn't borrow money.
08:11By 1929, buy now, pay later had become a way of life.
08:17So there were changes, many changes in the way people viewed the world and all of them optimistic.
08:23You extrapolate the curve and what do you have? Permanent prosperity.
08:27That was a term one heard in the late 1920s.
08:30We entered an age of permanent prosperity.
08:35Wall Street got the credit for this prosperity and Wall Street was dominated by just a small group of wealthy men.
08:42Rarely in the history of this nation had so much raw power been concentrated in the hands of a few businessmen.
08:49Men like William C. Durant.
08:52It's almost impossible to realize the power and the significance of the men.
09:01In Flint, when Mr. Durant came to Flint occasionally, people used to say, Durant is in town.
09:07Just like that, Durant is in town.
09:09He was bigger than life.
09:12Earlier in the century, Durant had founded General Motors.
09:17Now, he made his money on Wall Street.
09:20Backed by Midwestern auto industrialists, he controlled so much money that he could single-handedly drive up the price of a stock and then sell, reaping huge profits.
09:31He was just at the apotheosis, at the maximum of his power.
09:36He managed, according to the voices of the time, according to what was said, anywhere between two to five billion dollars, which in those days were fabulous.
09:48The market was filled with bulls and he was the bull of the wolves.
09:53Durant came to Wall Street as one of the titans of industry.
09:59Jesse Livermore, whose fortune was estimated at over one hundred million dollars, never did anything in his life but play the market.
10:08Everything Jesse Livermore touched turned to gold, it seemed.
10:11All he had to do was to press a button and the stock would go up ten points.
10:15And that meant, of course, that Jesse Livermore would make a lot of money.
10:18So, the average American would look at this and say, gee, if only I knew what he was doing, I could make money too.
10:25How do you get in on Jesse Livermore's brains?
10:30Livermore was a speculator, pure and simple.
10:33He didn't study the health of a company, he didn't care whether it made a profit or paid a dividend.
10:38For him, the stock market was an abstract game of numbers.
10:43Money was not the end for this man at all.
10:48Money was a very peripheral thing for him.
10:51But beating the odds, winning the game, that was his objective.
11:01He was a numbers man.
11:03He lived by the numbers.
11:05He took an elevator by the numbers.
11:07He came into town by the numbers.
11:09Everything was done by numbers.
11:11When he left his house in the morning, he did not leave at 8.10.
11:15He left at 8.07.
11:17All of the policemen knew, because of his time schedule, that he would be going down Fifth Avenue, let's say, at 8.37.
11:25Well, of course, traffic lights were hand-operated then, had policemen on boxes.
11:32So the instant that they saw his car, the lights were green.
11:36He never stopped for a red light.
11:39The success of large speculators like Livermore and Durant lured smaller investors to Wall Street.
11:47But Charles Mitchell, president of National City Bank, virtually invented the idea of mass-marketing stocks and bonds to the general public.
11:56This was a totally new idea and a huge success.
12:00The bank, prior to father's being elected president in 1921, was geared mainly to doing business with large corporations.
12:11Father pointed the bank for the first time in the direction of going after the little man.
12:20Don't call him the little man. It was every man.
12:24Well, he ate a man. All right.
12:26How old was he then? 38 years old.
12:29And the National City Company had four officers.
12:34I know within three years, there were over 50 officers.
12:37And by 1929, it was the largest distributor of securities in the world.
12:42Even at the height of the speculative frenzy, only a small percentage of the American public actually invested in the world.
12:49The public actually invested in stocks.
12:52But the market had entered popular culture.
12:55Wall Street became Main Street.
12:58Everyone was talking stocks.
13:01Watching the ticker became a national sport.
13:04Popular magazines covered financial news.
13:07Dozens of best sellers promised investors the inside track.
13:12Oh, what a feeling.
13:14You've got me feeling bigger and better than ever.
13:21The characters in the popular comic strip Gasoline Alley were investing in a company called Rubber Keyhole.
13:27Then ever.
13:29Stock tips came from everywhere.
13:31Some investors followed the advice of Evangeline Adams, an astrologer.
13:38She was able to calculate the variations of the stock exchange so accurately that there was practically no difference to having read it in a ledger somewhere.
13:50Among her more interesting clients were Charles Chaplin, Mary Pickford, and J. Pierpont Morgan.
14:00In February, Evangeline Adams looked at the stars and predicted a dramatic upswing in stock prices for the coming months.
14:08The stock market, once considered a highly risky place to put your money, was now beginning to attract a whole new group of amateur speculators.
14:26Among the new players was one Julius Marx.
14:29Everyone knew him by his stage name, Groucho.
14:33But they were poor.
14:35And my father, it always affected my father.
14:38Because he was always kind of thrifty and worried about his future and where it would become of him when no one else wanted him as an actor anymore.
14:47So he was always saving money and turning off the lights and turning off the water around the house, even after he was in Hollywood and making a lot of money.
14:54Of all the Marx brothers, Groucho was the most financially conservative.
15:00In 1929, he took his life savings and put it in a sure thing, the stock market.
15:07He was always phoning a broker and getting hot tips and wanting to know what the stocks were, how they were doing.
15:15And if he wasn't on the phone, he would take me into Great Neck, which was a little village at the time.
15:20But they did have a stock broker called Newman Brothers and Worms, and all these men who were investing in the market would all sit there in chairs like a little theater and watch the ticker tape go by.
15:33Groucho, along with record numbers of smaller investors, was borrowing money to buy stocks.
15:39It was called buying on margin.
15:42You only needed 10% down.
15:44Just $1,000 would get you $10,000 worth of stock.
15:49Suddenly, you were in the same league with the big players, or so it seemed.
15:54But the stock market was not a level playing field.
15:58In the 20s and 30s, one of the big features of the stock market is the fact that it wasn't controlled, and that operators could do a lot of things that are not permitted today.
16:13One of the most common tactics was to manipulate the price of a particular stock, a stock like Radio Corporation of America.
16:23RCA was, in the 20s, what Xerox was in the 60s, what was a great growth stock.
16:32The stock went from, I can't remember the exact numbers, but from something like 20 to 400, split many times, and made many people, including my grandfather, very wealthy.
16:43It was one of the stocks that was manipulated by a pool.
16:50Wealthy investors would pool their money in a secret agreement to buy a stock, inflate its price, and then sell it to an unsuspecting public.
16:59Most stocks in the 1920s were regularly manipulated by insiders, like RCA specialist Michael Meehan.
17:09In those days, that was legal, and it was quite common practice for a group of Wall Streeters to take a stock in hand.
17:20And they would acquire a position in the stock early on, and then they would see to it that there was good press on the stock, a lot of publicity.
17:31I would say that practically all the financial journalists were on the take.
17:36This includes reporters from the Wall Street Journal, the New York Times, the Herald Tribune, you name it.
17:42So 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.
17:50And we think that perhaps you should write something nice about RCA.
17:54And Charlie would write something nice about RCA.
17:57And Charlie would write something nice about RCA.
17:58A publicity man called A. Newton Plummer had canceled checks from practically every major journalist in New York City.
18:04Then they would begin to what was called painting the tape, and they would make the stock look exciting.
18:11They would trade among themselves, and you'd see these big prints in RCA, and people will say, oh, it looks as though that stock is being accumulated.
18:19Now, if they are behind it, you want to join them.
18:22So you go out and you buy stock also.
18:24And what's happening is the stock goes from 10 to 15 to 20, and now it's at 20, and you start buying.
18:29Other people start buying, 30, 40.
18:31The original group, the pool, they stopped buying.
18:33They're selling you the stock.
18:35Now 50, and they're out of it.
18:37And what happens, of course, is the stock collapses.
18:40On March 8th, 1929, Michael Meehan began one of the most successful pools on Wall Street.
18:48From the 8th to the 17th, Meehan and the pool pushed up the value of RCA almost 50%.
18:57On March 18th, they sold and divided up their profits.
19:01In today's money, they had made $100 million for one week's work.
19:08The pools were a little like musical chairs.
19:11When the music stopped, somebody owned the stocks, and those were the sufferers.
19:21If small investors suffered, they would soon be back for more.
19:25They knew the game was rigged.
19:27But maybe next time, they could beat the system.
19:30In vain, if you want the rainbow, you must have the rain.
19:55Wall Street had its critics.
19:57Among them, economist Roger Babson.
20:00He questioned the boom and was accused of lack of patriotism, of selling America's short.
20:05Roger Babson warned of the speculation, said there's going to be a crash.
20:11And the aftermath is going to be quite terrible.
20:16And people jumped on Babson from all around for saying such a thing.
20:23So that people who were cautious about their personal reputation, who did not want to call down on themselves a lot of calumny, kept quiet.
20:36Mobster Al Capone was not a cautious man.
20:42From his Chicago headquarters, he condemned the wild speculation on Wall Street.
20:47It's a racket, he said.
20:49Those stock market guys are crooked.
20:52Capone invested his money in a $100 million bootleg liquor business.
20:58Business was good on Valentine's Day 1929.
21:01He had just eliminated the competition.
21:04March 4th, Inauguration Day.
21:13Republican President Calvin Coolidge had run his administration on the belief that business was the basis of America's prosperity.
21:21Government should not interfere.
21:24Herbert Hoover had won a landslide victory promising to carry on the tradition.
21:29This was a time in our history when governments did not, as now, take responsibility for the economy.
21:42They presided over it.
21:44But the level of economic activity and the level of economic growth and the stability of prices were not yet everyday concerns of the president.
21:56And what Coolidge did was to say how wonderful times were, how happy everybody was going to be, and how prosperous everyone was going to be.
22:13And Hoover's responsibility was to continue that optimism.
22:20You, Herbert Hoover, you solemnly swear...
22:26Politicians came and went, but in the 20s the businessman was king.
22:32New York City had a dapper, corrupt, and vastly popular mayor, Jimmy Walker.
22:39But behind the scenes were powerful financial leaders like Charles Mitchell.
22:44Jimmy Walker was high, wide, and fancy with the city finances.
22:50One day, father called Mayor Walker up here, and he had some other bankers with him.
22:57And Mayor Walker was sort of put on the grill in the upstairs library while these bankers read the riot act to him to try and get some fiscal responsibility instilled into him.
23:10And I know that after the meeting, someone took me into the library and pointed me out the chair that the mayor had been sitting in.
23:18And he'd been so nervous.
23:20Oh, those Louis Cator's chairs with all the little...
23:23Louis Cance.
23:24Louis Cance chairs with all the little tacks in there, brass tacks.
23:28And he'd pulled out almost all the brass tacks that were sitting on the floor out of sheer nerves.
23:33The stock market, too, was getting a severe case of nerves.
23:40On Friday, March 22nd, all eyes were on that august government body in Washington, the Federal Reserve Board.
23:47The board distrusted the boom.
23:49They saw the speculation as reckless and dangerous because it was based more and more on the shaky foundation of borrowed money, margin.
23:58The board had the power to curb the borrowing, but the market was now dependent on borrowed money.
24:05Without margin, it would collapse.
24:07The board met day after day.
24:10Would they ask for regulation of the stock market?
24:13They issued no public statements.
24:16Their silence was terrifying.
24:19On Monday, March 25th, investors began to sell.
24:34Blue chip stocks plunged.
24:36Tuesday, another wave of selling swept the market.
24:40As it fell, people holding stock on margin were hit hard.
24:44They put only 10% down.
24:46But the value of their stock dropped more than 10%, so their down payment was gone.
24:52To hold their stocks, they'd have to put up more money.
24:56On March 26th, millions of investors suddenly found themselves in deep trouble.
25:02Your broker would call you and say, we need more money.
25:04You're wiped out.
25:05Unless you could give them more money, he would then sell the stock.
25:08Now, he would sell the stock, which would cause the stock to go down to 85, 86.
25:12And now more margin calls are triggered.
25:14So one margin call triggers, another margin call triggers, another margin call, and it goes all the way down.
25:21With everyone trying to borrow money to cover the falling value of their stocks, there was a credit crunch.
25:27Interest rates soared.
25:29At 20%, few people could afford to borrow more money.
25:33The boom was about to collapse like a house of cards.
25:38Charlie Mitchell was horrified.
25:40His success, his entire career, his personal fortune, had been based on a rising market.
25:46If nobody else was going to stop the crash, Charles Mitchell would.
25:50Father, at that point, stepped in and announced that the National City Bank would provide $25 million of credit, which was all very well and very necessary.
26:01But he added the fateful words, whatever the Federal Reserve Board thinks.
26:08And Senator Carter Glass, who had been sort of the father of the Federal Reserve Act in 1913, took that as a direct slap across the face.
26:19But whatever Senator Glass thought, immediately the credit crisis was alleviated.
26:27In fact, within the next 24 hours, call money went from 20% to 8%, and that stopped the panic then in March.
26:35The next day, the market rallied.
26:39The Federal Reserve Board remained silent, tacitly accepting defeat.
26:44The hero of the day was Charlie Mitchell.
26:47He had single-handedly stopped the crash of 29.
26:58With the start of the baseball season, people quickly forgot the break in the market.
27:02New events filled the papers.
27:05There was a crisis in Nicaragua, where the nationalist hero, Augusto Sandino, was threatening American Marines.
27:11Tragedy in the British mandate of Palestine, as Jews and Arabs clashed over control of holy sites in Jerusalem.
27:18And in Antarctica, Commander Byrd was at his base camp, Little America, waiting for a break in the weather.
27:27His elaborately planned flight over the South Pole was still on ice.
27:33The newsreels had come into their own.
27:36Now, in living sound, patrons could keep abreast of the important events of the day.
27:42The biggest news of the day is not the naval agreement, not even prohibition, but the return of the natural wasteline.
27:51Dorothy Livermore was a typical flapper.
28:06She has to embody the attorneys.
28:09She would do almost anything on an impulse.
28:13She had some priceless pieces of 18th century furniture.
28:17But the house had settled, and the floors were not level.
28:24But Mrs. Livermore didn't like to spend money that didn't show.
28:28So instead of having the hoist put underneath, she simply solved the problem by having the legs of the furniture cut off to fit the sloping floors,
28:40so that the tops of all the furniture were level.
28:44But, of course, the legs were on different angles.
28:47And this was her typical solution.
28:50As long as the tops were level, everything was fine.
28:53Everything was not fine that spring with the American economy.
28:57It was showing ominous signs of trouble.
29:02Steel production was declining.
29:04The construction industry was sluggish.
29:08Car sales dropped.
29:10Customers were getting harder to find.
29:12And because of easy credit, many people were deeply in debt.
29:17Large sections of the population were poor and getting poorer.
29:24Just as Wall Street had reflected a steady growth in the economy throughout most of the 20s,
29:29it would seem that now the market should reflect the economic slowdown.
29:34Instead, it soared to record heights.
29:37Stock prices no longer had anything to do with company profits, the economy, or anything else.
29:43The speculative boom had acquired a momentum of its own.
29:47This is the nature of mass illusion.
29:50Prices were going up.
29:52People bought.
29:54That forced prices up further.
29:56That brought in more people.
29:58And, eventually, the process becomes self-perpetuating.
30:02Every increase brings in more people convinced of their God-given right to get rich.
30:09The 20s was a decade of all sorts of fast money schemes.
30:13Three years earlier, everyone was buying Florida real estate.
30:18As prices of land skyrocketed, more people jumped in, hoping to make a killing.
30:23Then, overnight, the boom turned to bust, and investors lost everything.
30:28Florida folks, sunshine, sunshine, perpetual sunshine all the year around.
30:33Let's get the auction started before we get a tornado.
30:35Right this way, step forward.
30:37In May, the Marx Brothers were before the cameras with their first film, The Coconuts.
30:42Its subject?
30:43The Florida land boom.
30:45Now, in 1929, the gullibility of those naive speculators was something to laugh about.
30:52800 wonderful residences will be built right here.
30:55Why, they're as good as up.
30:56Better.
30:57You can have any kind of a home you want to.
30:58You can even get stucco.
30:59Oh, how you can get stucco.
31:01Now is the time to buy while the new boom is on.
31:04Remember that old saying?
31:05A new boom sweeps clean, and don't forget the guarantee.
31:08Groucho Marx would film these scenes and then rush to his broker to put more of his savings into the booming market.
31:15On margin, of course.
31:17Max Gordon, the Broadway producer, was also heavily in the market.
31:21And Gordon could never get over the fact that the market was going up and up and up all the time.
31:26And he said to my father, how long has this been going on, Groucho?
31:31And my father said, I don't know, but my broker down in Great Neck tells me that it's because there's a worldwide market for American goods and it's never going to go down.
31:40The market will just keep going up and up and up.
31:42May 1929.
31:44Stock prices were going up and up.
31:47With so much money to be made, people were borrowing more money than ever before to buy stocks.
31:53Market leaders like William Durant, far from being worried, were ecstatic.
31:58Off on his annual visit to Europe, he announced that everything would be fine as long as we all continued to believe.
32:05Confidence, not halfway confidence, but 100% confidence, is the real basis for our prosperity.
32:15Astrologer Evangeline Adams was now putting out a newsletter.
32:18Her 100,000 subscribers learned how the Zodiac could influence stock prices.
32:24Her advice for the coming summer?
32:26Buy.
32:27Hitting the ceiling, hitting the ceiling, breaking through to the sky.
32:38They thought this was a ride that was never going to end.
32:41It just goes on and on and on, and every day they got more money and they're counting up their paper profits,
32:47and they're selling and buying and buying and selling, and they're doing great.
32:53Hitting the ceiling, hitting the ceiling.
32:57Now, Tuesdays, I'd go to get a shoe shine and say, how's the market?
33:01You go, go, go up to the bar, get ahead, how's the market?
33:04Everybody was in the market.
33:11They were people who were looking for the one lucky break.
33:15People who were just hoping that they would strike it right.
33:18You know, they take a rifle, you aim it in the ocean, and you hope to hit a fish.
33:22Along with the market, temperatures soared that summer.
33:26That summer, it was a record heat rate
33:28and a record three months at the exchange.
33:31Some stocks doubled in value.
33:34In June, the New York Times index of stocks rose 52 points.
33:39In July, another 25.
33:47In the middle of the summer, the Graf Zeppelin
33:49was completing his first leisurely trip around the world.
33:53The Marx Brothers had finished shooting their film
33:55The Coconuts.
33:58Commander Byrd was still at his base camp
34:00near the South Pole.
34:02He, too, had money in the market
34:03and radioed his broker for the latest quotes.
34:08Back in Cleveland, George Herman Ruth
34:10hit his 500th home run.
34:14And on the radio, they were playing the latest hit tune
34:18I'm in the Market for You.
34:20I want a thousand shares of your caresses too.
34:25We'll count the hugs and kisses when dividends are due
34:32Cause I'm in the market for you.
34:39On August 17th, Michael Meehan's brokerage firm launched a new service.
34:44One of my grandfather's innovations was putting brokerage houses on the ocean liners.
34:51The first one on the Berengueria, and that allowed you during the, whatever it was,
34:56six or seven day passage to Europe, if you were such a stock market addict
35:00that you couldn't stand the withdrawal for that period, you could walk into the office and place your order
35:05to buy or sell a hundred shares of General Motors or General Electric or whatever,
35:09and they would radio that order back to New York.
35:12It was being very modern at the time.
35:14They were very wealthy people on the transatlantic liners, and it gave them something to do.
35:19At sea and on land, everyone seemed to be making money.
35:25It was a stampede of buying.
35:27And major speculators like John Jacob Raskob whipped up the frenzy.
35:32He told readers of the Ladies Home Journal that now everyone could be rich.
35:37September 2nd, Labor Day.
35:43It was the hottest day of the year.
35:45The markets were closed and people were at the beach.
35:49A reporter checked in with astrologer Evangeline Adams to ask about the future of stock prices.
35:55Her answer, the Dow Jones could climb to heaven.
35:59The very next day, September 3rd, the stock market hit its all-time high.
36:07My father and I had an ongoing discussion about the stock market.
36:16And I used to say, Pop, everybody's getting rich but you.
36:20You know, you work so hard and you're never going to make a nickel.
36:24All you do is you keep delivering these newspapers and that's about it.
36:28The guy who's shining shoes is in the stock market.
36:32The grocery clerk is in the stock market.
36:34The schoolteacher is in the stock market.
36:35The teller at the bank is in the stock market.
36:39Everybody's in the stock market.
36:40You're the only one that's not in the stock market.
36:42And he used to sit on the left and say, You'll see.
36:45You'll see.
36:47You'll see.
36:48On September 5th, economist Roger Babson gave a speech to a group of businessmen.
36:54Sooner or later, a crash is coming and it may be terrific.
36:58He'd been saying the same thing for two years.
37:01But now, for some reason, investors were listening.
37:05The market took a severe dip.
37:08They called it the Babson break.
37:10The next day, prices stabilized.
37:13But several days later, they began to drift lower.
37:18Though investors had no way of knowing it, the collapse had already begun.
37:24In the weeks to follow, the market fluctuated wildly, up and down.
37:28On September 12th, prices dropped 10%.
37:33They dipped sharply again on the 20th.
37:36Stock markets around the world were falling too.
37:39Then on September 25th, the market suddenly rallied.
37:42I remember well that I thought, Why is this doing this?
37:49And then I thought, Well, I'm new here.
37:54And these people, like every day in the paper, Charlie Mitchell would have something to say.
38:00The J.P. Morgan people would have something to say about how good things were.
38:05And I thought, Well, they know a lot more about this market than I do.
38:09I'm fairly new here, and I really can't see why it's going up.
38:14But then when they say it can't go down, or if it does go down today, it'll go back tomorrow,
38:21you think, Well, they really are like God.
38:24They know it all, and it must be the way it's going because they say so.
38:32As the market floundered, financial leaders were as optimistic as ever.
38:37More so.
38:37Just five days before the crash, Thomas Lamont, acting head of the highly conservative Morgan Bank,
38:46wrote a letter to President Hoover.
38:48The future appears brilliant.
38:50Our securities are the most desirable in the world.
38:54Charles Mitchell assured nervous investors that things have never been better.
38:59Practically every business leader in America and banker, right around the time of 1929, saying how wonderful things were, and the economy had only one way to go, and that was up.
39:10Unfortunately, he didn't have a crystal ball to predict the future.
39:15There's an old saying on Wall Street that the two most important emotions are fear and greed.
39:22And you go from fear to greed in about a fraction of a second.
39:24So you're very, very greedy, and you say to yourself, I want to make more.
39:28And then the market goes down ten points, and you get frightened.
39:31I want to keep what I have.
39:33So you sell everything.
39:33And that's how you have a panic.
39:36So you have a panic on the upside, people rushing in to get in before the train takes off, and a panic on the downside, trying to get off the train before disaster hits.
39:46Monday, October 21st, Hoover, along with the political and financial leaders of the country, arrives in Dearborn, Michigan, to celebrate the 50th anniversary of Edison's invention of the light bulb, the hostess Henry Ford.
40:02The country is reminded that in 50 short years, men like Ford, Durant, and Edison had transformed America from a third-rate power into the industrial giant of the world.
40:13And while they celebrated, their world was beginning to fall apart.
40:21There came a Wednesday, October 23rd, when the market was a little shaky, weak.
40:30And whether this caused some spread of pessimism, one doesn't know.
40:36It certainly led a lot of people to think they should get out.
40:40And so on Thursday, October the 24th, the first Black Thursday, the market, beginning in the morning, took a terrific tumble.
40:53The market opened in an absolutely free fall, and some people couldn't even get any bids for their shares, and it was wild panic.
41:12And an ugly crowd gathered outside the stock exchange, and it was described as making weird and threatening noises.
41:22It was indeed one of the worst days that they'd ever been seen down there.
41:34There was a glimmer of hope on Black Thursday.
41:37Directly across from the New York Stock Exchange was a low, stately building, the House of Morgan.
41:4322 years earlier, J. Pierpont Morgan had stopped the panic of 1907.
41:48October 24th, high noon.
41:53All eyes were now on acting head Thomas W. Lamont.
42:00Tom Lamont called a number of the other bankers, like Charles Mitchell of the National City Bank,
42:07and people from the Bankers Trust, and the J. Albert Wiggin of the Chase Bank, and so forth.
42:16There were about a half a dozen of them there.
42:18And they were gathered together to really discuss what they could do to stem this tremendous onslaught
42:27of selling stocks on the stock exchange that was taking place.
42:31About 12.30, there was an announcement that this group of bankers would make available a very substantial sum
42:39to ease the credit stringency and support the market.
42:45And right after that, Dick Whitney made his famous walk across the floor of the New York Stock Exchange.
42:54Richard Whitney, vice president of the exchange, was chosen by the bankers to be their representative.
43:01At 1.30 in the afternoon, at the height of the panic, he strode across the floor
43:06and, in a loud, clear voice, ordered 10,000 shares of U.S. steel
43:11at a price considerably higher than the last bid.
43:15He then went from post to post, shouting buy orders for key stocks.
43:21Stood up on one of the seats at the post, and he said,
43:24I might give it $45,000 for $50,000, stand in the aisle.
43:29And everybody started to pull up, oh, the crash is over.
43:31His mortgage is putting his money in, and maybe the crash is over.
43:37And sure enough, there seemed to be evidence that the bankers had moved in to end the panic.
43:44And they did end it for that day.
43:46The market stabilized and even went up.
43:50The New York Times said that thanks to the formation of this banker's pool,
43:56most observers felt that the panic and the great sell-off was over.
44:01And most people did feel that way.
44:04Tom Lamont felt that way.
44:06But Monday was not good.
44:09Apparently people hadn't thought about things over the weekend, over Sunday,
44:17and decided maybe they might be safer to get out.
44:20And then came the real crash, which was on Tuesday,
44:27when the market went down and down and down without seeming limit.
44:36October 29th.
44:38Morgan's bankers could no longer stem the tide.
44:40It was like trying to stop Niagara Falls.
44:45Everyone wanted to sell.
44:48AT&T down 50%.
44:50RCA wants $110 a share.
44:54Couldn't find buyers at 26.
44:57Blue Ridge 100 plunged to $3.
45:01And still no buyers.
45:03On the floor, they had never seen anything like it.
45:10And it was just like a nightmare.
45:12And I couldn't believe what was going on.
45:16In those days, every buy order was on a black pad.
45:21And every sell order was on a red pad.
45:24And all I saw was members running around with a fistful of red orders.
45:29Just like chickens with their head cut off, they didn't know which way to run.
45:33They were panicking, screaming.
45:36Everybody was bumping into everybody else.
45:40Don't remind them.
45:42Anyhow, this is what happened.
45:44And I tell you, and I was supposed to answer, everybody yelling at me.
45:49I said, what am I supposed to do?
45:51I mean, nobody knew what the hell to do.
45:53William Durant, the bull of the bulls, now tried single-handedly to support the market.
46:01The further it plunged, the more of his millions he poured into it.
46:07He became truly convinced that he was omnipotent.
46:11He thought that nothing could really unseat him.
46:14It was unfortunate.
46:16The forces were too great.
46:18There was no one man.
46:19There were some people, however, whose investment strategies made money.
46:28On October 29th, Jessie Livermore's wife, hearing of the crash,
46:33ordered the servants to move all the furniture out of their mansion
46:36into a small cottage on the estate.
46:39So when Mr. Livermore got home that night,
46:42he walked into a totally vacant house.
46:45When she told him that she had effected the move
46:48because she was sure that they had lost all their money,
46:52he told her that he had made more money that day
46:55than he had ever made before.
46:58For most others, it was all over.
47:02In brokers' offices across the country,
47:05the small investors, the tailors, the grocers, the secretaries,
47:10stared at the moving ticker in numb silence.
47:13Hope of an easy retirement,
47:16the new home, their children's education,
47:20everything was gone.
47:24My father was ready to kill himself.
47:28In the morning of the crash, he got a call,
47:30and it was Max Gordon, and Max Gordon says,
47:33Gracho, and my father said, what?
47:35And Gordon said, Gracho, the jig is up.
47:38There were all sorts of rumors,
47:39and you'd see people going down the street looking up
47:42to see if they could catch somebody jumping out the window.
47:47Now, it turned out there weren't as many people
47:49jumped out the window as they reported,
47:51but some did,
47:53and others committed suicide otherwise.
47:57500 miles from Wall Street in the Atlantic,
47:59the luxury line of the Berengaria was heading home.
48:02From Michael Meehan's brokerage office,
48:06word spread through the ship.
48:08The bottom was falling out of the market.
48:11Men came running out of their Turkish baths and towels.
48:14Card games ended abruptly.
48:16Everyone tried to jam into the tiny office yelling,
48:19sell at market.
48:20They had left England wealthy men.
48:25They docked in New York without a penny.
48:33There's nothing unique about this.
48:37It is something which happens every 20 or 30 years,
48:42because that is about the length of the financial memory.
48:46It's about the length of time that it requires
48:51for a new set of suckers, if you will,
48:57a new set of people capable of wonderful self-delusion
49:02to come in and imagine that they have
49:06a new and wonderful fix on the future.
49:09In the 1930s, Charles Mitchell was hounded
49:18by Senate committees and the IRS.
49:20The crash had left him $12 million in debt.
49:24This house was taken over, of course,
49:27and things changed.
49:30And I began to know what the real world was all about.
49:35It was about time I was 19 years old.
49:41Mitchell made a remarkable comeback.
49:44He paid off his debts and died in 1955,
49:47a highly respected figure on Wall Street.
49:51In 1936, William Durant filed for bankruptcy.
49:56His only assets, which he valued at $250,
50:00were the clothes on his back.
50:02In the late 30s, the founder of General Motors
50:06tried his hand at everything from running a bowling alley
50:10to selling a cure for dandruff.
50:13He died in 1947, still talking about making a comeback.
50:20Herbert Hoover spent much of the early 1930s fishing.
50:24He explained in a speech that fishing
50:26is a constant reminder of humility and of human frailty.
50:31For all men are equal, before fishes.
50:36The game on Wall Street had changed a great deal for Livermore.
50:42And the SEC was becoming a powerful factor,
50:46and the rules were changed.
50:48He couldn't operate freely, buy and sell,
50:52the way he had in the past.
50:53And he couldn't adapt to the new regulations.
50:59So, in a sense, his playing with the market was over.
51:06And I think a great deal of his interest in life
51:08was over at that point.
51:11The game was gone.
51:12In 1940, the day before Thanksgiving,
51:18a photographer snapped this photograph
51:19of an old and very tired Jesse Livermore.
51:23Several hours later,
51:25Livermore would go into a men's washroom
51:27and put a bullet through his head.
51:29At the end of 1929,
51:41as they celebrated New Year's Eve,
51:43all that lay in the future.
51:46Nobody knew that the Great Depression was coming.
51:50Unemployment, bread lines, bank failures.
51:53This was unimaginable.
51:55Then good luck came a-knocking at my door.
52:00But the bubble had burst.
52:03Gone was that innocent optimism,
52:06the confidence,
52:08the illusion of wealth without work.
52:12One era had ended.
52:15They toasted the coming of the 30s.
52:17But somewhere, deep down,
52:21they knew.
52:22The party was over.
52:25Blue skies smiling at me
52:30Nothing but blue skies do I see
52:38I never saw the sun shining so bright
52:43I never saw things going so right
52:47Noticing the days hurrying by
52:51When you're in love
52:53When you're in love
52:53My, how they fly
52:55When you're in love
52:56My, how they fly
52:57Blue days
52:58All of them gone
53:02Nothing but blue skies from now on
53:05Nothing but blue skies from now on
53:09Nothing but blue skies from now on
53:11Blue skies from now on
53:12Blue skies from now on
53:13Blue skies, trilist,笑
53:16Nothing but blue sky do I see.
53:23I hear those little blue birds.
53:26They're singing a song.
53:30Nothing but blue birds all day long.
53:35I'm sitting on the world.
53:38I'm sitting on the world.
53:40I'm sitting on the world.
53:43I'm sitting on the world.
53:46Wearing a grin.
53:48Telling the clouds that I'm not in.
53:52Blue days, blue days.
53:55All of them gone, gone, gone.
54:02Nothing but blue skies around the world.
54:13Exclusive corporate funding for American Experience is provided by Liberty Mutual.
54:19Major funding by the Alfred P. Sloan Foundation.
54:22American Experience is also made possible by the Corporation for Public Broadcasting.
54:27And from viewers like you.
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