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Looking back at the Great Crash

Today the world’s financial  centers are trembling. For the first time in a hundred years, terrified British depositors line up outside Northern Rock bank to try to rescue their deposits. In 1929 CLAUD COCKBURN covered the Wall Street crash for the London Times. Here is his memoir of Black Thursday, from his autobiography I, Claud, which CounterPunch Books, with AK Press, is republishing early next year. AC / JSC.

The morning of Thursday, October 24, was like the morning of a battle which people are beginning for the first time to realize may be lost. Until soon after the opening of the market on the previous day, nobody had thought of such a thing. It was as­sumed, as it had been assumed on each previous occasion when a break in the market had occurred, that this was a temporary setback, a “readjustment” – the bulls were losing a skirmish or two, but they were not going to lose the battle.

But by the close of Wednesday’s market, the New York Times averages for fifty leading industrial stocks had lost over eighteen points,  our telegrapher, Joe, had lost $10,000, and long after the close the London Daily Mail’s correspondent, Freddie Bullock – in the intervals of trying to reach his brokers on the jammed telephone lines – kept coming into our office talking, ar­guing and listening for the first time to Louis Hinrichs [ the London Times bureau chief]  with a kind of nervous awe. Bullock came across from his apartment to have breakfast with me that Thursday in the café of the Hotel Lafayette. He needed company, and I dare say, too, he needed the peculiar atmosphere of the Hotel Lafayette, which took you a little bit out of this world…

We had breakfast at a marble-topped table in the café at the end of which there was a ticker machine. Bullock kept jumping up and walking over to it by force of simply nervous habit, because at that hour the ticker could tell us nothing that we did not know already. Yet that morning there was a stream of men trotting up to the ticker and standing for a few minutes gazing at it in an un­usual silence.

It takes nothing less than a major air raid to produce any visible change in the social “atmosphere” of London, but New York lives more externally, and on the subway to the City Hall Square the change was as evident as a notable change in the weather. At the Sun office, there was just that nip in the emotional air which you get on the day after a big air raid, when people have grasped that the bombers really did get through last night and may do so again today. It was a situation in which nobody says much, but every­one knows what everyone else is thinking and knows that everyone else is a little frightened too.

As the electric clocks ticked off the minutes until the opening of the market, the tension was nearly intolerable. I do not mean that any of us had much idea of what was really going to happen except perhaps Louis Hinrichs. None of us, I am sure, thought, “This is a turning point, one way or another, in the history of the twentieth century.” None of us was sapient enough to reflect, “Upon what happens today hangs the fate of nations. A way of life is going to survive or is going down the drain. After today, either everything will be as it was, or else nothing will ever be quite the same again.”

There were some very smart people hanging over the ticker at the opening of the market that morning in the Sun office, but none of them was quite smart enough to know that, as they saw in those first few astounding minutes shares of Kennecott and General Motors thrown on the market in blocks of five, ten and fifteen thousand, they were looking at the beginning of a road which was going to lead to the British collapse of 1931, to the collapse of Austria, to the collapse of Germany – and that at the end of it, there was going to be a situation with Adolf Hitler in the middle of it, a situation in which no amount of get-togethers on a log at Rapidan was going to do much good, a situation, in fact, which was going to look very much like the fulfillment of the most lurid predictions of Marx and Lenin.

I kept being reminded of the old story about the enthusiastic American who took his phlegmatic British friend to see Niagara.

“Isn’t that amazing,” said the American. “Look at that vast mass of water dashing over that enormous cliff!”

“But what,” said the Englishman, “is to stop it?”

There was nothing much to do that morning except just to watch Niagara. It seemed pointless to go through the usual routine of telephoning to “contacts” and informants and asking for their comments on the situation. There was no sensible comment that anyone could make, and furthermore you had the feeling that there was no question you could ask which would not strike the man at the other end as some kind of affront. Even so, I scarcely began to guess how bad the situation really was until Hinrichs, in a low voice, said to me, “Remember, when we’re writing this story the word ‘panic’ is not to be used.”

At length we left the crazy-looking ticker and started to walk through the bright streets toward Wall Street, walking in silence because, in the light of the enormity of the event, anything that one could say seemed intolerably trivial. Thousands of other peo­ple were streaming toward Wall Street, and they were walking in silence too.

In the street itself, there was an enormous murmuring crowd, and the people pressed close around us were talking, when one listened to them, almost in whispers. Every now and then you could hear quite distinctly a hysterical laugh. As time passed, the crowd grew thicker and noisier, and then there was an eddy in the middle of it and a man in shirt sleeves was pushing his way across the street in the direction of the Morgan offices. Hinrichs nudged me sharply. This was an easily recognizable denizen of the village namely, Charles E. Mitchell, chairman of the National City Bank, the leader of the bull market and the champion of the “expansionists” against the “restrictive” efforts of the Federal Reserve Board. He pushed his way into the bomb-scarred offices of the House of Morgan, and a little later we learned what he had gone for. He and the other leading bankers of Wall Street had been summoned there to establish a multimillion-dollar pool in an attempt to steady the market.

Silver-haired Mr. Lamont received us with a manner so reas­suring that, upon me and many others, it had the same effect as Hinrichs’ warning against the use of the word “panic.” It was like the manner of the man who comes on the stage of a burning theater and urges everyone to keep perfectly cool, stating there is no cause for alarm. He made soft, soothing gesticulations with his pince-nez as softly, gently, almost stammeringly, he deprecated anything in the nature of sensationalism. His first sentence has been aptly described as one of the most remarkable understatements of all time.

“There has been a little distress selling on the stock exchange,” he said, “and we have held a meeting of the heads of several finan­cial institutions to discuss the situation. We have found that there are no houses in difficulty and the reports from brokers indicate that margins are being maintained satisfactorily.”

The pince-nez gently waved away ill-informed rumors of the disaster, moving to and fro in the dim light from the high window heavily covered with anti-bomb steel netting. Nothing fundamen­tal, he said, had changed. There was nothing basically wrong with the country’s economy. What had occurred was due simply to “a technical condition of the market.”

Since becoming a journalist I had often heard the advice to “believe nothing until it has been officially denied.” But despite this, even the ominous blandness of Mr. Lamont did not shake me into full awareness of what was going on. The shake came a little later at lunch with the Edgar Speyers.

“Edwardian” was the adjective which inevitably occurred to you in the presence of Edgar Speyer, and equally inevitably he recalled to me the Rothschilds as I had seen them in my boyhood days at Tring. He was an American now, had been an American for years, and he and his brother were not only millionaires but had made themselves powerful figures in the cut and thrust of Wall Street, but the aroma of Edwardianism still hung about him like the scent of a good cigar. This was natural enough since it was in Edwardian England that this originally German Jew had risen to wealth and prominence. He had been Sir Edgar Speyer then, and a Privy Counsellor  Then he was caught in the storm of indignation against Germans in high places in England which at the beginning of World War 1 swept even Prince Louis of Battenberg out of the Admiralty. He could afford to recall what for many people might have been a disaster with an amiable shrug. His enforced good-bye to all that had by no means been disastrous for him. He just got on a boat and went to Boston and made a couple of million dol­lars. Later he advanced triumphantly on New York and, at the time I knew him, lived in one of the lovely rose-colored houses on the north side of Washington Square. It housed, not in any special gallery but as part of its furnishings, a small but luminously beauti­ful art collection composed chiefly of Chinese paintings and porcelain. The atmosphere was one of elegant calm, in which the rich odor emanating from pots and pots of money was naturally, but not disagreeably, perceptible. It was at that time one of the few houses I visited in New York where you did not have to talk about the stock market or any other form of business, and the food and wine were so good that nobody thought it odd if at lunch or dinner you were perfectly silent for minutes on end. There were a middle-aged English butler and a youthful English footman, but, except for their age, one might have supposed that they had been trained in Edwardian England and come over with Speyer on the boat to Boston in 1914. Their only departure from an older tradition was that they, both of them, left the room as soon as each course had been served by the footman under the butler’s super­vision.

Leonora Speyer was a writer. She had, as I recall, recently pub­lished a volume of poems, and on this October 24 of 1929, the Speyers and their four guests were talking about modern American poetry. I was eating pompano and listening to somebody telling something about some poet I had not yet heard of, when I perceived to my astonishment that some kind of disturbance was going on at   the other side of the dining-room door, which faced me as I sat at the table. Something had certainly bumped against the door. I heard a very faint thump, and I saw the door shiver slightly. The idea of anything, as it were, untoward occurring in the Speyer household was nearly inconceivable. I concluded that they must be the owners of some large dog, which I had never seen, and that this dog had escaped and was probably at this moment being hauled off to its proper place by the footman. And then, just as I was about to give full attention again to the con­versation, something else happened.

The handle of the door turned very, very slowly; the door shud­dered again and moved an inch or so inward. Then it closed again, and again the handle very, very slowly turned in the direction op­posite to its direction before. There was no longer any doubt about it. Either somebody in an ecstasy of indecision was trying to make up his mind to come into the room, or else, as seemed more likely, two people were struggling over the handle of the door, one of them trying to open it and the other to keep it closed.

In any other house, there might have been a dozen explanations for this – children loose in the passage, for instance; perhaps chil­dren playing with a big dog. But in the Speyer household things were so ordered that a disturbance of this kind was as startling as it would have been to find the dining room too hot or too cold, or to have a draft blowing down one’s neck. Fascinated by the mysterious struggle behind the door, I found myself gazing at the man who was talking intelligently about this poet with an expres­sion, as I could see from the surprised look he gave me, of abso­lutely idiotic vacancy. I was so placed that I was the only one at the table who, when the door opened, could see right down the corridor outside, and what I saw, when the two menservants came in to put a saddle of lamb in front of Speyer, was that at the end of the corridor either four of five maidservants of various ages were grouped together in what seemed to be an excited attitude, and one of them – unless I was under some kind of hallucination – had actually shaken her fist at the footman as he came through the door.

Within a few minutes the butler and footman had again with­drawn, but we had swallowed no more than a mouthful or two of lamb when the noise in the passage became so loud that no­body in the dining room could even pretend to ignore it. A woman shouted, “Go on – or else!” and then the door was burst open, and the butler, very red in the face, nearly bounced into the room as though he had been pushed violently from behind at the last moment.

He closed the door and as collectedly as possible marched across the room to Speyer and in low, apologetic tones begged him to come outside for a moment. Listening with an air of astonish­ment, Speyer, after a few seconds’ amazed hesitation, left the room with him. Almost immediately Speyer came back again looking a little dismayed. He begged us to excuse him. The staff, he ex­plained, had of course their own ticker tape in the kitchen premises, and of course they were all heavily engaged on the stock market. And now the ticker was recording incredible things. In point of fact the ticker was by that time running just over an hour and a half late, owing to the enormous volume of trading, so that the prices which the Speyer staff were reading with horror at a quarter to two were the prices at which stocks had changed hands at the very worst moment of the morning before the bankers had met and the formation of the bankers’ pool had been announced.

The staff saw their savings going down in chaos; since they were certainly operating on margin, they might at this moment already have been wiped out. Among the stock in which all of them had speculated was that of Montgomery Ward, and that had dropped from an opening price of 83 to around 50 before noon. And all this was going on before their eyes, while their employer – re­putedly one of the shrewdest financiers in New York – was calmly sitting upstairs eating pompano and saddle of lamb. They abso­lutely insisted that he go at once with them to the kitchen, study the situation, make telephone calls if necessary, and advise them what to do for the best.

Speyer left the rest of his lunch uneaten, and his wife and her guests finished the meal under conditions of confusion and make­shift, which probably had never been seen in the Speyer household before. I left as soon as I decently could and did not see Mr. Speyer to say good-bye. He was still in the kitchen. I hurried to the office to write my story, beginning at last to be aware of what the great crash meant.

By this time, everyone else was beginning to be aware of it too – most of them more fully than myself. Whereas in the morning the atmosphere had been in the main one of incredulous excite­ment, now there was a strong smell of fear in the air too.

Our office had begun to look as though the waves were going over the bridge. Naturally we all had to write several thousand words to London describing the great crash. But at the same time everybody was either emotionally or financially so deeply engaged in what happened that there were constant little con­ferences in the corners of the office, where people were trying to figure out what really had happened. Every now and then forlorn telephone calls came in from other people who were also trying to figure that out. And, as always happens at times like these, the element of low farce walked in – in the shape of a little man whose name I remember so poorly that I can only describe him as Colonel X. Colonel X was some kind of dilapidated British peer who had spent years of his life in the Intelligence Service in India. He was now in New York, had been in New York for some time and had repeatedly come into the Times office suggesting that we buy from him for a large price a story he had, which told that a new anti-British revolution in India was being planned among the Indian students of Columbia University. He was a dirty little lord, and it was obvious to the least experienced ob­server that he was reeking with heroin. However, he had at one point somewhat endeared himself to me by showing a really extraordinary knowledge of the English hymn book. He could at any moment recite any hymn in the English hymn book of which you gave him the number, and this seemed to me a very remark­able accomplishment. He had also once borrowed from me a sum of money after I had determined never to lend him any more money at all. He had said to me, gazing into a battered straw hat which he wore, “You know, laddie, what I need is $5,000.”

I, who had been so sure that I never would lend him any money at all, had said laughingly, “Well, that is unfortunately too bad. I don’t have more than $10 available.”

To which he had replied, “That will do, laddie. That will be sufficient for the moment.” And of course there had been nothing to do but to give him the ten dollars.

He stank so badly that normally one did not care to see him otherwise than on the public street, but on this occasion, on the day of the great crash, one more stench seemed no worse than another. I could not at first focus upon the little man. I could not make out what on earth he was doing in this galère. Then I realized that he was standing on his bow legs with his little cane and his busted straw hat on the side of his head, looking at every­one with an air of enormous superiority. At last he, so to speak, “cut me out” in the way that a cowboy cuts out a cow, and he said to me: “You know, all these people are worrying, worrying, worrying. They are worrying about the crash in America, about some crash they think is going to happen in consequence in Britain; they think that we shall all go off the gold standard or something of the kind. And what I want to say to you, laddie, is just simply this. Don’t worry, don’t worry, don’t worry.”

I said to him that there were grounds for worry. He said, “I thought you would say that, laddie, and that is why I am going to tell you something. Let me tell you that to me, and just a very few people in the Intelligence Service, is known the fact that in the heart of Africa, right in Zululand, we have a mountain of gold. Yes, laddie, a mountain of gold. And that gold – that mountain of gold – is patrolled day by day and night by night by a great troop of the finest Zulus in the world. Loyal chaps, laddie, yes, loyal chaps.”

At this point his voice had risen to such a screech that even the financial editor of the New York Sun was peering to see where it came from.

“And these Zulus,” he said, “splendid physical specimens, mag­nificent men, they go round and round this mountain once at dawn and once at night. At dawn they run up the Union Jack on the mountain, and the chief of this magnificent tribe drives in a carriage round it, with, laddie, cream-colored ponies – cream-colored ponies like Queen Victoria had. And if any one of the magnificent Zulu guards is not in his place, that guard is taken out and lashed – lashed practically to death, laddie, because these are loyal fellows. And that means that whatever happens – whatever happens to America, whatever happens to Germany,  or Russia or this kind of nonsense – we’ve got this mountain of gold and we are going to survive. Do you see what I mean, laddie?”

I saw just what he meant, and it was the end of that day.

 

 

 

 

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