by Studs Terkel
No one was so sage that he saw this thing coming. You can be a Sunday morning quarterback. A lot of people have said afterwards, “I saw it coming, I sold all my securities.” There’s a credibility gap there. There are always some people who are conservative, who did sell out. I didn’t know any of these.
I don’t know anybody that jumped out of the window. But I know many who threatened to jump. They ended up in nursing homes and insane asylums and things like that. These were people who were trading in the market or in banking houses. They broke down physically, as well as financially.
Roosevelt saved the system. It’s trite to say the system would have gone out the window. But certainly a lot of institutions would have changed. We were on the verge of something. You could have had a rebellion; you could have had a civil war.
The Street was against Roosevelt. Only me and Joe Kennedy, of those I know, were for Roosevelt in 1932. I was Assistant Treasurer of the Democratic National Committee. I did not support him after the first two terms. I had a great argument with him. I didn’t think any man should serve any more than two terms. I was getting a little tired, too, of all the New Deal things. When I was asked to work with the War Production Board in 1940, he delayed initialing my employment paper. Later on, we had a rapprochement and were friendly again.
Confidence ended the Depression in 1934. We had a recession in 1937. People got a little too gay on the way up, and you had to have a little leveling off. The war had a great deal of stimulus in 1939.
A Depression could not happen again, not to the extent of the one in’29. Unless inflation went out of hand and values went beyond true worth. A deep stock market reaction could bring a Depression, yes. There would be immediate Government action, of course. A moratorium. But in panic, people sell regardless of worth. Today you’ve got twenty-odd million stockholders owning stock. At that time you had probably a million and a half. You could have a sharper decline now than you had in 1929.
Most of the net worth of people today is in values. They haven’t got it in cash. In a panic, values go down regardless of worth. A house worth $30,000, the minute you have a panic, isn’t worth anything. Everybody feels good because the stock they bought at fifty is now selling at eighty. So they have a good feeling. But it’s all on paper.
Martin DeVries
PEOPLE WERE speculating. Now who are they gonna blame aside from themselves? It’s their fault. See my point? If you gamble and make a mistake, why pick on somebody else? It’s your fault, don’t you see?
It’s like many people on the bread lines. I certainly felt sorry for them. But many of them hadn’t lived properly when they were making it. They hadn’t saved anything. Many of them wouldn’t have been in the shape they were in, if they had been living in a reasonable way. Way back in the’29s, people were wearing $20 silk shirts and throwing their money around like crazy. If they had been buying Arrow $2 shirts and putting the other eighteen in the bank, when the trouble came, they wouldn’t have been in the condition they were in.
In 1929, I had a friend who speculated. He’d say, “What’s good?” I’d say, “We’re selling high-grade first mortgage bonds on Commonwealth Edison.” “Oh, hell,” he’d say, “five percent. I make ten percent on the stock market.” He was buying on margin. He thought he was rich. Know what happened to him? He blew his brains out. The Government had nothing to do with that. It’s people.
Most people today are living beyond their means. They don’t give a damn. The Government’ll take care of them. People today don’t want to work. We had a nice colored woman that worked for us fifteen years. She had a grandson. We offered to pay him $2 an hour to take the paper off our bedroom wall. Nothing to it. One coat of paper. We’d provide the bucket and sponge and the ladder. Do you think he’d do it? No. We couldn’t get anybody to do it. So I did it myself. Nothing to it.
Do you think the New Deal is responsible… ?
Certainly. This huge relief program they began. What do you think brings all the colored people to Chicago and New York?
So when I say F.D.R.—
—my blood begins to boil. The New Deal immediately attacked Wall Street. As far as the country was concerned, Wall Street was responsible for all the upheavals. They set up the Securities and Exchange Commission. That was all right. I know there were some evils. But these fellas Roosevelt put in the SEC were a bunch of young Harvard theorists. Except for old Joe Kennedy. He was a robber baron. These New Dealers felt they had a mission to perform. Roosevelt attacked people—with some reason. But without justice. All people on Wall Street are not crooks.
My friends and I often spoke about it. Especially after his hammy fireside chats. Here we were paying taxes and not asking for anything. Everybody else was asking for relief, for our money to help them out… . A certain amount of that is O.K., but when they strip you clean and still don’t accomplish much, it’s unfair.
They were do-gooders, trying to accomplish something. I give them credit for that. But they didn’t listen to anybody who had any sense.
Hoover happened to be in a bad spot. The Depression came on, and there he was. If Jesus Christ had been there, he’d have had the same problem. It’s too bad for poor old Herbie that he happened to be there. This was a world-wide Depression. It wasn’t Hoover’s fault. In 1932, a Chinaman or a monkey could have been elected against him, no question about it.
John Hersch
He is the senior partner in a large brokerage house in Chicago. From his LaSalle Street office, on this late afternoon we can see the crowds below, worrying toward buses and parking lots, heading home.
“It’s been a fascinating business for me right from 1924 to 1968. I’ve been in it a long time, and I’m very proud of it. It’s entirely different than it was in the Twenties. The canons of ethics are extremely strict. There are still bad episodes once in a while, but it’s a big society.”
His is an air of worldly-weariness.
I CAME into the business, out of the University of Chicago, about Christmas, 1924. I had about $3,000 in the stock market, which was all the money I had. On Black Friday—Thursday, was it?—that margin account went out of the window. I may have had about $62 left.
My wife had a colossal $125 a week job with a Shakespearean theater company. That night, she came home to our little apartment, and she said, “Guess what happened today?” I said, “What?” She said, “I quit.” I was making about $60 a week and she was making $125. Two-thirds of our income and all of our savings disappeared that day.
I was a margin clerk. He’s a man who keeps the figures on individual accounts, if they’re carrying stocks on margin—that is, if they’re carrying stocks without paying for them.
When the break started, you had a deluge of selling, from weakened margin accounts. We had to stay up all night figuring. We’d work till one o‘clock and go to the LaSalle Hotel and get up about five and get some breakfast and continue figuring margin accounts. ’Cause everybody was in trouble. But everybody.
The guy I worked for was sitting in the wire room, watching the tape. The tape was something to see, because Radio Corporation, let’s say, would be ninety-five on the tape … they’d flash you sixty on the floor. The floor was a madhouse. I said to him: “Are we solvent?” He says, “I won’t know till about twelve tonight.” He was half-serious. It was brutal.
The Crash—it didn’t happen in one day. There were a great many warnings. The country was crazy. Everybody was in the stock market, whether he could afford it or not. Shoeshine boys and waiters and capitalists… . A great many holding company pyramids were unsound, really fictitious values. Mr. Insull was a case in point. It was a mad dream of get-rich-quick.
It wasn’t only brokers involved in margin accounts. It was banks. They had a lot of stinking loans. The banks worked in as casual a way as the brokers did. And when they folded… .
I had a friend in Cincinnati who was young and attractive. He had a wife and children and he was insured for $100,000. Life was over as far
as he was concerned. He took a dive, to take care of his wife and kids. There was a number who took the dive, to collect on insurance policies. It’s unthinkable now, when you know how many people have been able to come back.
There were others that impress me. I kept hearing about town that their businesses were in trouble. But they never lowered their standard of living a bit. They lived like kings, right through the Depression. I’ve never been able to figure this out. I knew some people who maintained their Lake Shore Drive apartments and cars, and everybody knew they were in trouble. I never knew how they did it, and I didn’t care particularly. My friends and I were all broke, and we had no pretensions.
You had no governmental control of margins, so people could buy on a shoestring. And when they began pulling the plug … you had a deluge of weakness. You also had short-selling and a lack of rules.37 There were many cases of staid, reputable bankers making securities available on special deals—below the market price—for their friends. Anything went, and everything did go.
Today, there are very few bankers of any repute who have objected to the Securities Exchange Commission. They believe that the regulation in 1933 was a very, very sound thing for our business.
In ’32 and ’33, there was no securities business to speak of. We played a lot of bridge in the afternoons on LaSalle Street. There was nobody to call or see. It was so quiet, you could hear a certificate drop. (Laughs.) Nobody was making a living. A lot of them managed to eke out $40, $60 a week, but mostly we played bridge. (Laughs.)
I found a certain obtuseness about what’s going on in the country. Even after it happened. Of course, at the beginning of the New Deal, the capitalists embraced Franklin Roosevelt as a real savior of our system. The Chicago Tribune wrote laudatory articles about him. Editorials. As soon as things got a little better, the honeymoon was over. You know all those old stories about guys getting on the train at Lake Forest: they were always looking for one headline every morning, that black headline about F.D.R. These people….
It took this guy with the long cigarette holder to do some planning about basic things—like the SEC and the WPA and even the lousy Blue Eagle. It put a new spirit in the country.
The Bank Holiday of 1933 brought a certain kind of joyous, devil-may-care mood. People were just gettin’ along somehow. It was based on the theory: Good grief, it couldn’t get much worse. They bartered things for things.
The Irish Players were in Chicago, and everybody took potatoes to get in. People were taking vegetables to the box office. And they had big audiences.
I’m not trying to detract from the fact that there was wholesale misery in the Depression, ’cause you knew there were people living under the Michigan Avenue Bridge. Gentlemen in old $200 suits were selling apples. There was plenty of misery. I never want to see another… .
I don’t find that people remember the Depression or think about it. I don’t find it coming up in conversations. I also discover that a great many people, even professors, who might have gotten $300 a month during the Depression—some of them are worth a hundred, a hundred fifty thousand bucks today. You’ve never seen so much money around in history as there is today. Never. It’s happened in the last twenty-three years … the development of industry and the creation of equities in business.
Another remarkable thing about the Depression—it never resulted in revolution. I remember that out in Iowa some place, there was a fellow named Reno,38 who led a small following. There were some trucks turned over, and sheriffs weren’t allowed to foreclose. But when you consider what was going on in the country—the whole country was orderly: they just sat there and took it. In retrospect, it’s amazing, just amazing. Either they were in shock, or they thought something would happen to turn it around… . My wife has often discussed this with me. She thinks it’s astonishing, the lack of violent protest, especially in 1932 and 1933.
Anna Ramsey
JUST BEFORE the Crash my father, who was a barber, bought a building. We pinched. We didn’t lose the building. He was a frugal man. I remember how he used to scrounge and scrape to make his mortgage payments. He borrowed money from a loan company very frequently. Oh, the tension in the house, when Pa used to scramble around trying to get enough money to pay that installment loan. That was the one degrading thing I remember.
It was a well-known loan company. I remember it as so dingy. I’m sure it wasn’t. It was just the way I felt: there was something not quite right about it. I didn’t feel shame. I felt resentment of conditions over which we had no control.
The worst thing I have to do every month is to pay my mortgage. I hate to think of all that interest being paid. If I had the money, I’d pay it all off. I just loathe it.
Dr. David J. Rossman
A psychiatrist. He had studied with Freud. His patients are upper middle class. He has been practicing since the Twenties.
MILLIONAIRES would come to me for treatment of anxiety attacks. In 1933, one of them said to me, “I’m here for treatment because I have lost all my money. All I have left is one house on Long Island which is worth $750,000. I don’t know what I’d get for it if I tried to sell it.” He was a very aristocratic looking man. “I’ve always had a feeling of guilt about the money I’ve made.”
I asked him, “Why do you feel guilty about it?” He said he was a floor trader and when he saw the market begin to fall, he would give it a big shove by selling short. At the end of the day, he had made $50—$75,000. This went on for a long time. He said, “I had always felt as if I had taken this money out of the mouths of orphans and widows.”
He felt guilty after the walls caved in. He began to feel what it was like not to have any money. To give you an idea of the importance of this man: he was in a secret meeting at the J. P. Morgan bank, when they were trying to stop the decline. He had an appointment at five o’clock, and he said, “I won’t be here today. But when I see you later, I’ll have an important message for you.”
If I had bought General Motors and Chrysler where it was in March, 1933, I could have been a multi-millionaire on the investment of $10,000. But that wasn’t his message. He said, “We have decided to close the Bank of the United States because the President was truculent and insisted upon an enormously inflated price for his stock.” This was a very small bank in New York. They decided to let him go to the wall. The bank failed.
This man told me to go to the bank and take all my money and get gold notes. They were yellowbacks that said on the back: Redeemable in demand at the U.S. Treasury for gold in bars. I got $10,000 in gold. I said, “What the hell am I going to do with this?” It was heavy as hell. In gold bullion. I put it in a safety deposit box. Two days later, I had to take it out because the President declared the possession of gold to be illegal. I gave it back to the bank, and they credited me with $10,000.
I learned about the crack in our economy long before the stock market crash of ’29. I had a patient who was the biggest kitchen utensil distributor in America. He had a huge plant. He said: suddenly, without notice, his orders just stopped. May and June, 1929.
All of us believed a new era in finance dawned. How long was I in the stock market? From ’26 to ’29. I had doubled my money. I remember some of the stocks I bought. I bought Electric Bond and Share, for example. I bought it at $100 a share and sold it at $465.
That was the only way you could make any real money. Income was piddling. Physicians were the greatest amateur financiers in the world. The way in which doctors, some of my friends, became interested was they had patients in high finance. They told them which stocks to buy. They were heading for a fall.
I began to invest in 1926. At the time I was working for Veterans Administration, and I think every doctor there had his finger in some kind of stocks. Some did better than others. I was too timid. Until a couple of years later, when I got a tip to buy Montgomery Ward, and within ten days I’d made $1,000.
In May of 1929, I personally pulled out of the market. I took my money out of the house I
was dealing with and entrusted it to a man who was the backer of one of the wealthiest men in the country. Thinking he was infallible. He began buying stocks. He bought me Johns-Manville, for example. It was selling at $112. He bought a hundred shares at a bargain, 105. I sold it at 50.
This man embezzled stocks in the spring of 1929, something like $3 million worth. He was in very deep trouble. He died of a coronary. There was no prosecution. He was a pawn. The man whose manager he was was worth about a hundred million. He was not injured in the Crash. He made vast fortunes in dealing with devaluating currencies in Europe. He passed tips along to his friends. A good many of them made $6—$8 million. $6 million is a lot of money. They were cashing in on the decline in European currency.
What was happening to humans … ?
Nothing much. You wouldn’t know a Depression was going on. Except that people were complaining they didn’t have any jobs. You could get the most wonderful kind of help for a pittance. People would work for next to nothing. That’s when people were peddling apples and bread lines were forming all over the city. But on the whole—don’t forget the highest unemployment was less than twenty percent.
Your patients, then, weren’t really affected?
Not very much. They paid fairly reasonable fees. I just came across a bankbook that I had between 1931 and 1934, and, by God, I was in those days making $2,000 a month, which was a hell of a lot of money. Then in 1934, 1935, 1936, they began coming in droves, when things began to ease up. People were looking for help. All middle class. Money loosened up. At the outbreak of the war, all psychiatrists in New York were just simply drowned with work. I saw my first patient at seven in the morning and I worked till nine at night.
He dwells on the recession of 1937, his interest in the Spanish Civil War, the disappointment in Roosevelt’s embargo on Spain, the fall of Barcelona… . A good many of his patients were liberals, some interested in Marxism as a solution; others were “the hard core of the big merchants.”
