266 an enraged mob had howled: Chapman, The Dreyfus Trials, 52.
266 “Maître de Forges”: “‘The Iron Master,’” Time, January 24, 1949, and “Francs and Frenchman,” Time, May 18, 1936.
267 Moreau had had his first taste: Moreau, The Golden Franc, 73.
268 Rothschild and Wendel employed every: Moreau, The Golden Franc, 261, 264, 279; Netter, Histoire de la Banque de France, 153.
14: THE FIRST SQUALLS
270 “Circumstances rule men”: Herodotus quote from Bartlett’s Familiar Quotations, 71.
270 “to make a fortune”: Fraser, Every Man a Speculator, 45.
270 “The English, however speculative”: Sobel, Panic on Wall Street, 223.
270 In 1913, the total value: Rajan, “The great reversals,” Table 3, 15.
271 The “merger” bull market: Leonard P. Ayres, “The Great Bull Market of 1925,” American Review of Reviews, January 1926.
272 No company better exemplified: Sobel, The Great Bull Market, 100-105.
273 The buoyant stock market was accompanied: Allen, Only Yesterday, chap. XI.
275 “Before the butler could move”: Wueschner, Charting Twentieth-Century Monetary Policy, 91.
275 “the only man who emerged”: Keynes, Collected Writings: The Economic Consequences, 2: 174, n.1.
275 “Secretary of Commerce”: Schlesinger Jr. The Crisis of the Old Order, 84.
276 “a mental annex”: Hoover, Memoirs, 9.
276 “May it not be the case”: Strong memorandum to Carl Snyder, May 21, 1925, quoted in Chandler, Benjamin Strong, 428.
277 “Must we accept parenthood”: Strong memorandum to Carl Snyder, May 21, 1925, quoted in Chandler, Benjamin Strong, 428.
277 “affairs of gamblers”: Letter from Strong to Governor George Norris, August 18, 1927, quoted in Chandler, Benjamin Strong, 444.
277 “It seems a shame”: Letter from Strong to Norman, November 7, 1925, quoted in Chandler, Benjamin Strong, 329.
280 “tactic of consulting everyone”: James, The Reichsbank, 26.
280 “He looked upon the world”: Bonn, Wandering Scholar, 303.
281 “infatuated by Dr. Schacht”: Bennett, Germany and the Diplomacy of the Financial Crisis, 127, and Vansittart, The Mist Procession, 301.
281 “He is undoubtedly”: Letter from Strong to Peter Jay, July 20, 1926, quoted in Chandler, Benjamin Strong, 333.
281 his salary was the equivalent: Kopper, Hjalmar Schacht, 86.
281 “ugly clown mask,” “vigilant watch”: Dodd, Through Embassy Eyes, 234.
282 “he dresses with the taste”: Johannes, Steel. “The Ambitious Dr. Schacht,” Current History, June 1934, 285-90.
282 “cutting and devastating humor”: Dodd, Through Embassy Eyes, 234.
282 “a whole table enthralled”: Aga Khan, Memoirs, 337.
282 “Life seemed more free”: Shirer, The Rise and Fall of the Third Reich, 118.
282 “jewel-like sparkle”: Large, Berlin, 211.
282 “You feel all the time”: Boyle, Montagu Norman, 167.
283 The recovery was reflected in the stock market: Voth, “With a Bang, Not a Whimper.” one small town in Bavaria: Frieden, Global Capitalism, 141.
284 He had hoped that: James, Europe Reborn, 112. a “chimera”: Voth, “With a Bang, Not a Whimper,” 72.
285 “not wish to have things seem too good”: Letter from Pierre Jay to Strong, June 22, 1927, quoted in McNeil, American Money and the Weimar Republic, 152.
285 “changeable and moody”: Letter from Parker Gilbert to Strong, September 8, 1927, quoted in McNeil, American Money and the Weimar Republic, 174.
285 “irresponsibility and unpredictability,” “extreme and erratic”: James, The Reichsbank, 61, and McNeil, American Money and the Weimar Republic, 180.
286 At a cabinet meeting: Stresemann diary entry, June 22, 1927, in Stresemann, Diaries, Letters and Papers, 2.
287 made him “smile”: Bank of England, letter from Norman to Strong, November 23, 1925.
287 “seem to be afraid of him”: Letter from Strong to Pierre Jay, September 15, 1926, quoted in Chandler, Benjamin Strong, 348.
287 “imperialist dreams”: Moreau, The Golden Franc, 220.
288 “capricious,” “menace the gold standard”: Norman cables to Strong, May 24 and 25, 1927, quoted in Clarke, Central Bank Cooperation, 117, n. 25.
289 “he could not do so”: Moreau, The Golden Franc, 295.
289 “I do not want to trample”: Moreau, The Golden Franc, 298.
15: UN PETIT COUP DE WHISKY
292 She had just landed a part: “Actress a Suicide by Poison in Hotel,” New York Times, December 10, 1926, and “Illness Drives 2 Women to Suicide in Hotels,” Washington Post, December 10, 1926.
294 In 1926, while Strong was in France: Wueschner, Charting Twentieth-Century Monetary Policy, 125.
294 “thoroughly enjoy getting into a fight”: Interview with Leslie Rounds, Committee on the History of the Federal Reserve System, Washington: Brookings Institution, 1954-55.
294 the constant sniping: Wueschner, Charting Twentieth-Century Monetary Policy, 123.
295 Over the years, each of the central banks: John, Brooks. “Annals of Finance: In Defense of Sterling,” New Yorker, May 23, 1968, 44.
297 “closeted together”: Sayers, The Bank of England, 339.
297 Norman dominated the proceedings: Interview with Mrs. Ogden Mills, Committee on the History of the Federal Reserve System, Washington: Brookings Institution, 1954-55.
298 “un petit coup de whisky”: Banque de France, Charles Rist memorandum “Conversation du 1 au 7 Juillet, 1927 a New York et Washington;” Charles, Rist. “Notice Biographique,” Review D’Économie Politique. Nov-Dec 1955, 1006; and Sayers, The Bank of England, 340.
298 “courtesy calls”: Entry for July 7, 1927: Hamlin diary, Volume 14, Library of Congress.
299 “inflation of credit”: Hoover, Memoirs, 11.
299 “That man has offered me unsolicited advice”: Schlesinger Jr., The Crisis of the Old Order, 88.
299 Fobbing Hoover off: Hoover, Memoirs, 11.
300 “the greatest and boldest operation”: Robbins, The Great Depression, 53.
300 “takes great interest”: “Manuscript Notes by the Governor on Benjamin Strong and on Europe, 3-9 July 1927,” reproduced as Appendix 17 in Sayers, The Bank of England, 2: 96-100.
301 “I had an important conversation”: Moreau, The Golden Franc, 430-31.
302 “intrigues to prevent France,” “ask Norman to choose”: Moreau, The Golden Franc, 443, 445. “to establish some sort of dictatorship”: Letter from Strong to Walter Stewart, quoted in Clay, Lord Norman, 265.
303 “speculation on the stock market”: Chicago Tribune, July 14, 1928.
303 “most vehement language”: “Memorandum on Bank of England—Bank of France Relations,” May 24, 1928, quoted in Chandler, Benjamin Strong, 417-18.
304 At one point, several frustrated senior directors: Letter from Siepmann to Steward, July 8, 1928, cited in Boyce, British Capitalism, 23, n. 69.
304 “One moment he would be sunny”: Boyle, Montagu Norman, 235.
304 “How hard and how cruel”: Chandler, Benjamin Strong, 472.
304 “I am desolate and lonesome”: Boyle, Montagu Norman, 238.
16: INTO THE VORTEX
307 At particular times: Bagehot, “Edward Gibbon,” National Review, January 1856, in The Collected Works: Literary Essays, 352.
307 “stocks could be beat”: “The Magnet of Dancing Stock Prices,” New York Times, March 24, 1929.
308 The bubble began: Acampora, The Fourth Mega-Market, 129.
309 “The old-timers”: “The Magnet of Dancing Stock Prices,” New York Times, March 24, 1929.
310 “You could talk about Prohibition”: Cockburn, In Time of Trouble, quoted in Brooks, Once in Golconda, 82.
310 Anyone trying to throw doubt: Noyes, The Market Place, 322.
310 As the crowd piling
into the market: Charles, Merz. “Bull Market,” Harpers Monthly Magazine, April 1929, 643.
310 “bootblacks, household servants”: Charles, Merz. “Bull Market.” Harpers Monthly Magazine, April 1929, 643.
311 “Taxi drivers told you what to buy”: Baruch, The Public Year, 220.
311 “When the time comes that a shoeshine boy”: Goodwin, The Fitzgeralds and the Kennedys, 488.
311 “hard losers and naggers”: Patterson, The Great Boom and Panic, 18.
311 Even the New York Times: “The Army of Women Who Watch the Ticker,” New York Times, March 31, 1929.
312 Biggest of them was Billy Durant: Sparling, Mystery Men of Wall Street, 3-42.
312 “History, which has a painful way”: “Warburg Assails Federal Reserve,” New York Times, March 8, 1929.
312 “sandbagging American prosperity”: Galbraith, The Great Crash, 77.
313 “Monty and Ben sowed the wind”: Chernow, The House of Morgan, 313.
313 “speculative orgy,” “There are many underlying reasons,” “stock speculation,” “The prevailing bull market”: “The Stock-Speculating Mania,” The Literary Digest, December 8, 1928.
314 It was from Washington: Ellis, A Nation in Torment, 40.
315 “displayed some life”: Moreau, The Golden Franc, 89.
315 “When the American people”: Interview with Roy Young, Committee on the History of the Federal Reserve System, Washington: Brookings Institution, 1954-55.
316 The following exchange: Hearings of Senate Committee on Banking and Currency on Brokers’ Loans. Washington: United States Government Printing Office, 1928, quoted in Lawrence, Wall Street and Washington.
317 “oratory, ethics and provincialism”: “Federal Reserve versus Speculation,” Time, February 25, 1929.
317-18 “Wall Street has become the most notorious”: “Senate Votes to Ask Reserve Board How to Bar Speculation,” New York Times, February 12, 1929.
318 Nevertheless, in the last weeks: Letter from Strong to Walter Stewart, August 3, 1928, quoted in Chandler, Benjamin Strong, 460-61.
318 Strong’s successor: Matthew, Josephson. “Money Men are Different Now,” Saturday Evening Post, February 26, 1949.
319 “being young and new,” “had inherited all antagonisms”: Letter from Leffingwell to Edward Grenfell, May 29, 1919, quoted in Kunz, The Battle for Britain’s Gold Standard, 19.
319 With Strong dead: Interview with Leslie Rounds, Committee on the History of the Federal Reserve System, Washington: Brookings Institution, 1954-55.
320 “raise the prestige”: “Memorandum on conversation with Governor Young: March 6, 1929,” Goldenweiser Papers, Library of Congress, quoted in Clarke, Central Bank Cooperation, 156.
321 “any longer intend to be”: Bierman, The Great Myths of 1929, 78.
321 Harrison urged Norman: Hamlin Diary, February 11, 1929, quoted in Bierman, The Great Myths of 1929, 105, n. 11.
321 “to have the stock market fall”: Josephson, Infidel in the Temple, 22.
321 Once the speculative fever: Harrison Memorandum, “Conversations with Federal Reserve Board: February 5, 1929,” quoted in Clarke, Central Bank Cooperation, 152.
321 “lived and breathed”: Hamlin Diary, March 5, 1929, Library of Congress; “Memorandum on conversation with Governor Young: March 6, 1929,” Goldenweiser Papers, Library of Congress, quoted in Clarke, Central Bank Cooperation, 157.
322 “If buying and selling stocks”: “The War Against Wall Street Speculation,” The Literary Digest, April 13, 1929.
322 “the hardest time in America”: Letter from Peacock to Revelstoke, February 18, 1929, quoted in Kynaston, The City of London: Illusions of Gold, 157.
322 “an even deeper feeling”: Letter from Norman to European Central Bankers, February 21, 1929, quoted in Clay, Lord Norman, 249.
322 Over the next three months: Friedman and Schwartz, A Monetary History, 259.
324 Even Adolph Miller: Hamlin Diary, January 3, 1929, quoted in Wueschner, Charting Twentieth-Century Monetary Policy, 153.
325 “The French have always had”: McNeil, American Money and the Weimar Republic, 228.
325 Under the Dawes Plan schedule: Under the Dawes Plan, reparations were supposed to increase according to a “prosperity index,” calculated based on trends in foreign trade, the budget, coal production, railway traffic, consumption of sugar, tobacco, and beer and spirit. While the increase in payments was potentially indefinite, most people worked on the calculation that the annual tribute would settle somewhere around $700 million.
326 “with a mixture of awkwardness”: McNeil, American Money and the Weimar Republic, 228.
327 “nothing but work ”: McNeil, American Money and the Weimar Republic, 228
327 Government officials: Bennett, Germany and the Diplomacy of the Financial Crisis, 5.
327 “the new German Kaiser”: “69,” Time, February 6, 1929.
327 “without the normal incentive”: Annual Report of Agent General for Reparations, 1927, quoted in Eyck, A History of the Weimar Republic, 2: 174.
329 “was dancing on a volcano”: Stresemann Note on Meeting with Parker Gilbert, November 13, 1928, in Stresemann, Diaries, Letters and Papers, 2: 406.
329 It came as an ill omen: “Europe’s Cold Snap Worst in Centuries,” New York Times, February 12, 1929; “100 Die in Europe as Cold Holds Grip,” New York Times, February 13, 1929; “Freezing Europe Faces Cold Famine,” New York Times, February 14, 1929.
330 Marthe Hanau was a forty-two-year-old: Janet Flanner, “Annals of Finance: The Swindling Presidente,” the New Yorker, August 26 and September 2, 1939.
332 “lengthy, tiresome”: Ziegler, The Sixth Great Power, 357.
332 “a vehement, intolerant man”: Huddleston, In My Time, 256.
332 “tantrums and exhibitionism”: Leith-Ross, Money Talks, 119.
332 “hatchet, Teuton face,” “like a steel trap”: Ziegler, The Sixth Great Power, 356-57.
332 “If Hell is anything like Paris”: Klingaman, 1929: The Year of the Crash, 163.
332 The German delegates: Kopper, Hjalmar Schacht, 146.
334 Schacht’s proposal was initially received: Stuart Crocker Memoirs, quoted in Jacobson, Locarno Diplomacy, 257.
334 Pierre Quesnay: Stuart Crocker Memoirs, quoted in Jacobson, Locarno Diplomacy, 265.
337 “You ought never to have signed”: Schacht, My First Seventy-six Years, 247.
337 “The crisis may have been”: Kopper, Hjalmar Schacht, 154.
337 “My prophecy would be”: Keynes, “Letter to Andrew Mcfadyean,” January 5, 1930, in Collected Writings, 18: 346-47.
338 In addition, he continued to manage: Hession, John Maynard Keynes, 175.
338 Despite his reputation: Skousen, “Keynes as a Speculator,” 161-69.
338 “triumph”: Keynes, Collected Writing: A Tract, 4: 231.
339 “nothing which can be called inflation”: Keynes, “Is There Inflation in the United States?” September 1, 1928, in Collected Writing, 13: 52-59
339 “on the side of business depression”: Keynes, “Letter to Charles Bullock,” October 4, 1928, in Collected Writings 13: 70-73.
339 “I was forgetting that gold”: Keynes, “Is There Enough Gold? The League of Nations Inquiry,” The Nation and Athenaeum, January 19, 1929, in Collected Writing, 19: 775-80.
339 “Picture to yourself”: Kynaston, The City of London, Illusions of Gold, 157.
340 “Almost all the great powers”: Somary, The Raven of Zurich, 155.
341 “even in countries thousands of miles”: Keynes, “A British View of the Wall Street Slump,” New York Evening Post, October 25, 1929, in Collected Writings, 20: 2-3.
341 The character of the market: White, “The Stock Market Boom and Crash of 1929 Revisited,” 77.
342 Indeed, on September 3, 1929: Paul, Desmond. “An Exploration of the Nature of Bull Market Tops,” Lowry Reports, 2006.
342 In February, Owen Young: Klingaman, 1929: The Ye
ar of the Crash, 159, 211.
342 Joe Kennedy: Goodwin, The Fitzgeralds and the Kennedys, 488.
342 Bernard Baruch claims: Baruch, The Public Years, 224-25.
342 Even Thomas Lamont: Lamont, The Ambassador from Wall Street, 260.
342 In April 1929, he had some friends: Durant’s secret visit to the White House from Sparling, Mystery Men of Wall Street, 3-6.
343 “panic which keeps people”: Seldes, The Years of the Locust, 40.
343 “Scores of thousands: “Europe’s ‘Wall Street Panic,’” The Literary Digest, August 24, 1929.
345 “fat excitable man”: Snowden, Autobiography, 2: 827.
345 “invisibly the battle of gold”: “Palladin of Gold,” Time, August 19, 1929.
345 In late August, as Britain’s reserves hit: Clay, Lord Norman, 252.
17: PURGING THE ROTTENNESS
347 “For five years at least”: BusinessWeek, September 7, 1929
348 “I repeat what I said”: “Babson Predicts ‘Crash’ in Stocks,” New York Times, September 6, 1929.
349 He was a strict Prohibitionist: Fridson, It Was a Very Good Year, 87-88.
350 “none of us are infallible”: “Fisher Denies Crash Is Due,” New York Times, September 6, 1929.
350 Simple commonsense techniques: White, “The Stock Market Boom and Crash of 1929 Revisited,” 72-73.
351 “not perhaps surprising”: “Financial Markets: Last Week’s Reaction in Stocks and the Talk of a Future ‘Crash,’” New York Times, September 9, 1929.
352 “Mr. Hatry is very clever”: Kynaston, The City of London: Illusions of Gold, 140.
353 “Stocks have reached what looks like”: “Fisher Sees Stocks Permanently High,” New York Times, October 16, 1929.
353 “increased prosperity”: “Says Stock Slump is Only Temporary,” New York Times, October 24, 1929.
354 “There is a great deal of exaggeration”: “Letter from Lamont to Herbert Hoover,” October 19, 1929, quoted in Lamont, The Ambassador from Wall Street, 266-68.
354 “This document is fairly amazing”: Kunz, The Battle for Britain’s Gold Standard, 55.
354 On Wednesday, October 23: Henry, Lee. “1929: The Crash That Shook the World,” American Mercury, November 1949.
355 “grave,” “gesturing idly”: Brooks, Once in Golconda, 124.
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