Anything Goes_ A Biography of the Roaring Twenties - Lucy Moore [129]
Some got out in time. Joe Kennedy was one of the clever ones. Having made a fortune from RCA and various other movie and property interests he sold quietly well before the crash, saying, “Only a fool holds out for top dollar.” He was less successful handling his profligate mistress Gloria Swanson’s financial affairs. Gloria Productions brought out its last film in 1930, at about the time their affair came to an end.
Others refused to believe that a fall in prices was even possible. A Professor Dice published New Levels in the Stock Market in the autumn of 1929. “Among the yardsticks for predicting the behavior of stocks which have been rendered obsolete are the truism that what goes up must come down, that the market will be at the end of a major advance after twenty to twenty-four months of climbing, that major declines will run from eleven to fifteen months, that stock prices cannot safely exceed ten times the net earnings.” On October 15, the celebrity economist Irving Fisher declared that stock prices stood on “what looks like a permanently high plateau.” On October 23, the Chrysler Building’s lofty silver dome was fitted into place.
The next day, on what became known as Black Thursday, after a slow but steady decline in prices the market plunged into free fall. Winston Churchill, visiting New York, watched the prices plummet from the visitors’ gallery of the New York Stock Exchange. A group of elder statesmen from the financial world tried to arrest disaster by pouring millions back into the market as a show of faith, but succeeded only in staving off collapse for two days. General panic ensued on Black Tuesday, October 29, when the market lost $14 billion in value.
Groucho Marx’s broker called him that day. “Marx,” he said, “the jig is up!” and put down the telephone. Groucho was philosophical. “All I lost was two hundred and forty thousand dollars . . . I would have lost more but that was all the money I had.” His brother Harpo said his remaining holdings, post crash, “were probably worth a medium-size bag of jelly-beans.”
Within two weeks the total value of the New York Stock Exchange was down by half. Nearly 13 million stocks changed hands in October and by the end of the month the market had fallen 43 points—the amount it had gained in the previous year. Plummeting stock and share prices lost their owners over $40 billion. Jack Dempsey lost $3 million.
“On the whole, the greater the earlier reputation for omniscience, the more serene the previous idiocy, the greater the foolishness now exposed,” wrote John Galbraith some forty years later. It was a total, ruthless liquidation of the market. Speculators who thought they could outwit it lost heavily; among them was “the leading bull,” Billy Durant. Generally speaking, customers fared worse than brokers, who sold their own stocks first and thus made smaller losses than their clients, and who also had access to longer grace periods from their lenders and cheaper credit.
It is a myth that streams of suicidal traders and investors leapt to their deaths from the skyscrapers that had once represented their success, but, as Galbraith commented, the public seized on accounts of suicides “to show that people were reacting appropriately to their misfortune.” Everybody could see that the crash was not simply an economic disaster—it was a revolution that would affect the life of every single American, whether they had been actively involved in the stock market boom or not. Galbraith called it a “leveling process comparable in magnitude and suddenness to that presided over a decade before by Lenin.”
The crash did not cause the Depression; that was part of a far broader malaise. What it did was expose the weaknesses that underpinned the confidence and optimism of the 1920s—poor distribution