INTERLUDE

Oxygen to the Fire

If a man saves fifteen dollars a week and invests it in good common stocks, and allows the dividends and rights to accumulate, at the end of twenty years he will have at least eighty thousand dollars and an income from investments of around four hundred dollars a month. He will be rich. And because income can do that I am firm in my belief that anyone not only can be rich but ought to be rich.

—John Jakob Raskob

Labor Day weekend offered a brief respite from the mad crucible of New York, but by Monday evening, September 2, 1929, the crowds returned to suffer the heat. A line of cars ran five miles long to enter the Holland Tunnel into Manhattan. Some families abandoned their boxy Fords, the wait for the tunnel pointless, and carried their suitcases to the nearest train station. There they found little relief as hordes of sunburnt beachgoers packed the trains and buses. Even the piers were overcome with nearly ten thousand passengers just off the liners from Europe, their sea legs not yet adjusted to solid ground. The record temperatures only fell a few degrees as midnight approached. The streets gave off heat like coils on a radiator.

By dawn the next day, cars continued to pour from the tunnel at a rate of two thousand per hour. The clear morning sky promised an afternoon sauna. Although another day with sand between the toes would have been nice, the brokers and bankers heading into Wall Street couldn’t resist the call of the opening bell. Some were charged by yesterday’s radio announcement from astrologist–turned–stock picker Evangeline Adams that “the Dow Jones could climb to Heaven.” Little did most commuters know that on this day they would reach a market high not to be surmounted again for a quarter of a century. “Wall Street was pandemonium,” said Philip Gibb of the downtown scene that fall. “The outside brokers—the curb men—were bidding against one another for stocks not quoted on the New York Exchange, and their hoarse cries mingled in a raucous chorus. I stood outside a madhouse staring at lunatics.” The stock market bubble—once tethered on a long, thin string to reality far below—had come loose. At the closing bell, the Dow Jones Industrial Average was 381, compared to 104 five years earlier. In the last three months alone, average values had risen twenty-five percent.

For all the decade’s marvels and activity—the speed records, dancing contests, political ballyhoo, speakeasy raids, airplane crashes, and talking picture premieres—nothing captured the country’s attention like the market that day. Yes, some cared about Bobby Jones winning another golf championship. A few preferred finishing All Quiet on the Western Front, the best-selling book in America, to studying the latest newsletters that predicted stock runs down to the hour of the day. But let there be no question, the market loomed like a giant on everyone’s horizon, whether they speculated on stocks or not. It determined the mood of men and women on the street. There was no better antidote to the heat than a double-digit gain on U.S. Steel or General Electric hitting 395. Seeing Oscar Hammerstein’s Sweet Adeline in the “artificially cooled” theater on Broadway was, at best, a distant second. As one British observer said: “You could talk about Prohibition, or Hemingway, or air conditioning, or music, or horses, but in the end you had to talk about the stock market, and that was when the conversation became serious.”

Throughout the summer the bull market brought record highs in both trading volume and market averages (up seventy-six percent from 1928). Some high-profile stocks traded at thirty times earnings and increased by ten or twenty points in a single day of trading. Although a substantial number of stocks had stalled or were suffering downtrends, few speculators saw the forest from the trees. Without hesitation, the bulls shrugged off attempts by the Federal Reserve to rein in margin loans. They muzzled the bears who dared predict doom, calling them “destructionists” of America. Investment trusts, like Riordan’s County Trust, opened at a rate of several per week and were leveraged to the hilt. Readers rushed newsstands to read John J. Raskob’s article “Everybody Ought to Be Rich.” One paper called his plan “a practical Utopia”; another said it was the “greatest vision of Wall Street’s greatest mind.” Advice on how to win a fortune on Wall Street became a business in its own right, publishers printing thousands of “morning letters” every day to show how to beat the market. The quick kill outpaced the investor’s interest in something as mundane as a dividend yield. In August Walter Chrysler announced in an article entitled “Here Comes Prosperity” that “a new era of prosperity which will sweep the world and revolutionize modes of living is rapidly approaching.”

Talk of the market was hard to escape. Neighbors shared tips over a barbeque. Waitresses, chauffeurs, and shoeshine boys eavesdropped on their Wall Street customers for stocks on the run. Policemen and the gangsters they arrested found they shared more than an interest in crime. Cowboys, bookkeepers, ladies-who-lunched, train attendants, and lawyers were united by their attraction to public utilities. Buying on margin spoke to one’s ambition, not foolhardiness. Investors jammed brokerage offices during lunch breaks. Families shortened holidays to get back to the market. Tales of hastily won fortunes ricocheted about office hallways, subway cars, and automats. As Frederick Lewis Allen described, “a young banker had put every dollar of his small capital into Niles-Bement-Pond and now was fixed for life; a widow had been able to buy a large country house with her winnings in Kennecott. Thousands speculated—and won, too—without the slightest knowledge of the nature of the company on whose fortunes they were relying, like the people who bought Seaboard Air Line under the impression that it was an aviation stock.” Actually, Seaboard turned out to be a railroad company. People quit their jobs to track stocks full-time and gambled their life savings to beat the market. Ocean liners boasted facilities where passengers traded by shortwave radio. The wealthy in London, Paris, Brussels, and Amsterdam invested as well. Even small children wanted in on the game. The New York Times ran a story about a southern girl who wrote to Standard Oil about sinking the four dollars she earned in the tobacco fields to buy “as little an intrest or shear in your Oil Wells as $4.00 four dollars [sic] to start with and then take what it makes for me and add to the four dollars until it amounts to a fifty dollar share for me.” She wanted to have them tell her when she might “start drawing money off of it. I am a poor girl and I work on a farm with my home people.” Despite the small percentage of Americans actually speculating in the market, every story of sudden wealth spread the obsession.

At noon a preacher mounted a box in the shadow of Trinity Church to warn of greed’s charm. His cries fell on ears deaf to any sound other than “Buy. Sell. Hold.” The oracles of the day were men like Billy Durant, who had traded his automobile executive’s hat to become a player in the market. When he called to meet the President, Hoover made time in his schedule. Money ruled. People cheered the market with the enthusiasm of parents celebrating their child’s success. Investors made decisions on rumors rather than studied calculation. Chances were what one took if he let his eye stray from the ticker tape. Throughout the summer, brokers lent $400 million a month to investors.

The crowds packed Wall Street on September 3, needing to be near the action, to feel the pulse of the market. The ninety-four-degree temperature did little to dampen their enthusiasm. Gossip about which stock would soon break muffled the sound of the riveter’s gun. Trading volume reached another record high. The tape ran twenty minutes behind, not able to match the pace of trading. Those reading the Evening Post on the subway home marveled at the advances: “The summer holiday is now over and the speculative element back on the job, invigorated by long-weekend recess.”

The battle to build the world’s tallest skyscraper fed off this enthusiasm, like oxygen to a fire. It was in periods like these, when a nation and its leaders were flush with prosperity and pride, that they erected their most ambitious monuments. The ancient wonders of the world—the Great Pyramid, Temple of Artemis, Hanging Gardens of Babylon, Statue of Zeus in Olympia, Colossus of Rhodes, Lighthouse of Alexandria, and the Mausoleum of Halicarnassus—were built at such times. It was this same spirit that drove the men behind the Empire State, Chrysler, and Manhattan Company buildings to go higher, ever higher.

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