Crashes Happen

1929 is an in-depth analysis of the cultural, financial, and political dynamics that precipitated the 1929 stock market crash and its aftermath. The crash was not a singular event but the culmination of a decade defined by unprecedented credit expansion, widespread public speculation fueled by margin debt, and a culture that lionized financiers as celebrity visionaries.

Key figures like Charles E. Mitchell of National City Bank championed the democratization of stock ownership for the “Everyman,” but their aggressive promotion of credit clashed with a divided and ultimately ineffective Federal Reserve, which failed to curb the speculative bubble. The market itself was rife with manipulation through highly leveraged investment trusts and coordinated stock pools, such as the infamous RCA pool, which involved Wall Street’s most prominent institutions and individuals.

The crash unfolded over several days in late October 1929, beginning with Black Thursday (October 24). A panicked, last-ditch effort by a consortium of top bankers, led by Thomas Lamont of J.P. Morgan & Co., attempted to stabilize the market through organized buying. This intervention, personified by the “White Knight” actions of Richard Whitney, provided only a brief respite before the catastrophic selling resumed on Black Monday and Tuesday, wiping out years of gains and erasing fortunes.

The aftermath saw the onset of the Great Depression, a profound shift in public sentiment against Wall Street, and a political sea change with the election of Franklin D. Roosevelt. This led to landmark federal inquiries, most notably the Pecora hearings, which exposed the questionable practices of the financial elite. The era’s titans faced dramatic reversals of fortune: Charles Mitchell was tried for tax evasion and, though acquitted, was financially and professionally ruined; Jesse Livermore, who made a fortune shorting the market, later lost it and died by suicide; and Richard Whitney, the crash-day hero, was ultimately imprisoned for embezzlement. The period culminated in fundamental reforms, including the creation of the SEC and the passage of the Glass-Steagall Act, which separated commercial and investment banking and reshaped American finance for generations.

I. The Economic and Cultural Climate of the 1920s

The decade preceding the crash was characterized by a profound transformation in American economic life and social values, creating a fertile environment for a speculative mania.

The Rise of Consumer Credit and Speculation

The 1920s witnessed the birth of the modern consumer economy, underpinned by the widespread adoption of credit.

• “Buy Now, Pay Later”: General Motors pioneered selling vehicles on credit in 1919, breaking the taboo against personal loans. Sears, Roebuck & Co. followed with “installment plans” for appliances and other goods.
• Margin Buying: Wall Street extended this culture of debt to the stock market, offering stocks “on margin.” Middle-class Americans could open accounts by putting down as little as 10% or 20% of a stock’s purchase price and borrowing the rest.
• Debt as a Habit: Borrowing became a normalized habit, fueled by relentless optimism. Margin loans grew from $1 billion at the start of the decade to nearly $6 billion by its end. As long as faith in the future was maintained, debts could be rolled over indefinitely.

The Bifurcation of the American Economy

The prosperity of the 1920s was not evenly distributed, creating a significant and growing divide within American society.

• Urban vs. Rural: As technology made farming more efficient, agricultural workers fell into economic distress, creating a widening gulf between the urban “haves” and rural “have-nots.”
• Laissez-Faire Government: President Calvin Coolidge’s administration was committed to slashing taxes and reducing the size of government, believing the American people could solve their own problems. This approach allowed business to largely make its own rules.
• Wealth Concentration: Giant corporations like U.S. Steel and General Motors achieved market dominance, and the wealthy became a class unto themselves, particularly in New York City. The wealthiest individuals amassed fortunes over $100 million (nearly $2 billion in today’s dollars).

The Cult of the Financier

For the first time in American history, businessmen and financiers became mainstream celebrities, their wealth equated with genius.

• Celebrity Status: Titans of Wall Street and industry became household names, joining Hollywood stars and athletes in the public spotlight.
• Media Canonization: New magazines like Time (1923) and Forbes (1917) featured financiers on their covers, scrutinizing their salaries and quoting their pronouncements “like scripture.”
• From Gambling to Investing: The perception of the stock market shifted. Previously disdained as a “grubby endeavor” for gamblers, it became the engine of the economy, a spectacle that drew in Americans from all walks of life, promising a chance to strike it rich.

II. Key Figures and Institutions of the Bull Market

The era was defined by a cast of powerful, ambitious, and often-flawed individuals who drove events forward, frequently without grasping the full consequences of their actions.

Charles E. Mitchell: “Sunshine Charlie” and the Everyman Investor

As Chairman of National City Bank, Charles E. Mitchell was a central figure in popularizing stock market investment.

• The “Bank for All”: Mitchell transformed National City from a “sleepy relic” into the engine of the new Wall Street. He built a national sales force and aggressively marketed securities to small depositors and the middle class, whom he called “the Everyman.”
• Philosophy: Mitchell believed there was “too much mystery connected with banking,” famously stating, “We sell our goods over the counter just the same way a clerk sells a necktie.”
• Conflict with the Fed: He was a vocal critic of the Federal Reserve’s attempts to curb speculation. His decision to inject $25 million of National City’s funds into the call loan market on March 26, 1929, single-handedly stopped a panic but placed him in direct opposition to the Fed and drew the ire of Senator Carter Glass.
• The Fall: The crash devastated his bank and his personal fortune. He became a primary target of the Pecora hearings, which investigated his massive bonuses, the sale of risky bonds to the public, and a sale of stock to his wife to avoid taxes. Though acquitted of tax evasion in a sensational 1933 trial, he was left financially ruined.

Thomas Lamont and the House of Morgan: Old Power in a New Era

Thomas Lamont, a senior partner at J.P. Morgan & Co., embodied the firm’s role as a quasi-diplomatic force in global finance.

• The Banker-Ambassador: Lamont played a key role in negotiating German war reparations in Paris in 1929, believing that any problem could be solved through “the wizardry of credit.”
• Investment Trusts: He and his partners embraced the era’s speculative tools, creating highly leveraged holding companies like the Alleghany Corporation.
• The “Preferred List”: Lamont offered shares in these new ventures to a “friends of the firm” list at a steep discount. Recipients included former President Coolidge, Charles Lindbergh, Bernard Baruch, and John Raskob, representing an institutionalization of influence-peddling.
• The Bankers’ Pool: During the October crash, Lamont convened the nation’s top bankers at 23 Wall Street, organizing a pool of capital to support the market in an echo of J. Pierpont Morgan’s actions during the 1907 panic. The effort ultimately failed to stem the tide.

The Speculators: William C. Durant and Jesse Livermore

These two figures represent the era’s speculative extremes: the industrialist-turned-market-plunger and the professional short seller.

• William C. “Billy” Durant: The founder of General Motors, Durant became one of the nation’s most famous speculators. A fierce critic of the Federal Reserve, he held a secret meeting with President Hoover in April 1929 to warn that the Fed’s policies would cause a crash. He later praised Charles Mitchell in a national radio address for defying the Fed. He was nearly wiped out in the crash and declared bankruptcy in 1936.
• Jesse Livermore: Known as the “Boy Plunger,” Livermore was a legendary trader famous for his instincts and his massive short positions. He made a fortune in the Panic of 1907 by shorting stocks and repeated the feat in 1929, netting a personal profit of approximately $100 million by betting against the market. However, he later lost this fortune and, beset by personal and financial turmoil, died by suicide in 1940.

John J. Raskob: The Industrialist-Politician

An executive at DuPont and General Motors, Raskob was a powerful symbol of the intersection of business, finance, and politics.

• “Everybody Ought to Be Rich”: This was the title of an article he co-wrote for the Ladies’ Home Journal, promoting his plan to create an investment trust (Equities Security Company) that would allow ordinary Americans to buy stocks on an installment plan.
• Political Operator: He served as Chairman of the Democratic National Committee for Al Smith’s 1928 presidential campaign, using his wealth and business connections to fund the party. After Smith’s defeat, he plotted to undermine the Hoover presidency.
• The Empire State Building: The skyscraper was Raskob’s brainchild, a “monument to the future” conceived at the market’s peak.

III. Mechanisms of the Mania: Pools, Trusts, and Leverage

The bull market was fueled by financial innovations and practices that amplified risk, often through opaque and manipulative means.

Investment Trusts: The Amplification of Leverage

Investment trusts became a Wall Street craze, offering what appeared to be professional management and diversification but was often just amplified leverage.

• Structure: A trust would raise public money to buy a basket of securities, financing itself with layers of debt and preferred shares.
• Layered Leverage: A new trust could be launched to buy shares of the first trust, “piling still more leverage atop what was already there.”
• Reputation over Assets: Investors were often buying the reputations of the financiers behind the trusts—like Morgan or Goldman Sachs—rather than the underlying assets. The most fashionable trusts traded at extraordinary premiums to the value of the assets they held. The Alleghany Corporation, created by the Van Sweringen brothers with the help of J.P. Morgan, was a prime example.

Stock Pools: The Manipulation of Markets

Stock pools were a common, legal, and patently deceptive practice used by insiders to artificially inflate stock prices.

• Process: A group of investors would covertly buy up a company’s shares. Aided by a floor specialist, they would then trade shares among themselves to create the illusion of high volume and upward momentum (“painting the tape”).
• Public Lure: Gullible investors, seeing the rising price, would jump in, driving the price higher. The pool operators would then “pull the plug,” dumping their shares on the market at a massive profit.
• The RCA Pool (March 1929): Led by NYSE specialist Michael Meehan, a pool of 68 participants, including William Durant and Walter Chrysler, amassed over $12.6 million. In just over a week of manipulation, they drove RCA’s stock price up dramatically and walked away with a net profit of nearly $5 million.

IV. The Failure of Oversight: Government and the Federal Reserve

Government institutions and political leaders either failed to grasp the severity of the developing bubble or were unwilling to take decisive action to stop it.

The Federal Reserve’s Ineffective “Moral Suasion”

The Federal Reserve, only fifteen years old and internally divided, struggled to exert its authority.

• New York vs. Washington: The New York Fed, due to its proximity to Wall Street, practically ran the institution, often creating tension with the Federal Reserve Board in Washington.
• Fear of a Bubble: In February 1929, the Washington board, fearing a speculative bubble, issued advisories discouraging loans for stock speculation. This tactic was known as “moral suasion.”
• Failure to Act: The strategy failed to curb speculation. The board was reluctant to take the more decisive step of raising the discount rate, fearing it would harm legitimate business. This paralysis allowed the bubble to inflate further. Charles Mitchell’s public defiance in March 1929 effectively neutered the Fed’s authority in the eyes of Wall Street.

Herbert Hoover’s Laissez-Faire Presidency

Elected in a landslide in 1928, President Herbert Hoover was an engineer who believed the economy could be operated like a machine, but he was reluctant to intervene in the market.

• Private Concerns: Despite his public pronouncements, Hoover was privately unnerved by the roaring market and held reservations about New York bankers.
• Rebuffing Durant: In a secret meeting in April 1929, William Durant passionately warned Hoover that the Fed’s policies were going to cause a disaster. Hoover was unconvinced and preferred to let the NYSE govern itself.
• Post-Crash Response: After the crash, Hoover’s initial response was to assert that the “fundamental business of the country… is on a sound and prosperous basis.” His actions were seen as too little, too late, and the prolonged downturn became known as the “Hoover market.” He came to believe that powerful Democrats like Raskob and Baruch were organizing short-selling pools to sabotage his presidency.

V. The Crash: October 1929

In the last week of October, the collective delusion that had sustained the market for years evaporated, first gradually, then with terrifying speed.

Black Thursday (October 24)

The day began with a torrent of selling and near-total panic.

• Opening Bell Bloodbath: The market opened with a calamitous sell-off. Tickers fell hopelessly behind, amplifying the panic as investors were unable to get accurate prices.
• The Bankers’ Pool: At noon, Thomas Lamont convened the heads of the nation’s largest banks at J.P. Morgan & Co. They pledged an initial $120 million (later increased to over $250 million) to make stabilizing purchases in key stocks.
• The “White Knight”: At 1:30 p.m., NYSE Vice President Richard Whitney, acting for the pool, strode onto the floor and famously placed a loud, above-market bid for 10,000 shares of U.S. Steel. He proceeded to other posts, placing large orders. The theatrical gesture temporarily halted the slide and turned Whitney into a momentary hero.
• Record Volume: Over 12.8 million shares traded hands, a record. The day ended with the Dow down significantly, but well above its intraday lows, wiping out all gains for the year.

Black Monday and Tuesday (October 28-29)

The bankers’ intervention proved futile as the panic returned with overwhelming force.

• Renewed Selling: On Monday, October 28, the Dow plummeted by 13%. The bankers’ pool was overwhelmed and could only try to fill “air pockets” where there were no bids at all.
• National City’s Crisis: On Monday evening, Charles Mitchell discovered his own firm had purchased 71,000 shares of its own stock at a cost of $32 million, a “deadweight” that threatened the bank’s solvency. To save the bank, Mitchell personally borrowed $12 million to buy the shares from his company.
• The Climax: Tuesday, October 29, was the most disastrous day in Wall Street’s history. Over 16 million shares were traded as the market collapsed in the face of near-total buyer absence. The Dow fell another 12%. The bankers concluded they could not fight the deluge of selling.

VI. The Aftermath and Reformation

The crash was not a fleeting panic but the beginning of a prolonged economic collapse that fundamentally altered the relationship between government and finance in America.

The Onset of the Great Depression

The collapse of asset prices eviscerated credit markets, leading to mass unemployment and bank failures.

• Bank Runs: The failure of the Bank of United States in December 1930, despite efforts by major banks to save it, signaled a new, more dangerous phase of the crisis. By 1932, nearly 11,000 banks had permanently closed.
• Economic Collapse: Unemployment, which was 3% before the crash, soared to 23.6% by 1932. Shantytowns known as “Hoovervilles” appeared across the nation.

The Pecora Hearings

The 1932 election swept Franklin D. Roosevelt into office and gave Democrats control of Congress. The Senate Committee on Banking and Currency, with Ferdinand Pecora as its aggressive chief counsel, launched a full-scale investigation into Wall Street.

• Mitchell on Trial: Pecora’s interrogation of Charles Mitchell in February 1933 became a national spectacle. It revealed Mitchell’s $1 million+ bonuses, the sale of risky Peruvian bonds to the public, and a sale of 18,300 shares of National City stock to his wife that allowed him to claim a $2.8 million loss and pay no income tax in 1929.
• Morgan Under the Microscope: In May 1933, Pecora put J.P. “Jack” Morgan Jr. and his partners on the stand. The hearings revealed the firm’s secret “preferred lists” for discounted stock offerings to influential figures and the fact that none of the 20 Morgan partners, including Jack Morgan, had paid any U.S. income tax in 1931 and 1932 due to capital losses.

Landmark Legislation: The Glass-Steagall Act

The revelations from the Pecora hearings created unstoppable momentum for reform.

• A Contentious Bill: The bill was a product of fierce political infighting. Its namesake, Senator Carter Glass, wanted to protect J.P. Morgan from its provisions and was vehemently opposed to the federal deposit insurance component championed by his House co-sponsor, Henry Steagall.
• Forced Separation: The final act, signed into law by FDR on June 16, 1933, forced the separation of commercial banking (which takes deposits) from investment banking (which underwrites securities). This directly targeted the business models of firms like National City and J.P. Morgan.
• FDIC: It also established the Federal Deposit Insurance Corporation (FDIC) to insure bank deposits, a measure designed to end the cycle of bank runs.

The Fall of the Titans

The new era brought personal ruin and disgrace to many of the men who had defined the 1920s.

• Charles Mitchell: Though acquitted of tax evasion in June 1933, he was pursued in civil court by the Roosevelt administration, which ultimately cost him over $2 million. He was stripped of all his possessions and lived out his life in relative obscurity.
• Richard Whitney: The “White Knight” of 1929 was elected president of the NYSE in 1930. In 1938, it was revealed that he was massively in debt and had been systematically embezzling funds from clients, the NYSE’s gratuity fund, and even the New York Yacht Club. He pleaded guilty to grand larceny and was sentenced to Sing Sing prison. His brother George, a Morgan partner, personally repaid every dollar he stole.

1929 by Andrew Ross Sorkin chronicles the events leading up to and immediately following the 1929 stock market crash, focusing on the actions and attitudes of major figures in finance and politics, such as Charles Mitchell, Thomas Lamont, and Herbert Hoover. The narrative explores themes of market speculation, the conflict between Wall Street and the Federal Reserve, the personal lives and rivalries of powerful bankers, and the ensuing political response and legislative reforms like the Glass-Steagall Act. Furthermore, the author emphasizes the historical parallels between the 1929 era and modern economic climates and includes extensive endnotes and acknowledgments detailing the rigorous archival and academic research behind the book.

Contact Factoring Specialist, Chris Lehnes

Key Figures of the 1929 Financial Era: A Collection of Biographical Profiles

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1. Charles E. Mitchell: “Sunshine Charlie” and the “Bank for All”

1.1. Introduction: The Modern Banker

Charles E. Mitchell was the embodiment of the new Wall Street of the 1920s. As the energetic and unusually optimistic chairman of National City Bank, the man known as “Sunshine Charlie” represented a seismic shift in American finance, aiming to democratize an investment landscape once dominated by an exclusive class of insiders. He was not a cloistered patrician but a dynamic public figure, a “financial human dynamo” whose mission was to dismantle the mystique of banking. Mitchell’s strategic importance lay in his revolutionary ambition to bring “the Everyman” into the stock market, transforming investing from an elite pastime into a mainstream pursuit and, in doing so, becoming a potent symbol of the era’s boundless confidence.

1.2. Background and Ascent

Born in Chelsea, Massachusetts, in 1877, Charles Edwin Mitchell attended Amherst College, where his friends voted him “the greatest” among them. His early career took him to Western Electric in Chicago before he landed at New York’s Trust Company of America. Both he and Thomas W. Lamont were shaped by the Panic of 1907, but they drew starkly different lessons. Mitchell, watching his bank get saved by J.P. Morgan, saw the need for a modern, public-facing institution to provide systemic liquidity. Lamont, a “bit player” in Morgan’s library, saw the necessity of a discreet, coordinated intervention by a powerful private elite.

Mitchell’s true ascent began in 1916 at National City Company, the securities affiliate of National City Bank. By 1921, at age forty-three, he was president of the bank itself. From this perch, he launched his vision of creating a “Bank for All,” challenging his sales force to look beyond traditional wealthy clients. When his salesmen complained they had run out of buyers, Mitchell would point to the streets of Manhattan and declare:

“There are six million people with incomes that aggregate thousands of millions of dollars. They are just waiting for someone to come to tell them what to do with their savings. Take a good look, eat a good lunch, and then go down and tell them.”

1.3. Personality and Lavish Lifestyle

Mitchell’s public image as “Sunshine Charlie” belied a more complex and intimidating personality. He drove his employees relentlessly; one regarded his browbeating of the sales force “as if Attila the Hun had coupled with one of the Borgias to create their own Nero.” In a telling anecdote, when an employee discreetly informed him that his pants were unbuttoned, Mitchell fired him on the spot.

His immense compensation—well over $1 million annually—funded a lifestyle of spectacular opulence. His suits were bespoke, and his family lived in a breathtaking showplace at 934 Fifth Avenue, a five-story mansion modeled after an Italian Renaissance palazzo. The home was run by a staff of sixteen, including a butler, a valet, and two footmen. The Mitchells also built “Hilldale,” an impressive seventy-two-acre estate in Tuxedo Park with a three-story Tudor and Gothic Revival house designed by the architects of Central Park.

1.4. Pivotal Role in the 1929 Financial Era

The People’s Capitalist

Mitchell’s philosophy was rooted in the democratization of investment. “It has always seemed to me that there is and always has been too much mystery connected with banking,” he often said. “We sell our goods over the counter just the same way a clerk sells a necktie.” While he used the machinery of National City to pursue this vision, John J. Raskob was developing a parallel philosophy with his “Everybody Ought to Be Rich” campaign, showing how this idea permeated the highest levels of both finance and industry. Mitchell aggressively promoted margin accounts with as little as 10 percent down, arguing that if Americans could use credit to buy cars and radios, they should be able to use it to buy stock.

Conflict with the Federal Reserve

On March 26, 1929, as call money rates soared to 20 percent, Mitchell took decisive action. With the Federal Reserve actively trying to curb speculation, he announced that National City would lend $25 million to stabilize the market, directly defying the central bank. This was the same day that the speculator Jesse Livermore, sensing a top, launched a massive $150 million short position—a bet that was directly, if temporarily, thwarted by Mitchell’s actions. Mitchell declared his position in what was described as “dynamite in a sentence”:

“we feel that we have an obligation which is paramount to any Federal Reserve warning, or anything else, to avert, so far as lies within our power, any dangerous crisis in the money market.”

The move single-handedly turned the tide, and Mitchell was hailed as a hero on Wall Street. In Washington, however, Senator Carter Glass was enraged, declaring that Mitchell had “slapped the board in the face” and should be “properly disciplined.”

The Crash and its Immediate Aftermath

On Monday, October 28, 1929, as National City’s stock went into a “perpendicular drop,” Mitchell discovered his stock-trading unit had purchased $32 million of the bank’s own stock to support the price. The bank lacked the cash to pay for the shares, creating a “very dangerous situation” that threatened the entire institution. That same evening, at a formal dinner hosted by Bernard Baruch for Winston Churchill, a composed Mitchell raised his champagne glass and offered a toast: “To my fellow former millionaires.”

1.5. The Fall from Grace: Trial and Legacy

In the post-crash era, Mitchell became a primary target of Ferdinand Pecora’s Senate investigation. Pecora, the “Hellhound of Wall Street,” relentlessly interrogated him on executive bonuses, risky bond sales, and a 1929 transaction where Mitchell sold 18,300 shares of National City stock to his wife to establish a $2.8 million tax loss. Mitchell defended his actions, stating he sold the shares “frankly, for tax purposes” and insisting the transaction was proper.

His testimony led to his immediate arrest and trial for tax evasion. His lawyer, Max D. Steuer, argued that Mitchell was a “big fish” being sacrificed to “mob psychology.” To the public’s shock, the jury acquitted him on all counts.

Though he escaped prison, Mitchell was financially ruined. A civil suit cost him over $2 million, forcing him to sell his Fifth Avenue mansion and his Tuxedo Park estate. He lived in reduced circumstances on his wife’s income, yet his public demeanor remained unbowed. “I have never lost my nerve,” he insisted. “One can’t quit, and I don’t propose to quit.” Mitchell’s fall from his Fifth Avenue palace marked the end of an era for the public-facing “people’s capitalist.” Yet, while he had been courting the masses, the true levers of power were still being pulled in quiet, private rooms by a more patrician class of financier, epitomized by Thomas Lamont of J.P. Morgan & Co.

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2. Thomas W. Lamont: The Patrician Banker-Statesman

2.1. Introduction: The Ambassador from Wall Street

Thomas W. Lamont was the polished, discreet, and powerful senior partner at J.P. Morgan & Co. Where Charles Mitchell was the boisterous salesman of the new Wall Street, Lamont was its ambassador—a patrician banker-statesman who moved effortlessly between high finance and international diplomacy. He represented a vital link between the old world of J. Pierpont Morgan, where a single man could bend markets to his will, and the supercharged market of the 1920s. As an adviser to presidents and negotiator on the world stage, Lamont’s strategic importance lay in his ability to project the power of American capital across the globe.

2.2. Background and Rise at the House of Morgan

The son of a minister, Lamont began his career in journalism before being personally recruited into the partnership of J.P. Morgan & Co. in 1910. Both he and Charles Mitchell were shaped by the Panic of 1907, but they drew starkly different lessons. Lamont, a “bit player” in Morgan’s library watching the great man lock the nation’s top bankers in a room, saw the necessity of a discreet, coordinated intervention by a powerful private elite. Mitchell, whose bank was saved by Morgan, saw the need for modern, public-facing institutions to provide systemic liquidity. Lamont’s experience left an indelible mark, shaping his belief in coordinated action in times of crisis.

2.3. The Art of Influence

Lamont saw himself not merely as a banker but as an “ambassador of American affluence.” A central figure in negotiating German war reparations, he believed there wasn’t a problem that couldn’t be solved through “the wizardry of credit.” His influence was cultivated through a system of institutionalized patronage, using access to guaranteed, risk-free profits to cultivate goodwill with the nation’s most powerful figures.

A prime example was his use of “preferred lists.” When J.P. Morgan organized speculative ventures like the Alleghany Corporation, Lamont and his partners would set aside shares at a steep discount for “friends of the firm.” Influential figures from former President Calvin Coolidge to rivals like Charles Mitchell and Albert Wiggin received offers of stock at a fraction of its market price. The telegram sent to Wiggin, chairman of Chase National Bank, was typical of this practice:

The Van Ess boys of Cleveland have just organized Alleghany Corporation, being a holding company, to take over their principal investment in railroad shares. Yesterday we issued 35 million of collateral trust bonds. Today Guaranty is offering 25 million preferred stock. We are making no offering of common stock, but have set aside for you and immediate associates 10,000 shares at cost to us, namely, $20. The counter market is quoted at $35.

Please wire promptly your wishes. I am sailing for Paris tonight.

With best regards, TOM

2.4. Role in the 1929 Crash

On Black Thursday, October 24, 1929, Lamont was the central figure who convened the “bankers’ pool” to halt the market’s freefall. As panic gripped Wall Street, he summoned the heads of the nation’s largest banks to the Morgan offices at 23 Wall Street and acted as the public face of the intervention. With practiced understatement, he sought to calm the markets, famously telling anxious reporters, “There has been a little distress selling on the stock exchange this morning.”

His public calm, however, contrasted with his private concerns. In communications with his son, he offered more cautious advice, writing, “In my spare moments, I keep feeling cash is a good asset.” While he worked to project confidence, he privately told the stock exchange board that “no man nor group of men can buy all the stocks that the American public can sell.”

2.5. The Aftermath and Enduring Influence

In the Pecora hearings, the firm’s use of “preferred lists” was exposed to public scorn. Lamont defended the practice, stating that the firm naturally turned to “individuals who had ample means and who understand the nature of common stock.” The explanation did little to quell the public’s sense that Wall Street was a rigged game.

Years later, Lamont’s reputation was further tested by the Richard Whitney scandal. When it was discovered that Richard, the brother of Morgan partner George Whitney, had been embezzling funds, Lamont loaned George money to secretly cover the theft. An SEC report later accused Lamont and George Whitney of following an “unwritten code of silence.” Though never prosecuted, the incident tarnished the image of the impeccable banker-statesman. Lamont’s world was one of quiet understandings and elite consensus, a stark contrast to the solitary, high-stakes game played by the era’s great speculators.

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3. Jesse L. Livermore: The “Boy Plunger”

3.1. Introduction: The Great Speculator

Jesse L. Livermore was one of Wall Street’s most iconic and enigmatic figures—a pure speculator who made and lost several fortunes with breathtaking audacity. Known as the “Boy Plunger,” he was a master of the market’s dark arts, particularly short selling. Unlike the institution builders Mitchell and Lamont, Livermore was a lone wolf operating from a fortified office far from the Wall Street scrum. In the public imagination, which desperately needed heroes and villains to make sense of the catastrophe, Livermore’s prescient bet against the market cast him as the ultimate antagonist—the man who profited from the nation’s ruin.

3.2. Origins of a Trader

Born on a farm in 1877, Livermore ran away from home as a teenager and found work at a brokerage, quickly mastering the art of reading the ticker tape. His transition into a true trader was marked by what he called his “spooky story.” In 1906, on vacation, he felt a premonition and began shorting Union Pacific stock against all advice. Days later, the San Francisco earthquake struck, the market plunged, and Livermore made a fortune. His reputation was cemented during the Panic of 1907, where his short positions earned him $3 million. His selling was so impactful that J. Pierpont Morgan himself sent an emissary to ask him to stop, a moment Livermore considered “one of the most significant of his life.”

3.3. Personality and Philosophy

Livermore lived a lavish but intensely private life. He moved his office to a discreet Midtown penthouse, a sanctum equipped with eighty phone lines, forty stock tickers clattering under glass domes, and an intimidating personal aide. He maintained a close friendship with fellow speculator Bernard Baruch, with whom he often discussed market sentiment.

His trading philosophy was built on discipline and instinct. He famously advised novices to “Beware of stock tips,” believing a trader must rely on their own analysis. His core principle was to take small losses quickly while letting profitable positions run. “Profits always take care of themselves,” he wrote, “But losses never do.”

3.4. The 1929 Crash: The Ultimate Bear Raid

In early 1929, Livermore grew wary of the market’s relentless climb, observing that “everybody was in the market.” On March 26, the same day Charles Mitchell intervened to stop a panic, Livermore launched a massive short assault, selling short $150 million worth of shares against his own capital of just $7 million—a move temporarily thwarted by Mitchell’s injection of liquidity.

When the market finally broke in October, his bets paid off spectacularly, netting him a profit of approximately $100 million. The scale of his success was so vast that when his wife, Dorothy, heard news of the crash, she assumed they were ruined. Livermore returned home to find she had hidden the paintings, rugs, and her jewelry. When he explained that they were richer than ever, he recalled, “Today was the best day I ever had in the market.”

3.5. The Final Fall

Livermore’s triumph was short-lived. Within a few years, he lost his entire 1929 fortune on another audacious bet. His success during the crash also made him a public villain, a symbol of those who profited from others’ misery. Fearing for his family’s safety, he hired a full-time bodyguard.

The final chapter of his life was tragic. Beset by financial and personal troubles, Livermore walked into the Sherry-Netherland Hotel in November 1940 and ended his own life. He left behind a leather-bound notebook containing a final, desperate message:

“I am tired of fighting. Can’t carry on any longer. This is the only way out.”

Livermore’s spectacular rise and fall stood as a testament to the raw, untamed power of speculation, a force that politicians in Washington would soon seek to bring to heel.

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4. Carter Glass: The Scourge of Wall Street

4.1. Introduction: The Unreconstructed Rebel

Senator Carter Glass of Virginia was one of the principal architects of the modern American banking system and, for decades, Wall Street’s most formidable adversary in Washington. A fiery, self-taught expert on finance, Glass was a physically frail but politically tenacious legislator who saw Wall Street speculators as “money devils” threatening the nation’s economic health. His strategic importance lies in his role as the driving force behind the post-crash reform movement, a crusade born from a deep-seated distrust of the New York banking establishment.

4.2. A Man of Two Passions

Glass’s long public career was defined by two unwavering passions. The first was his tireless fight for segregation and Jim Crow laws in his native Virginia. He once openly stated that the purpose of certain measures in the state’s constitution was discrimination, “To remove every Negro voter who can be gotten rid of, legally.”

His second, and equally powerful, passion was the banking system. Though he lacked a formal education, no one in Congress knew more about the subject. He dedicated his political life to building and defending a financial system that he believed should serve the productive economy, not the speculative whims of Wall Street.

4.3. The Architect of the Federal Reserve

After witnessing the chaos of the Panic of 1907, Glass became a pivotal figure in co-authoring the Federal Reserve Act of 1913. The legislation was the culmination of his core belief that the nation needed a central banking system to manage credit and prevent financial power from being concentrated in the hands of a few New York bankers. To Glass, speculators siphoned off capital that should have gone to building factories and creating jobs.

4.4. The Crusade Against Mitchell and Speculation

Glass watched the speculative boom of the late 1920s with growing alarm. When Charles Mitchell intervened in March 1929, directly undermining the Federal Reserve, Glass publicly declared that Mitchell had “slapped the board in the face” and should be “properly disciplined.” After the crash, Glass relentlessly blamed “Mitchellism” for the disaster, using the banker as a symbol of Wall Street’s excess. His fury fueled a legislative push that, in its initial form, tellingly exempted private firms like Thomas Lamont’s J.P. Morgan & Co., illustrating the complex alliances and rivalries of the era.

4.5. The Glass-Steagall Act: A Complicated Legacy

For years, Glass fought to pass what would become the Glass-Steagall Act of 1933. His initial goal was to separate the commercial and investment banking activities of nationally chartered banks like National City, while leaving private partnerships like J.P. Morgan untouched. His efforts were complicated by President Franklin D. Roosevelt and by Winthrop Aldrich of Chase Bank, who successfully lobbied to expand the bill’s scope to all firms, a move aimed squarely at his rival, J.P. Morgan.

Ironically, Glass staunchly opposed one of the bill’s most enduring provisions: federal deposit insurance. He believed it would subsidize weak banks. The provision was championed by his co-sponsor, Representative Henry Steagall, and its immense popularity ultimately ensured the bill’s passage. Glass’s nature remained unchanged to the end. Years later, when the Black waiters at his Washington hotel were replaced by white women, he became furious and demanded they be reinstated, declaring that “no white girl would wait on him. He would have his black boys.” While Glass sought to rewrite the rules of finance in Washington, other key figures of the era were making their own colossal bets on the future of American capitalism.

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5. Other Key Personas of the Era

5.1. William C. Durant: The Eternal Optimist

William “Billy” Durant, the visionary founder of General Motors, reinvented himself in the 1920s as a titan of speculation. He was an unshakeable bull, so convinced of the market’s strength that he secured a secret meeting with President Hoover to warn him that the Federal Reserve’s policies were threatening prosperity. He even took to the radio to deliver a public address defending speculation and praising Charles Mitchell’s defiance of the Fed. Durant’s optimism proved his undoing; he held on through the crash and was financially ruined. In 1936, the man who was once one of the richest in America declared bankruptcy, listing his total assets as $250 worth of clothing.

5.2. John J. Raskob: The People’s Capitalist

A powerful executive at DuPont and General Motors and later the chairman of the Democratic National Committee, John J. Raskob was a leading evangelist for the new era of popular capitalism. Along with Charles Mitchell, he was a chief promoter of bringing ordinary Americans into the market. He famously championed the idea that “Everybody Ought to Be Rich” and developed a plan to create an investment trust that would allow people to buy stocks on an installment plan. As the market collapsed, Raskob channeled his immense fortune into his most enduring legacy: conceiving of and financing the Empire State Building, which he envisioned as a “monument to the future.”

5.3. Richard Whitney: The “White Knight” and the Fallen Hero

Richard Whitney, the Vice President of the New York Stock Exchange and broker for J.P. Morgan, was the celebrated hero of Black Thursday. On October 24, 1929, he strode onto the chaotic trading floor with theatrical confidence. In a loud, booming voice, he placed a large, above-market bid for U.S. Steel. This act was a deliberate performance, designed to signal that the powerful bankers’ pool, led by Morgan, was stepping in. It temporarily halted the panic and earned him the sobriquet “Wall Street’s White Knight.” This heroic image shattered years later when it was revealed that Whitney was living a life of secret debt and deception. He had embezzled millions from clients, his family, and even the NYSE’s own Gratuity Fund. The fallen hero was eventually convicted of grand larceny and imprisoned at Sing Sing.

5.4. Herbert Hoover: The Great Engineer Overwhelmed

President Herbert Hoover, the “Great Engineer,” was a leader ideologically committed to laissez-faire principles who grew increasingly alarmed by the “orgy of speculation.” His initial response to the crisis was guided by his belief that “words are not of any great importance… it is action that counts.” He attempted to organize private-sector bailouts led by bankers, but these efforts proved inadequate. Convinced that powerful short sellers were deliberately sabotaging the economy to undermine his presidency, he pushed for investigations into their activities. Overwhelmed by the scale of the economic collapse and unable to restore public confidence, Hoover suffered a landslide defeat to Franklin D. Roosevelt in 1932.