1929 Stock Market Crash and the Great Depression - Documentary

out of our city season now on bbc2 was this the greatest financial lesson we chose to ignore in 1929 years of booming prosperity ended in catastrophe it was the biggest stock market crash since records began it is impossible to underestimate the shock a sense of stunned disbelief first time investors bought at huge amounts of money to speculate on the market the market broke very sharply and a lot of people were wiped out with it it was very painful later thousands of banks failed millions lost everything the poverty was really all around us it was really really pitiful the crash was followed by a depression that spread across the world lasted for a decade and was a prelude to war this is a story of a financial disaster that we hoped would never happen again [Music] Wednesday 23rd of October 1929 without warning share prices are plummeting on a New York Stock Exchange investors are stunned for the last five years the market has only gone up in the space of an hour a staggering two and a half million shares are sold the next day the dome would spiral continues as people came in to trade stocks on October 24th there was a sense that maybe something had changed if there was something different all of a sudden there just weren't buyers people were willing to sell but there weren't buyers coming forth to buy the stocks and prices began to fall $2 $4 $10 a share it was sort of horrifying that morning there were drops on the stock exchange that was so sharp and so dire stocks suddenly dropping 10 20 30 points at the time that it said that there were shrieks and gasps in the gallery of the New York Stock Exchange people are stunned by what is happening and terrifying thousands of people begin to gather outside the stock market ten thousand people they fill the streets from Broadway to the East River people want to know what's going on they went there these huge crowds gathered around the stock exchange around the statues and on the stairs waiting to get any kind of news they could as people came out of the exchange they could hear voices they could actually hear the shouting and yelling as people were buying and selling but they didn't know what was going on and so they gathered and they stayed there to find out few of the thousands waiting in the crowd appreciated the scale of the disaster that was about to unfold nor could they imagine that over the next five days a financial catastrophe would sweep away the foundations of America's prosperity but to understand what brought about the crash we need to go back a decade to a time when American confidence grew so high that it seemed the good times would last forever in 1919 the US had emerged victorious from World War one a mood of optimism was in the air Britain and its European allies were exhausting financially from the war the US economy was thriving and the world danced to the American children the uncertainties were over there seemed little doubt about what was going to happen America was going on the greatest gardius spree in history and there was going to be plenty to tell about it in the 1920s everyday life was changing electrification transformed America towns were hooked up to the grill new technologies emerged airplanes radios domestic goods that had started life as luxuries now it became necessities the card industry also boomed as people flocked to buy one of the new Ford or Chrysler automobiles an era of boundless prosperity seemed to have begun this is the flowering of consumer culture and mass consumption on a scale never before seen there is also heavy installment buying to encourage people to buy big-ticket consumer items so that they can buy those items on credit this type of consumer credit was another innovation of the 1920s for the first time the idea of buy no pay later hit the mainstream and there's a kind of play culture that develops along side this consumerism which says we believe now in instant gratification take care of the now don't worry about the future live for the moment it was a whole ideology that we were in a new economic era that it was the birthright of every self-respecting American to be rich [Music] with easy credit and more disposable income Americans were now looking for new ways to get even richer since World War one the US government had sold bonds known as Liberty bonds to pay for the war this was a way to borrow money from the public who in turn would receive interest payments on the bonds volume celebrities such as Charlie Chaplin and Douglas Fairbanks had been recruited to promote them at huge rallies Liberty Bonds caused many people to become investors in securities for the first time for the first time in their lives they got interest payments every six months and the security was something they could trade on the market so they could look in the newspaper and see what the price of my bond is today Liberty Bonds created an investing culture most people had never purchased securities before and it got ordinary people accustomed to buying securities now there was another group of people who thought they could take advantage of this new investing culture the bankers of Wall Street for years Wall Street the center of American Finance was made up of a small elite group of bankers doing business with each other in a society closed off to the general public but one man saw an opportunity that would change the face of the financial world Charles Mitchell president of National City Bank spotted a lucrative the gap in the market Mitchell saw that investors had purchased a lot of government bonds during World War one and so he said now we have an investing public there all we need to do is market other products like corporate bonds common stocks and just tell people these are respectable investments Mitchell was a natural salesman with a big ambition if people were willing to buy bonds to raise capital for the government surely they could be tempted to buy stocks and shares to raise capital for private companies listed on the New York Stock Exchange and they could make a profit for themselves in the process gradually people who never dreamed that they would invest in stocks were doing so when stocks lost a lot of this stigma historically stocks had been considered much too risky for ordinary people how whereas in the 1920s there was a sense that investing in stocks was not only safe but reliable and respectable the idea took off and to exploit this lucrative new market Mitchell opened brokerage offices all across the country where people who had the money but not the investment no ho could speculate in stocks and shares this speculum frenzy embraced all kinds of people not just professionals ordinary people began participating as well in unprecedented numbers or all across the country not just in New York City but in cities in small towns all across America people were in love with the stock market technology made it all possible the latest share prices flashed from Wall Street could be printed out within minutes across America using telegraphic ticker tape machines you could find ticker tape in nightclubs in railroad depots in beauty parlors on ocean liners the market became a pervasive part of America's play culture in the 1920s I eat sleep dream talk stocks the only way I believed to make money it's exciting I love it $17,000 profit on three and a half thousand dollars capital not bad there were wild speculations in all kinds of securities movie company stocks aeronautical stocks all the auto company stocks one of the hot stocks of the 1920s was Radio Corporation of America it was a lot like today's Google you know it was cutting-edge technology they had this idea that you could put radios and cars imagine that the American investing public began to connect the products they were using that were coming from corporate America with the notion that hey I might own a share of the company that makes that product that I like by the mid 20s around three million Americans were in the market and Wall Street gripped the public imagination with tales of fortunes being made overnight the idea of a great bull market where shares only seemed to go up took hold every popular magazine every newspaper every radio station was fascinated by what was going on in the stock market people charted the activities of celebrities like Charlie Chaplin or Groucho Marx and were fascinated by what stocks they happen to be speculating the young comic actor Groucho Marx invested all his savings into the market and was so pleased with his profits on paper that he persuaded his brothers to invest too what an easy racket RCA went up seven points since this morning I just made myself seven thousand dollars but it wasn't just celebrities becoming speculators the big Wall Street speculators were becoming celebrities themselves they were thought of as creative entrepreneurial and bringing wealth to America Joseph Kennedy father of the future President Kennedy was one of this new breed of shrewd financial superstar people were fascinated because some of these men like Joseph Kennedy or ordinary folks they were men from nowhere and their rapid rise on the market was a kind of inspiration to ordinary folk that that might even be possible for them someday stories circulated that anyone from bell boys to bobbins could make easy money on the market the shoeshine boy on Wall Street Pat Bologna was one of those inspired by these tales of rags to riches everyone was going to make a fortune have you lived in New York the stock market was king my father was probably about 17 or 18 on a daily basis he would shine the shoes of the literally of the great men of America people like Joseph Kennedy executives like Mitchell he would converse with them and became somewhat of an expert on things like the Federal Reserve and the things that you wouldn't think that a shoeshine who would be expert on but he was talking to the great minds of Wall Street every day all day and so my father began to invest in the stock market as the truth be told I learned how to read reading the stock pages because that was what my father did I mean we grew up with the stock market there was the stock market for breakfast it was a stock market for dinner when he came home the stock market was was the world I started 1928 because like many young people I wanted to go to the place where everybody was making all this money my first job was to be a messenger boy on foreign exchange it took only a week or to find out that most of the time people are greedy people had so much faith in the bull market that they borrowed increasing sums of money to speculate on rising share prices this way of buying shares was known as buying on margin the investor was required to put down only part of the money with their broker funding the rest the culture of buy now pay later had spread to the stock market buying stocks on margin means essentially that you're buying them with borrowed money by the late 1920s 90% of the purchase price of the stock is being made with borrowed money there were no rules about how much you could borrow and people borrowed enormous sums of money to buy stocks you could buy $100 stock for $25 and then and then the brokerage firm would loan you the other 75 and if the stock went up and in the late 20s everything seemed to go up and up then that $25 could turn into investment it was worth 200 or 300 so it became a huge part of the US economy to loan money for the stock market in fact in the late 1920s nearly 40 cents of every dollar loaned was for stocks this vast influx of borrowed money into the stock market created more demand for shares pushing prices ever upwards in 1928 the market went up by almost 50 percent in just 12 months and as stocks continued to rise more and more investors borrowed money to get a piece of the action one of them was shoeshine boy Pat Bologna my father didn't have a lot of money in the stock market and he told me at the time he had about six thousand dollars in cash but I remember six thousand dollars in cash translated into a lot of stock paint course in those years you heard me had to put 10% down for margin so it's six thousand dollars you could have sixty thousand dollars worth of stock Wall Street was hungry for new punters there was one group of would-be investors that the street had always ignored but whose money it now wanted up until the 1920s women had played a very small role in the stock market part of this was simply gender prejudice they were considered incapable of the kind of cruel sang flawed it was necessary if you speculated in the market but in the 20s part of the popularization of the stock market included huge numbers of women well the 20s were a big time for women anyway they really stepped out on their own they began to take control of their own money they went to college actually in record numbers in the 1920s and as they did that they also got interested in the stock market and it is way for them to build their own wealth one such investor was a pioneering New York photographer called Alice Austin she lived in Staten Island just across the water from Wall Street she had moved into this house when she was a couple of months old she was bright she was adventurous by the time she was 11 she had received a camera which was a new invention by the time and she immediately took to it over the years she took some 8,000 glass plate negatives making her one of America's earliest and most prolific photographers policies inheritance from her grandfather had funded a comfortable lifestyle but it had dwindled by the 1920s and she was tempted by Wall Street's promise of a quick buck so I was Austin discovers that she's running a little low and the question then becomes what to do her friends urged her to be conservative cut some spending maybe not go to Europe maybe not buy a car instead Alice found a broker who advised her know buy stocks become rich quick and you know what you can borrow money so you can buy even more stocks buying on margin and Alice Austin thought that pay sounds like a good idea to me [Music] throughout the Surrey market of the 1920s the Republican Party stayed in power on the back of America's increasing prosperity Calvin Coolidge became president in 1923 an investor himself he was notably silent on the speculative mania gripping Wall Street Calvin Coolidge typifies that lays a fair devil-may-care a recklessness of 1920s he's famous for saying that the business of America is business it was a prosperous period business was making money Wall Street was making money the politicians I think just said well every everything's fine the economy's growing the market takes care of things pretty well and the government's job is to get out of the way [Music] during the Coolidge presidency Wall Street spark continued to grow unchecked his administration had close links with an elite group of bankers and finances Wall Street's inner circle their wealth and connections gave them immense influence over the government's financial policy they were small a lead to private partnerships this was really the royalty of Wall Street these were very mysterious in discreet places there were small firms with limited capital but they exercised really an outsized power the most prestigious of these elite firms was the JP Morgan bank strategically located directly opposite the stock exchange it would play a key role in events to come a senior partner at JP Morgan Thomas Lamont was the most powerful man on Wall Street his influence extended well beyond New York Lamont and the other JPMorgan partners spoke regularly with successive presidents grandfather was a very very busy man he didn't have the time as some grandfathers might to take his grandson to the baseball game or go fishing and do things like that grandfather's lifestyle was certainly a very handsome lifestyle there's no question about it he did have his yacht to run it which was a 72 foot very handsome yacht which he often would cruise down from his house in Palisades commuting by boat if you will down the Hudson River to Wall Street and then walk up to the bank under Lamont's leadership JPMorgan steered clear of the worst excesses of the stock market but the close relationship between elite bankers and politicians helped keep government regulation of Wall Street to a minimum while amateur speculators were transfixed by the soaring value of their investments they were hopelessly unaware of how Wall Street really worked with little government supervision the market was a law unto itself an insider dealing was rife there was a lot of market manipulation going on it was rampant there was no disclosure to all the speak of and when Wall Street was very small and very self-contained that was probably okay but as people like you and me began to put our heart and money into the market then it really mattered the stock market of the 1920s was neither fair nor a democratic it was a big gambling casino and it was rigged by professional speculators as smaller investors gambled with their life savings they failed to realize that the odds were stacked against them men like Joseph Kennedy did not make their fortunes by simply picking the right stocks the truth was that they were cashing in on the naivety of gullible newcomers a bunch sharp speculators would get together and in coordinated fashion they would start quietly but relentlessly buying an individual stock what they would do is hype up a particular stock buy it up themselves and then dump it on the market so that they took the profits while the average investor in those stocks were left with the losing's even some of the elite investment houses on Wall Street were engaged in this type of market manipulation in March of 1929 a new Republican President Herbert Hoover was inaugurated in his address he reassured Americans we have reached a higher degree of comfort and security than ever existed before in the history of the world but behind the scenes he was less confident Hoover is actually skeptical about what's going on on Wall Street and the economy generally but he doesn't have the political courage of his convictions and so when he becomes president he does nothing to rein in this wild speculative fervor he doesn't do anything to encourage the Federal Reserve or the Treasury to tighten up margin speculation in the stock market in private whoever talked of an orgy of speculation but like his predecessor Coolidge he had no appetite for regulation of the marketplace yet Hoover was not alone in his fears that the stock market bubble might be about to burst days after the inauguration speech a prominent and highly respected banker Paul Warburg broke ranks with the Wall Street aristocracy and issued a bleak warning if orgies of unrestrained speculation are permitted to spread too far the ultimate collapse is certain to bring about a general depression involving the entire country my great-grandfather issued a warning in March of 1929 he actually used the word a depression and he was shouted down I think he was disregarded he was you know a party pooper I mean no no everything's fine everybody's making money and having a good time at the party so when there's a good bull market going on the person who says this might be getting overvalued you better be careful he sort of dismissed Warburg's prediction fell on deaf ears and between May and September 1929 60 new companies were floated in the New York Stock Exchange adding more than a hundred million shares to the marketplace fueling the investment bubble you hear the same things in every bubble this time is different it's a different financial world it's a new financial world in fact Groucho Marx went to his broker at some point said you know I just don't understand how these prices just keep going up and the broker said to him well you just have to understand that it's a global economy now and this was 1928 in 1929 gee I think I've heard that some times since then some professional speculator since that the market was overheating the more astute got out during the summer Monday apparently killed Kennedy according to Jill Kennedy later recollections he said if the shoeshine guy knows as much as I do about the stock market maybe it's time for me to get out in September the market became increasingly volatile behind closed doors President Hoover's and ease was growing Herbert Hoover did keep making inquiries among his Wall Street friends asking if he should be concerned and he received a memo from Thomas tabula montt who is the senior partner of JP Morgan and company grandfathered said in that letter the market will correct itself and it doesn't a period that would not appear to be any need for any kind of government intervention in the market Lamond reassure Hoover that there was absolutely no cause for concern and the memo ended with the line the future appears brilliant [Music] five days later the stock market crashed no one knows what triggered the sudden loss of confidence that happened at the end of Wednesday 23rd of October but out of nowhere a sharp fallen automobile stocks provoked a frantic last hours trading millions of shares were suddenly sold the next day the great crash of 1929 began October 24th 1929 black Thursday is often considered to be the beginning of the crash there was really a tremendous drop was scared a lot of people it is impossible to underestimate the shock a sense of stunned disbelief people panicked as the market just drops and drops and drops desperate for news thousands gathered outside the stock exchange tremendous crowd standing there very grimly staring ahead men who had just been wiped down city officials are so alarmed by this that they sent 400 Mounted Police fearing that there's going to be a kind of bastille like invasion of of the stock exchange and it said that there was a strange murmur in the air that there was a very very strange kind of haunting sound which must have been the cumulative voices of all of these people sharing their concerns the popular reaction is one of this can't be happening a visitor from Britain was there that day too Winston Churchill had invested much of his own money in the US stock market and had decided to pay a visit I happened to be walking down Wall Street at the worst moment of the panic and the perfect stranger who recognized me invited me to enter the gallery of the stock exchange I expected to see pandemonium but the spectacle that met my eyes was one of surprising calm and orderliness the twelve hundred members of the stock exchange were walking to and fro like a slow-motion picture of a disturbed ant heap offering each other enormous blocks of securities at a third of their own prices [Music] Churchill was to lose a fortune in the crash that day outside the crowds continued to wait for news rumors were fueling the mounting panic once the crash is underway the real question becomes one of confidence when you lose all confidence in the economy good and bad go down together and so the chief investment elite is at great pains to try to restore that confidence to convince people that the economy and the stock market is sound the bankers knew they had to do something to avert a total financial meltdown a Times journalist watched events unfold the crowd grew thicker and noisier and then there was an eddy in the middle of it and a man in shirtsleeves was pushing his way across the street in the direction of the Morgan offices this was Charles E Mitchell chairman of the National City Bank he pushed his way into the offices of the house of Morgan and a little later we learned what he'd gone thought Charles Mitchell had been summoned to a meeting of the offices of JP Morgan around the table before other leading bankers including Richard Whitney vice-president of the New York Stock Exchange these were some of the wealthiest businessmen in America representing around six billion dollars in assets chairman was Thomas Lamont I think it was a great shock to grandfather he did not foresee that anything like the great crash that took place what happened grandfather called a meeting at his office at 23 Wall Street or some of the leading bankers in town and figured out what they could do to support the stock market which was plunging what they came up with was a plan to put together a pool of 250 million dollars and those funds would be used to support a key list of stocks at lunch time Richard Whitney marched across the street back to the trading floor of the stock exchange with a huge injection of the bankers cash kwitny hope to get the market moving again Whitney parades over to the desk where US Steel is being sold and buys twenty five thousand shares of US Steel at a price well above well it was then selling for and then makes a similar promenade to other blue chip stocks and makes a similar purchase the idea being we will now restore everybody's confidence in the market and other great financial Titans of the time including john d rockefeller make similar purchases hoping that this symbolic act will turn the time and it worked such was the magical power of the Whitney name and the Morgan name that stock suddenly turned around and started to go up by now news of the meeting had leaked out and journalists were desperate for information grandfather was meeting with a group of reporters who were assembled on Wall Street outside of the his Bank office his style was always to stay calm and never say anything that would cause that would erode people's confidence in the stock market silver had mr. Lamont received us with a manner so reassuring because like the man who comes on the stage of a burning theater and urges everyone to keep perfectly cool stating there is no cause for alarm there has been a little distressed selling Stock Exchange and we have held a meeting to discuss the situation we have found that there are no houses and difficulty and margins are being maintained satisfactorily grandfather many others felt that the worst was over but they were very very wrong over the weekend the bankers interventionists seem to have worked trading on Friday and Saturday was calm and uneventful President Hoover also tried to steady nerves by repeating a mantra that has been used during market crashes many times since the fundamental business of the country that is production and distribution of commodities is on a sound and prosperous basis but in the offices of the financial district there was total kills why are things that we forget is how a primitive the technology was so many stocks traded on October 24th that it took four hours for the ticker to print all of the stock trades after the market had closed the ticker hopelessly swamped fell hours behind the actual trading and became completely meaningless all night long the lights blazed in the windows of the tall office buildings were margin Clark's and bookkeepers struggled with the desperate task of trying to clear one day's business therefore the next day began they fainted at their desks the weary runner fell exhausted on the marble floors of banks and slept on Monday the stock tickers running out of tape panicking investors desperate for the latest share prices jammed the telephone lanes between New York and other major cities for the first time many speculators were discovering the downside of easy credit and buying on margin a fairly significant number of people who were buying stocks in the 1920s were buying it with borrowed money and of course the wonder of buying stocks with borrowed money is that the gains are tremendously accelerated and magnified on the way up and that of course on their way down the entire Machinery's thrown into reverse and the losses are also magnified all these people who had borrowed to buy stock now had to put up more collateral and this was something that had not happened as the market had gone up and up you've got twenty five dollars down for a hundred dollar stock but now of a stock has dropped so what happened is the broker just that had made all these loans got very concerned that the loans wouldn't be paid back people got calls to bring in more cash or their stocks would be sold account needs six hundred dollars unless this amount received before 1:00 p.m. Tuesday will sell all securities in your account consider this notice to that effect and that's a difficult thing to do some people didn't have additional cash to bring in or they they took them some time perhaps to do it but the brokers were very uneasy they couldn't wait and so Monday the market begins to fall even at a steeper rate than it fell on Thursday in fact this would turn out to be one of the very worst days ever in this in the history of the United States stock market [Applause] 1929 when the stock market crashed I was a very young lady just seven years old however I do remember bits and pieces of that day very clearly in my memory we didn't have many means of communication and when something extraordinary happened the papers would put out an extra as that that's what it was called an extra for two cents and a little boys and their little pea caps would come running through the streets screaming extra extra read all about it and invariably somebody in the house would go down and buy a daily for two cents and then we would know what happened that's how we found out about the crash at the time Vera was with a family friend but news came that the friend's aunt had lost everything the little lady was crying quietly she was crying quietly and wringing her hands and wringing hands and walking from room to room to room so that was my actual memory of that day [Music] on Tuesday morning some of the most famous names in corporate America saw their share price plummet US Steel Radio General Motors stocks that had been symbols of the boom years on Thursday there were tremendous waves of selling that just kept coming this time the selling was so powerful and so relentless there was no lunchtime meeting at JP Morgan clearly the volume of the sales overwhelmed any possibility of the bankers trying to stem the tide by evening Tuesday all American stocks were worth about 22% less than they were when the market opened in the morning on Monday 36 hours you lost 22% of the value of American industry Hoover was president and he and Andrew Mellon the the secretary of the Treasury were way to the right and felt that it was not the government's job to interfere with this they believed in pure unfettered capitalism and so they did very little or nothing to alleviate the crash they said it'll solve itself the market broke very sharply and a lot of people were wiped out with it it was very painful almost everybody lost money as has happened now all the markets not good today your stocks look fine dancing it's estimated that by the end of these five days trading 25 billion dollars worth of personal wealth had simply disappeared the stock market continues to Sag without end have orders in to sell everything I figure I'll have about 500 left if I'm lucky a humble ending to a potential profit not four months ago of nearly a hundred thousand the least I say to myself I lost all in the greatest panic in history I was very lucky I never lost my job I did get a cut in salary fortunately my employers were wealthy people and when they told me about this they said why are you smiling I said I thought you heard of fire but those who could afford to face their losses with black humor I am one of the man that Wall Street has Sean when I was a little girl a patron of art left me a million dollars for my musical education but I thought I couldn't live on the income of a million dollars so I asked all my rich friends for tips on the market they aired them to me and I lost my million now the only thing I have left is this chinchilla coat of mine from and on panel key if you're lucky enough to have a million dollars hold everything and don't may the market another performer who had gambled and lost was Groucho Marx his reckless speculation cost him everything he'd earned the fate of Alice Austin the photographer from Staten Island was also typical of those who had been lured into the market without realizing the risks basically she loses everything in 2930 her account is wiped out and it comes as a shock for for Alice Austin and I don't think she believes it like a lot of people you just can't believe it and she thinks all I have to do is to wait a little bit and the market will come back and she continued living as if she was rich and she mortgaged Alice ocean mortgaged her house not to pay her bills but because she once again wanted to take a fancy trip to York my father lost everything he was losing everything but he was 22 he took it magnanimously you know is when you're 22 it isn't as traumatic the people around him were impor it'll establish people in their 50s and 60s and were losing their life savings were in an absolute panic not everyone coped with their losses although the number of suicides has been exaggerated to some it seemed the only way of it I know that people read about the stories on Wall Street of people opening the windows and their offices and jumping out that actually happened that isn't an urban legend people did commit suicide people who had work 30 and 40 years on Wall Street and had amassed fortunes within a period of days lost everything I'm sorry I was unable to return the two books until now the conditions down in the financial neighborhood have been such as to keep us working yesterday a woman jumped from the roof of our building 44 floors right past our window I saw her body lying in the street and the sight was so harrowing that I became half sick [Music] the effects of the catastrophic crash and wallstreet were pulled out across America even those who had never owned shares and who'd never benefited from the stock market boom became victims to the crash had undermined Americans faith and their fragile banking system made up of thousands of small-town banks at lack the size of repetition to convince customers that their money was safe as confidence in the economy sank further a domino effect began in 1931 over 2,000 banks failed after the crash the banks closed that I think was affected as a little more seriously us meaning us the people of my stature many people had money in the bank little bit of mine a couple of hundred dollars you know thousand dollars maybe there was no infrastructure then there was no Federal Deposit Insurance Corporation the guarantee people's deposits there was no way to back up the banks so if the banks had made bad choices you as a depositor paid for it you went to go get your money it wasn't fair and then people would hear that the bank down the street wasn't good and they worried about their own bank and then it would cause a run on their bank and it it became a terrible vicious cycle and something like 3,000 banks closed in the following couple of years after that the whole financial system then seems not just unstable but worthless after that when people save money they were very leery of banks and money went under the mattress the stock market crashed in 1929 did not create the Great Depression but it did start a sequence of events that eventually culminated with the Great Depression well you know what some of this is gonna sound sort of familiar the banks were loaning money for the stock market that companies were loaning money that brokerages were loaning money and when that those prices fell all that money just disappeared almost immediately companies began to feel the pinch of not having the capital and having lost money and they began to layoff people to let people go to shut down production there were mass bankruptcies there was a liquidity crisis of exactly the same kind we have today that is to say all kinds of businesses could no longer get loans to keep themselves afloat even if those businesses were entirely solvent they couldn't get the kind of short-term commercial credit to pay their workers to buy new inventory to pay their suppliers and so they began going bankrupt and as they went bankrupt they laid people off and as they laid people off demand fell and this is what a does traumatic damage to the whole society so traumatic that it's second only to the civil war in in in American memory as a tragic moment in American history my father had a modest-sized insurance brokerage agency one night at dinner my father said that he had to fire an employee and I very cavalierly said well he'll be able to get a job won't he and my father said no he's an older man who isn't very capable and I don't think he can and at that point my father burst into tears it was the first time I had ever seen my father cry [Music] there was such a change in our lives and all the people around me after the crash many of my girlfriend's fathers lost their jobs and they couldn't pay the rent they were evicted the poverty was really all around us men had no clothing they were in rags really rags they used to wrap their feet up in newspaper and put them in cardboard makeshift shoes to walk around the street and then if you took a walk over to Central Park you saw this big area a deserted reservoir that had been drained and they made little Hut's of cardboard boxes and they would sleep there overnight and they called it Hooverville because that was the name of our president at the time and of course all this stock market crash and all this poverty was of course put in his lap it was really really pitiful like many others the photographer Alice Austin struggled to keep up mortgage payments as the Great Depression too cold a few years into the depression alice austin runs out of money there is nothing left she is out of her house they take her to a poorhouse and it's a poor house out of a Dickens novel and she lingers there for a couple of years miraculously her photographs are discovered a fewer photos are sold to time and Life magazine and that earns her enough money to move out of the poorhouse and into a decent retirement home in a sense her photographs come to her rescue and take her out of poverty and into year two of decent living Paul Warburg who so accurately predicted the crash and the depression saved the bank he ran from disaster by getting out of the market and time but it was of little consolation to him my great-grandfather probably never really recovered his own personal equilibrium after the crash to be called the cassandra of Wall Street I think was very painful for him and if we all remember Cassandra she couldn't just see the future she was also doomed to be disregarded and I think it caused him to go into a depression of his own I'm not sure that he ever would have said I told you so I think he felt that it was really tragic that this worldwide depression could have been averted or headed off or at least it didn't have to crash so hard and and I think it probably led to his early death when he died it was the last year of Hoover's presidency and there was no end in sight but in 1932 twelve years of Republican rule came to an end hi Franklin do solemnly swear that I will faithfully Democrat Franklin Roosevelt was elected president in a landslide victory his first task was to restore confidence seen as a savior Roosevelt promised a new deal for the American people and to regulate the financial system money the new president acted quickly he guaranteed bank deposits and introduced laws forcing bankers to operate on the strict government supervision [Music] [Applause] an investigation into the crash was launched by the Senate Banking Committee it would last more than three years and the 10,000 pages of testimony blackened the reputation of Wall Street the committee's ambitious lawyer Ferdinand pakora challenged the banking elite to account for their behavior who calls these bankers to testify and what does he learn he learns that Charlie Mitchell of National City Corp had sold stock to his wife to avoid taxes richer Whitney who had so boldly bought stock on Black Thursday lost money of his own and began borrowing from his brother and then when that didn't work he began stealing from customers he ended up in jail doing time the most prestigious bank in America JP Morgan was also found to be far from blameless the heating's uncovered evidence of a list that offered preferential deals on stocks to friends and high places including a former president not only Morgan partners and pork and family members but also prominent corporate executives and even some politicians Calvin Coolidge was on the preferred stock list for example that was a practice that a lot of people felt was wrong Fernan pakora had a great quote he said it was shocking disclosures of low standards and high places which I love because you know you could say the same thing today in response to public outrage at the bankers dirty dealings President Roosevelt set up the Securities and Exchange Commission its task to clean up Wall Street at its head he chose a man who knew more about unethical practice than most President Roosevelt when he introduced the Securities and Exchange Commission to regulate Wall Street named his old friend and supporter Joe Kennedy to be the first chairman and that's putting the Fox in the chicken coop although Roosevelt restored confidence in the banking system the Great Depression would last until the outbreak of World War two then as now the globalized economy meant that the crash and subsequent depression rippled out across the world in Britain there was a slump in manufacturing and millions lost their jobs Germany still suffering from defeat in the First World War was hit even harder so many people had their life savings destroyed during the Great Depression that had created in many countries a desire for some authoritarian government that would save them that would rescue the economy no doubt that crash and the depression strengthened anti-capitalist movements the Communists had take it over in Russia and the were rising fascist movements Mussolini was already in power and in Italy and Hitler's political base was growing in Germany and when american-style free-market capitalism suffered from this Wall Street Crash followed by a depression it just strengthened those people who wanted to say there's a better way while communism and fascism prospered many nations put up barriers to prevent free trade and turned inwards in an attempt to save that economies economic nationalism led to trade Wars and later World War eighty years on those who remember the bubble of the twenties and the crash that followed feel that they have seen it all before I don't think we learned anything from it I have found that people's memories are very short they make the same type of leveraged commitments where they don't look at the downside risk you have a lot of cheap credit in the 1920s now we've had cheap credit and people have speculated in houses and now the housing bubble has collapsed you have a heavily leveraged American consumer he's in debt up to his eyeballs and he can't sustain that debt the subprime mortgage crisis is a symptom of that in the 80s and 90s faith in the free market had revived and as optimism returned many of the financial regulations which Roosevelt had introduced were felt to be outdated and were slowly dismantled yet again a lightly regulated market allowed speculation to grow unchecked [Music] we are now reaping the whirlwind of that deregulation and in that sense we're in exactly the same position as people were in 1929 when the government turned a blind eye to what was going on in the financial world what I do hope and I do think is that the government has learned it's lessons and is trying to take steps that are much more active and much more aggressive than what was taken in in the 30s to try and stem the pain and stem the decline the hope is that such steps will work but the lessons from the crash of 1929 are that history repeats itself that human folly and greed are much stronger forces in financial affairs than reason and restraint [Music] [Music]

Channel: TradingCoachUK

Views: 654,514

Rating: 4.7223582 out of 5

Keywords: Wall street, forex, stocks, commodities, gold, oil, trader, warren buffet, million dollar traders, traders by the millions, market, trading, analysis, stock, technical, investment, futures, options, finance, day, currency, markets, news, euro, financial, bloomberg, system, stock market, hedge fund, education, dow, business, charts, trump, trade war, market crash, top 10, top 50, billionaire, trillionaire, lifehack, the great depression, china, 1929 market crash, secret, mid term

Id: qlSxPouPCIM

Length: 58min 36sec (3516 seconds)

Published: Fri Jul 06 2018

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[u/Jas9191]

Im not going to watch the entire hour, especially because you chose to start us at these exact scenes, but I will say that the way out of WW2 and Economic Depression ended up being the Democratic Socialist President, FDR's radical big government idea. For the first time in US History we had no banking crashes for 50 years. We grew the largest middle class.

It's not "more government" or "less government" it's what kind of government.