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The Ponchatoula Times
Ponchatoula , Louisiana
October 16, 1986     The Ponchatoula Times
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October 16, 1986

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e 1929 Stock Market Crash familiar sound in 1986 Conclusion By B. Vincent McMahon Exclusive toThe Times coming under the spell of a local stockbroker Churchill had been speculate heavily. The Wall Street fever of that autumn had afflicted Churchill had written his wife: "Since my last from Santa Barbara I have another 1,000 pounds by speculating in a stock called Simmons Mattress. It domestic furniture business. They say you can't go wrong on a Simmons There is a stock exchange (ticker) in every big hotel. You go and watch flgures being marked up on slates every few minutes. Mr. Van Antwerp me. He is a stockbroker in one of the leading firms. I think he is a very man. This powerful firm watches my small interests like a cat and a mouse." Van Antwerp was a member of E.F. Hutton, a reliable company, but the brokers were impotent in the panic selling of Wtnston's last week in York, though he had not been wiped out, his financial independence had the reams of ticker tape. Throughout the coming decade he would to write furiously to keep his family and style of living afloat. 11, 1929 the Wall Street Journal printed its thoughts for the day, quoting "Don't part with your illusions; when they are gone you may still but you have ceased to live." worsened steadily, with only few temporary setbacks, from the 1929 to the spring of 1933. Other estimates for March 1933 range from Nathan's 13,577,000 to the National Industrial Conference Board's the American Federation of Labor's 15,389,000, and more than 000 on the Congress of industrial Organization's. The cuts in steel played part in precipitating an epidemic of wage cuts in the fall of 1931. prices shot sky high almost overnight during the last years of WWI peasents were in the trenches). Like gold, farm land was limited in and was of great potential value. Prices skyrocked from $1(30 to $25(3 and to $400 per acre, without regard to the producing power of the land. During insurance companies were bidding against one another for the of making loans on Iowa farms at $90, $10(3, $1,50 per acre. Prices of were soaring. Everyone was on the high road, not only to comfort, but and luxury. Second, third and fourth mortgages were considered just as bonds. made on March I, 1920. crisis swept France and Germany and they all nearly foundered. Now than ever it is important to remember it did not just happen here. In April representatives of nearly all the countries of Europe met in London with s of the major wheat exporting nations, of which the United States, was one of the largest. The gathering produced an international wheat tied to production, in hopes of causing the price of wheat to rise to a it would be profitable to farmers, yet still "reasonable for consumers. 1925 most countries had recovered from the economic disruptions caused by of 1914-18. There followed a few years of rapid growth but in 1929 the prosperity ended. Then came a precipitous plunge that lasted until 1933. This dark period was followed by a gradual, if spotty, recovery. The however was aborted by the steep recession of 1937-38. it took a still cataclysmic event, the out break of World War II, to end the Great one seems to know definitely what caused the stock market crash. John Gailbraith is considered the best authority (The Great Crash 1929; Time .). He blames two causes (1) the downturn in the indexes, (2) the collapse of Hairy Business Empire in England (Sept. 20, 1929). David A. Shannon (The Great Depression) points out a third cause, the drastic of lowa farm loans under orders from the Federal Reserve Board after 1929 crash. The tidal wave of foreclosures by banks and insurance companies over the farm belt in 1931 and 1932 Finally in the East on Oct. 11, 1929 State of Massachusetts Dept. of Public Utilities blocked Boston Edison's to split Its stock four to one, followed up by an investigation of its rates. In its infancy put lvar Kreuger (The Match King) on its front cover. later by Samuel Insull, The Utility King, but when these two geniuses uncovered (with their pants down) Time Magazine put Warden Lawes of Sing Prison on its cover. Fisher said the decline was a purge to discharge the lunatic fringe. E. Mitchell sailed into New York harbor and lectured reporters. "Leave alone and it will correct itself." lbson threw cold water on this good cheer. He advised, "Sell out and buy gold." The stock market at the onset of the Depression drifted lower and lower, all very gradually. Sitting in the White House amidst this debacle President Hoover observed, "My own experience ... has been that words are not of any great importance in times of economic disturbance." It was at this time he came up with his most memorial expression, "Prosperity is just around the comer." Men meeting one another would pull their empty trousers pockets inside out, a signal of "The Hoover Flag." This aroused the rage of Simeon D. Fess, Chairman of the Republican National Committee, who charged: "Every time an administration official gives out an optimistic statement about business conditions, the market immediately drops." Crops were rotting in the fields, milk was being dumped into ditches by dairy farmers. All the while in the cities and towns people were without food and babies were deprived of milk. Thousands of unemployed men were in the streets. Store merchants were going bankrupt and the newspapers were full of editorial pe about cleaning up your plate and tightening your belt. Agriculture conditions were far worse in the South with their tenant farmers and sharecroppers. Hoover believed firmly that relief was a matter of state and local governments. Only after three winters of Depression did he finally consent to any federal relief action. For this he earned the resentment of all classes of Americans. Here was a man who fed the starving Belgians and his fellow Americans, victims of wind storms and floods, yet he was imperious to the suffering of the Depresslon's unfortunates as he ruled in the White House wearing his high starched white collar. The working people referred to stock brokers as wheelers and dealers and fat cats. Now they were suspicious as to how some of them managed to escape unslnged from the big crash. Two were notable: Chase National's Albert H. Wiggin, variously president, chairman of the board, and chairman of the veming board. Wiggin was a stock speculator and operator but not a mboyant one. In 1929 he received $275,000 salary as head of Chase. But this was peanuts, he was also director of some fifty-nine utilities, industrial, insurance and other corporations who sliced him into the pie. Example: Armour and Company paid him $40,000 per annum; $20,000 a year from the Brooklyn- Manhattan Transit Corporation; etc. plus a number of private companies of which three were personal holding companies, two of whom were named after his daughters; all financed by Chase. In one named after a daughter, he sold short 42,506 shares of the bank's stock, beautifully timed for the crash, netting him $4,OO8,538. His defended this transaction and others financed by Chase to its own officers, allowing them to speculate on the grounds that it developed an interest in their institution. At the end of 1932 Mr. Wiggins requested that he not be re-elected chairman of the governing board of the bank. He announced that at sixty-flve he was tired of promoting the bank. The Equitable Trust Company which emerged with Chase represented the Rocldellers and decided to dump Mr. Wiggins to make room for Winthrop W. Aldrich, but being generous men they gave Wiggins a golden parachute, $100,000 a year for life. Wiggins' retirement fund aroused the wrath of the Senate "Doges" who investigated and found the "golden para- chute" was at his suggestion. Mr. Aldrich, his successor, said it was all a horrible mistake. Mr, Wiggins, an of' school boy, renounced this compensation. The head of the National Ci,, Bank, Charles E. Mitchell, was nicknamed after a comic strip "Headline Harry.' After the Crash he lald low until March 21, 1933 when into his Fifth Ave. mansion marched Assistant U.S. Attorney Thomas E. Dewey surrounded by the media crowd of that period. Dewey slapped the cuffs on Mitchell and entoned, "You are under arrest for evasion of income taxes." Mitchell had sold his bank stock to his wife but unfortunately the stock market crash wiped out the value of the stock. "Why did you sell It to your wife?" a senator asked. Frankly, for tax purposes," he replied. The jury acquitted him on all counts. The government sued in civil court and won a judgement over a million dollars. He paid up on December 27, 1938. On March 4, 1932 Roose- velt in his inaugural address promised to ddve the money changers from the temple. People thought Mitchell would be the first. Richard Whitney succeeded to the presidency of the New York Stock Exchange in the spring of 1932. His boorishness upset a Senate committee investigating the market. He put on his "sack clothes and ashes" when Thomas E. Dewey the young Iocklnvar again rode out of the West, Owosso, Michigan, and nailed him on a charge of grand larceny. His stock brokeraqe firm was bankrupt. EYE CARE SURGERY CENTER INTRODUCING THE EYE CARE AND SURGERY CENTER /N HAMMOND The resources and technology of some of south Louisiana's most experienced eye physicians and surgeons are now available in Hammond. For years, the Eye Care and Surgery Center has provided south Louisianians with the most advanced care for eye diseases such as cataracts and glaucoma. Opened September 2, the Eye Care and Surgery Center opens its doors in Hammond to provide area residents with the same superior care that has been established and maintained in Baton Rouge and other cities in the state. The skills of an exceptional team of ophthalmologists are now available to Hammond residents. TOgether, Drs. William R. Williamson, Louis G. Perez, Fay L. Woo, Benjamin L. Willis and Thomas E. Hebert are committed to total diagnostic and surgical eye care. The Eye Care and Surgery Center's 1500 square foot office facility is open Monday through Friday. Please call 542-5624 for an appointment. Happy endings start with new beginnings, and the opening of the Eye Care and Surgery Center's Hammond office means the beginning of exceptional, convenient and cost effective eye care for Hammond residents. We're committed to seeing that you're seeing all there is to see. EYE CARE AND SURGERY CENTER Hammond: . 1801 Fagan Drive, Suite 6 (504) 542-5624 Medicare Assignment Accepted SERVICE AIR FORCE Airman Joseph D. Pepitone Ill, son of Mr. and Mrs. J. Danny Pepitone of 280 W. Willow St., Ponchatoula, La., and brother of Danita J. Pepitone of 2573A Carriage Drive, Murfreesboro, Tenn., has graduated from Air Force basic training at Lackland Air Force Base, Texas. During the six weeks of training the airman studied the Air Force mission, orqanization and customs and received special training in human relations. In addition, airmen who complete basic training earn credits toward an associate degree through the Community College of the Air Force. ARMY Travis A. Davis, son of Malcolm I. Davis of 1810 E. Park, Hammond, La., and Catherine E. Davis of Ponchatoula, La., has been promoted in the U.S. Army to the rank of private first class. Davis is a single channel radio operator with the 1 lth Signal Battalion in West Germany. AIR FORCE Larry R. Smith, son of Otis C. Smith Sr. of Winnsboro, La., and Eunice'D. Smith of Ponchatoula, La., has been promoted in the U.S. Air Force to the rank of captain. Smith is a logistics plans and program officer in Rock Island, Ill., with Head- quarters, Army Material Command, Air Force Liaison Office. His wife, Ronnie, is the daughter of Ronald Mitchell of 124 Aldene, Goose Creek, S.C. Blitz Up and beautification campaign for all business and residential areas of our city," reads the official proclamation signed Monday. Volunteers willing to join in the effort are being urged to meet in front of City Hall at 8 a.m. Saturday to begin the job in an effort at "making our city a more beautiful, healthful and inviting place in which to live." Sig I n a PAGE ONE outside the cit/, had not worked in some time and the city was still being billed for electricity to keep it blinking. The mayor said local motorists not used to the new traffic signal at Eighth Street should be made aware of its existence. The traffic signal changes were made as the result of requests made by Gideon to Merlin A. Pistorius, district administrator of the Department of Transportation and Development. Sept. 27, 1932, before this was known, he addressed-the St. Louis, Mo. Chamber of Commerce and spoke thusly: "One of the prime necessities of a great market is that-the brokers must be honest and financially responsible" and added the financial supervision by the exchange of its members would be so strict that "failure would be next to impossible". Thanks to the Whitney affair the Securities Exchange Act was passed In Congress in 1934, putting all the American exchange= under governmental regulations. The Securities and Exchange Commission (SEC) was set up to enforce the regulations. The chairman of the SEC, a future president's father was Installed, Joseph E. Kennedy. Black Thursday, Oct. 25, 1929. Variety theatrical paper headlined "Wall Street Laid An Egg." "We do not know why a great =peculative orgy occurred in 1928 and 1929. The long-accepted explanation that credit was easy and so people were Impelled to borrow money to buy common stock on margin is obviously nonsense. On numerous occuions before and since credit has been easy and there has been no speculation whatever. Furthermore, much of the 1928 and 1929 speculation on money borrowed at Interest rates which for years before, and in any period since, would have been considered exceptionally astringent. Money, by ordinary tests, was tight In the late twenties." (John K. Gallbraith, The Great Crash, 1929, P 172) In February 1932 President Hoover to President-elect Roosevelt: "it would steady the country greatly If there could be prompt assurance that there be no tampering or inflation of currency; that the budget will be unquestionably balanced even if further taxation is necessary; that government credit will be maintained by refusal to exhaust it in the issue of securities." If you don't believe he meant it, read the account of his dispersal of the Bonus Army from Washington by the peacetime regular army commanded by future World War 11 generals. The role of the stock market in the great tragedy of the Thirties must be seen in the collapse of securities values that affected first the wealthy and the well-to-do, and this was a vital group. In addition, the crash promptly removed from the economy the support it had been deriving from the Sl}ndin of stock manet gains. The crash was also effective in bringing to an end the foreign lending by which the international accounts had been balanced. The instinct of farmers who traced their troubles to the stock market was not too far off base. Had the economy been fundamentally sound in 1929 the effect of the stock market crash might not have been redundant. As the bartender said to the fellow ordering a drink, "Put your money where your elbow is." Andrew Mellon summoned up the philosophy behind the crash when he was Hoover's Secretary of the Treasury. He said, "It was to liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate" next time you are in Washington visit the National Gallery, one of the great treasuries of the world. Donated to the American People by Andrew Mellon through his dear friend Hoover after Mellon was nailed for not paying his fair share of his federal income tax. "Stock prices fell in record trading Friday, a day after the Dow Jones industrial average suffered Its biggest point loss in history." New York, Sept. 13, 1986 "The Dow dropped 34.17 to 1758.72 following Thuredly's record 86.61 plummet .... For the week the Dow lost a record breaking 141.03 points." The Detroit News, Ellen Frellich UP! Business Writer. The End TOUCH-TONE SERVICE A whcde new world of posdbili0es rkjht at your flncjertJps. It's fast dialing in emergencies. Easy for chil- dren and people with disabilities. And Touch- Tone service puts you in touch with telephone banking, shopping, information services and so much more. To order, call our toll-free number. We'll let you know when your service is working, and you just plug in your new Touch-Tone phone. Whether you buy or lease your phone, just be sure to check the bottom to see that the serial number ends in T or E. Then you'll know you're getting a true tone-dialingphone that will work with convenient Touch-Tone service.* Get Touch-Tone service for your home for only $1.57 a month. And save the Touch-Tone connection charge by ordering before November 30. For details, call on us toll free at 1800 722-1616. FREE Touch-Tone Connection! Order by November 30 and Save $22.99. South Central Bell A BKM.SOUTH Compe Also make Sure the set has a polarity guard (mo,t new ones do). [n aorne areas Touch Tone sets without polarity guards won't work with special services such as telephone banking. Services mentioned are available in most areas. Limited capacity in e areas. Rate and savings are different for businesses. Rates subject to change. Customers who[rove never had Touch-Tone mrvice also save a $S.22 one-time pfremium charge. This charge des not appl)" to customers who have had uch-Tnne service before. Additional one-time charge1 may apply for party. line customers. The regu!ar new pho.e service connection applies if ordering Touch-Tone with new service. O 1986 South Central Bell