The greatest stock collapse in history sets off the greatest communications jam in history. Undersea cable and phone lines to Europe can’t handle the load. Western Union hires a fleet of taxis to help deliver telegrams – all margin calls – which sends hordes of people across America charging out of homes to banks or brokerage offices with their certificates. Insurance companies are flooded with calls from people asking to cash in or borrow on their policies.
All across the nation, people crowd into brokerage houses to watch the tickers spill out the continuing disaster. With the tape two hours behind actual sales, nobody knows how bad the disaster is – just that they’re wiped out.
There are few suicides that day, contrary to popular belief. A coal dealer in Providence, Rhode Island, suffers a fatal heart attack. A Kansas City insurance man shouts, “Tell the boys I can’t pay what I owe them!” Then he puts two bullets into his chest. On the other hand, at Little America in Antarctica, a member of Commander Richard Byrd’s expedition tells his pals that while he’s bankrupt, he can’t think of a better place to be without money.
There are suicides, but not immediately after the Crash…a Milwaukee man’s note leaves his body to science, his soul to Treasury Secretary Andrew Mellon, and his sympathy to his creditors. A New York commission merchant hurls himself into the Hudson River. The cops find his pockets jammed with margin calls and $9.40 in change. Comedian Eddie Cantor gets a laugh by impersonating a hotel clerk, asking if the broker guest wants the room for sleeping or jumping.
By closing time at 3 p.m., nearly all of the 751 investment trusts have been wiped out. So are Groucho Marx, Irving Berlin, and Eddie Cantor. Clarence Darrow, aged 73, is broke. Rex Stout, hard up for money, needs a quick hit to stay solvent. He starts whipping out a series of detective novels about a fantastic sleuth named Nero Wolfe.
Among those heavily beaten in the Crash is Winston Churchill, who invested in Simmons and other American stocks on the advice of his friend Bernard Baruch. His fortune eliminated, Churchill must now survive on a combination of his Parliamentary salary and his writing ability. He starts work on the life of his ancestor, the Duke of Marlborough.
Financier Joseph Kennedy, however, having sold his stock before the crash, avoids damage. So does Charlie Chaplin, who also dumped his stocks in 1928.
Others are simply unaffected because the stock exchange does not enter their world. A 25-year-old physicist named J. Robert Oppenheimer, studying in Gottingen, Germany, is busy publishing the last of 16 papers that win him an immense reputation as a theoretical physicist. Harvard, Berkeley, and California Institute of Technology in Pasadena all offer him jobs. He takes jobs at Berkeley and Cal Tech, lecturing on quantum physics.
OTHER MILITARY LEADERS
Men are crying on the Exchange floor. Nearly 10,000 people gather in the rain on Broad and Wall Streets. People of all religions flood up Wall Street to find solace in Trinity Church. The tickers are still two hours behind the floor when the bell rings to close trading at 3 p.m.
At 5:32 p.m., the final quotation clatters across the Trans-Lux tickers, spelling the end of the Roaring 20s, “Total Sales Today 16,383,700. Good night.” The share loss value in New York alone is $10 billion. The worldwide losses are estimated at $50 billion. Later estimates of losses are as high as $74 billion. The Dow Jones average has dropped 48 points.
Names large and small are battered by the crash. Edwin S. Porter, who helped Thomas A. Edison invent the movie camera and produced his first films, is bankrupted. Charles Schwab loses millions. Even Col. George C. Marshall, commanding an infantry regiment in Kansas, is hard hit.
Polly Adler, who owns New York’s most famous house of ill repute, is vacationing in Canada, and fears her operation will be out of business. She’s wrong. The now-broke brokers still shuffle into her bordello. Instead of hiring a girl, they pony up $1 a pop for a stein of illegal beer (or $30 for a bottle of champagne), and drink themselves under the table. One customer, noted for gentlemanly behavior, summons a particular girl, and beats her savagely. Next day he goes to his office and shoots himself.
As millions of Americans face the sudden loss of jobs, savings, and homes, the crash starts to whip around the world. The London and Paris stock markets collapse next. Then the major banks and brokerage houses of Europe.
One of the early victims is German aircraft designer Willy Messerschmidt. The young designer is planning to invade the American market through Rhode Island’s Eastern Aircraft Corporation, but that outfit is bankrupt. With it go Messerschmidt’s hopes of finding money to finance the secret air force Germany is building. He needs another source of money to turn the aircraft on his drawing board into reality.
But the Weimar government, still obeying the orders of the Army, makes up the gap with subsidies. Messerschmidt gives up his American plans and returns to his drawing board and his new design – the Bf 109 fighter.
Next victim, BMW. Hard-hit by the crash, they cancel one of their projects: designing a four-engine bomber for the Reichswehr.
The German economy, dependent on American and British loans and support, collapses. When foreign loans and investment dry up and Auslander investors scream for German interest payments to cover their own losses on Wall Street, the results are inevitable. American banks pull their money out of Germany just when Germany needs it most. With the money gone, German businesses have to cut back, which leads to mass firings. In October, Germany has 650,000 unemployed. By the end of November, more than 2.5 million Germans are out of work.
In 1923, Germans had vast sums of worthless money. In 1930, money is unbelievably scarce. Banks offer 8.75 percent interest on three-month deposits. Corporations have to pay lending banks up to 15 percent interest. Private individuals face 25 percent payments on their loans. The banks start failing anyway.
The Crash pounds Germany. Already humiliated by defeat, battered by inflation and French occupation, divided by violent politics, the Great Depression is the sledgehammer that smashes Stresemann’s frail latticework. Laborers lose jobs. The middle class is shoved into poverty when their businesses close. Shopkeepers lose their stores. Farmers cannot sell their crops for enough of a profit to make their mortgage payments. The world’s longest breadline shuffles down the Kurfurstendamm. Unemployed laborers wear placards around their necks that read: “Looking for work of any kind.” Other young men give up and simply spend their days playing cards, wandering through parks, or riding Berlin’s U-Bahn. Like their American and British cousins, Germans try selling goods on the streets, often offering house-cleaning services to those still with money. The next descent is begging, and after that, crime: Berlin’s theft rate jumps 24 percent between 1929 and 1932.
Farmers are blasted, too…like in America, banks foreclose on mortgages, tossing agricultural workers out of jobs, sending them to cities to compete for jobs that aren’t there. Berlin’s unemployment rate skyrockets from 133,000 in 1929 to 600,000 in 1932. And not just laborers feel the pinch: half a million white-collar workers get pink slips, too.
Municipalities and states, trying to pay unemployment, find themselves hamstrung too, when their tax bases disintegrate and their American loans are called in. The government tries cutting costs by cutting salaries as much as 23 percent, which infuriates both workers and their unions. Feeling betrayed by their employers, government workers join the Nazis or the Communists.
Bitter crowds blame the schlotbarone, the Ausländer, and the Jews. Misery rules the Reich.
Hitler is delighted. “Never in my life have I been so well disposed and inwardly contented as in these days. For hard reality has opened the eyes of millions of Germans,” he says.
Communists are happy, too…they recruit members from the gangs of youths committing mayhem around cities, creating the Red Front-Fighters’ League, which stages parades and rallies. They usually end in fighting with the police. The Communists also organize rent strikes, agitate to schoolchildren, and most importantly, stake out bars and taverns as their own, defending their favorite lager against all forms of capitalism. Their membership flies from 117,000 in 1929 to 360,000 in 1932.
Even so, the Communists have their own weaknesses…its leaders seem more concerned with arguing theory with Social Democrats than battling capitalists…the leadership, men like Walter Ulbricht, parrot Moscow’s line despite its contradictions… membership turns over frequently, as much as 50 percent in 1932…and most importantly, its members are mostly from the unemployed, who have little money by definition. Between 1929 and 1933, many of the Communist-owned pubs or bars go out of business, turning over the all-important beer business to Nazi-owned (and therefore subsidized) taverns.
By early 1930, German unemployment hits 6 million. Suddenly, Nazi rhetoric about imprisoning Jews, Communists, and “November criminals” strikes the German masses as not craziness, but viable solutions to Germany’s desperate problems. Hitler’s words are crude, but he promises the Germans something they need: food and jobs.
So does Communist rhetoric, which blames Germany’s problems on their primary enemy, capitalism. While the Communists gain great numbers of adherents, their class-based appeal limits them to one stratum of society: laborers. Communist speakers assail and thus alienate the middle classes, small and large businessmen, bankers, the clergy, industrialists, nationalists, military, and schlotbarone.
On January 1, 1930, the Nazi Party marks the beginning of a new decade and new era when Stormtroopers kill eight Jews in Berlin. As the year rolls on, the Brownshirts will become more visible and violent, molesting Jews in cafes and theaters, and disrupting synagogue services. In the Reichstag, Brownshirt deputies break up debates and attempts to pass useful legislation by starting fights and hurling inkwells, desk drawers, ledgers, chairs, and driving opponents from the chamber. Once the session is wrecked, the Nazis sing their marching songs. In early 1930, they gain a new song, for amid the chaos of Germany that year appears one of those ephemeral characters who tread the stage of history for a few minutes, earning a notoriety and fame they do not deserve. In 1930, such fame is thrust upon a 21-year-old Berliner named Horst Wessel.
By day, Wessel is a blond, muscular law student, rebelling against his preacher and Freemason father. By night he is a dedicated Brownshirt, fighting Reds in Berlin’s Friedrichshain district and writing poetry, including a forgettable verse named “Raise High the Flag!” It immortalizes comrades slain in street battles.
After penning the poem, Wessel sets it to the tune of a Viennese cabaret song from the turn of the century, and mails it to Goebbels’ paper Angriff. Goebbels publishes the song in September 1929, notes that Wessel is a perfect Aryan physical specimen, and that should be the end of it.
