n the summer of 1929 that an economic crackup was impending. He was aware of the continuing distress of the farmers, but did not attach significance to the fact that construction had been down for the three years and freight-car loadings declining, nor did he know that some insiders like Bernard Baruch, who had been on of the nation’s most successful investors, were quietly liquidating their holdings in the great bull stock market.

<><><><><><><><><><><><><><>

John Pearson, The Private Lives of Winston Churchill (New York: Simon & Schuster, 1991)

p. 225 ... on to Hollywood, where Churchill was feted as something of a star himself. They were also lavishly entertained by William Randolph Hearst at his legendary castle at San Simeon. Always thoroughly at home with press proprietors, Churchill made something of a hit with the megalomaniac publisher, and agreed to write for him. Randolph took advantage of San Simeon to lose his virginity with some rapdily forgotten female guest of Hearst’s. If Churchill was aware of Randolph’s escapades, he tactfully ignored them, and so, up to this point, the trip had been a great success. For Churchill, however, this visit to America had a gloomy ending. Throughnout the summer he had played the stock market, confident that he would come back with a fortune. Gambler that he was, he was speculating on tips from one of his millioniare admirers, the financier Bernard Baruch, and ignoring advice of brother Jack to play it safe. After Hollywood, he also enjoyed himself visiting battlefields of the Civil War (on which he was something of an expert), but he reached New York in time to witness a ruined speculator throwing himself from a window on Wall Street. The Crash of 1929 had come, and Churchill’s savings and his rash investments vanished overnight. He returned to England not in triumph but on the edge of ruin. He was to keep himself afloat only by prodigious efforts as an author and journalist, living over the next few years, "from mouth to hand."

<><><><><><><><><><><><><><><><><>

William Manchester, The Last Lion; Winston Spencer Churchill 1874-1932; Visions of Glory (New York: Dell Trade Paperback, 1984) (Copyright 1983 by William Manchester)

p.824 On August 3, 1929, the Empress of Austrailia steamed out of Southampton bound for Quebec. Among its first-class passengers were Churchill; his brother Jack; Randolph, now eighteen; and Jack’s young son Jonny. ... The Daily Telegraph had agreed to pay him [2,500 pounds] for ten articles on his trip. In additon, [1,000 pounds] in World Crisis royalties had arrived before he left London, and a sale of utility shares had brought him another [ 2,000 pounds]. He invested every shilling he could spare in the New York stock market. Financial security, he wrote Clementine from the ship, was "a wonderful thing." ........ The Canadian Pacific had put a stenographer-typist at his disposal for the journey across the continent, and Bernard Baruch had persuaded Charles Schwab to lend Churchill his private railway car, with double beds, private bathrooms, a parlor, a dining room (which Winston converted into an office), kitchen, servant’s quarters, a refrigerator, fans, and a radio. ... "The wireless is a great boon, and we hear regularly from [Horace] Vickers [his broker] about the stock markets. His news has, so far, been entirely satisfactory."

<><><><><><><><><><><><><><><><><>

Gordon Thomas and Max Morgan-Witts, The Day the Bubble Burst: A Social History of the Wall Street Crash of 1929 (Garden City, Double Day, 1979)

p. 322 At noon on Sunday, October 6, Bernard Baruch’s private rail car, hooked to the express from Chicago, glided into Grand Central Station in New York. Baruch had traveled to Chicago to collect the Churchills, all four of whom were now suntanned following their stay in California. There they had been guests of William Randolph Hearst, who messmerized them with the opulence and eccentricity of his lifestyle. In a letter home to Clemmie, Winston Churchill described Hearst to his wife as "a grave simple child - with no doubt a nasty temper -playing with the most costly toys," including two charming wives," a reference to Mrs. Hearst and Marion Davies, Hearst’s mistress. As usual, Churchill kept Clemmie fully informed on his financial affairs. In one "windfall," resulting from his New York broker investing for him on margin instead of purchasing shares outright as Churchill expected, he made 5,000. In another whim, he made 1,000 by speculating in the stock of a furniture firm called Simmons; Churchill was particularly taken by its advertising slogan: "You can’t go wrong with a Simmons mattress." Between amusing Baruch with his perceptive observations on Hollywood and its stars - Churchill thought Charlie Chaplin "bolshy in politics and delightful in conversation" - he carefully questioned his host about dabbling further in the market. Baruch explained why he ad adopted a cautious position. And yet, just as Richard Whitney had predicted to the reporter, the Great Bull Market had now seemingly shaken off its fetters and was rampaging on more strongly than ever. On the New York Stock Exchange on Saturday, U.S. Steel had leaped ahead almost $8 a share. General Electric’s surge was even more dramatic; it went up 10 points. American Tobacco achieved one of the most spectacular rises of all - a wonderous $38 a share. The Dow Jones industrial average regained more than 16 points during the dramatic turnabout. In San Francisco there was near-record trading in Transamerica and other issues. IN Chicago some brokers were said to have sent their clerks out to buy gargle to ease their sore throats from shouting. Balimore, Boston, and Hartford were swept by a wave of trading that often equaled the volume of earlier in the year. In St. Louis, Los Angeles, Philadelphia, and Minneapolis-St. Paul, the urge "to get into the market reached what one hard-pressed broker described as "an epidemic." Along thousands of miles of private wires went the cheerful news "the big boys" were behind this new wave of buying. With a flair that few could match, John J. Raskob encouraged the thought. Throughout Saturday he talked up his media contacts. Percy Rockefeller, the Du Ponts, Van Sweringens, and Billy Durant helped reinforce his message. After Saturday’s market closed there were few Americans unaware that, in the words of one reporter, "a financial revival equal in fervor to anything the Bible Belt can produce" was under way. Across the nation, still more hopefuls threw up their jobs, packed their bags, bid their families and friends fairwell, and headed for New York. A radio commentator said, with considerable justification, Wall Street had "taken on the appearance of a Gold Rush." The train that brought Baruch’s private car into Grand Central no doubt carried at least a few more speculators who quickly headed downtown to get the first glimpse of their Klondike. Even an investor as seasoned as Baruch could not but be surprised by the amazing about-face the market had made. Some Wall Street brokerage houses called in their staff this Sunday to change the tone of their market letters from somewhat somber caution to renewed optimism. And once again the phrase "organized support" was heard in the Street. P. 359 [Black Thursday, October 24 - 11:45 a.m.: following a brief official welcome by Richard Whitney (at 9:50 a.m.) Churchill is looking down on NYSE trading floor from the visitor’s gallery. ] Not unaccustomed to being present at moments of high drama, Churchill cooly observed a scene that seemed to him "one of surprising calm and orderliness .. There they were ... offering each other enormous blocks of securities at a third of their old prices and half their present value, and for many minutes together finding no one strong enought to pick up the sure fortunes they were compelled to offer." [Letter to wife, Clementine] - But whatever he thought about the day’s decline in values of the American stock he himself held or what he may have said about his loss to Percy Rockefeller, whose guest he now was, Churchill decided never to put into public print.

<><><><><><><><><><><><><><><><><>

John Kenneth Galbraith, The Great Crash 1929, 3rd ed. (Boston: Houghton Mifflin Company, 1972)

p. 74-75 The best reassurance on brokers’ loans was in the outlook for the market. If stocks remained high and went higher, and if they did so because their prospects justified their price, then there was no occasion to worry about the loans that were piling up. Accordingly, much of the defense of the loans consisted in defending the levels of the market. It was not hard to persuade people that the market was sound; as always in such times they asked only that the disturbing voices of doubt be muted and that there be tolerably frequent expressions of confidence. ... The official optimists were many and articulate. Thus in June, Bernard Baruch told Bruce Barton, in a famous interview published in The American Magazine that "the economic condition of the world seems on the verge of a great forward movment." He pointed out that no bears had houses on Fifth Avenue. ..... pp. 103-106 Thursday, October 24, is the first of the days which history - such as it is on the subject - identifies with the panic of 1929. Measured by disorder, fright, and confusion, it deserves to be so regarded. That day 12,894,650 shares changed hands, many of the at prices which shattered the dreams and hopes of those who had owned them. Of all the mysteries of the of the stock exchange there is none so impenetrable as why there should be a buyer for everyone who seeks to sell. October 24, 1929, showed that what is mysterious is not inevitable. Often there were no buyers, and only after wide vertical declines could anyone be induced to bid. The panic did not last all day. It was a phenomenon of the morning hours. The market opening itself was unspectacular, and for a while prices were firm. Volume, however, was very large, and soon prices began to sag. Once again the ticker lagged more and more. By eleven o’clock the market had degnerated into a wild, mad scramble to sell. In the crowded boardrooms across the country the ticker told of a frightful collapse. But the selected quotations coming in over the bond ticker also showed that current values were far below the ancient history of the tape. The uncertainty led more and more people to try to sell. Others, no longer able to respond to margin calls, were sold out. By eleven-thirty the market had surrendered to blind relentless fear. This, indeed, was panic. Outside the Exchange in Broad Street a weird roar could be heard. A crowd gathered. Police Commissioner Grover Whalen became aware that something was happening and dispatched a special police detail to Wall Street to insure the peace. More people came and waited, though apparently no one knew for what. A workman appeared atop one of the high buildings to accomplish some repairs, and the multitude assumed he was a would-be suicide and waited impatiently for him to jump. Crowds also formed around the branch offices of brokerage firms throughout the city and, indeed, throughout the country. Word of what was happening, or what was thought to be happening was passed out buy those who within sight of the board or the Trans-Lux. An observer thought that people’s expressions showed "not so much suffering as a sort of horrified incredulity." Rumor after rumor swept Wall Street and these outlying wakes. Stocks were now selling for nothing. The Chicago and Buffalo Exchanges had closed. A suicide wave was in progress, and eleven well-known speculators had already killed themselves. At twelve-thirty the officials of the New York Stock Exchange closed the visitors gallery on the wild scenes below. One of the visitors who had just departed was showing his remarkable ability to be on hand with history. He was the former Chancellor of the Exchequer, Mr. Winston Churchill. It was he who in 1925 returned Britain to the gold standard and the overvalued pound. Accordingly, he was responsible for the strain which sent Montagu Norman to plead in New York for easier money, which caused credit to be eased at the fatal time, which, in this academy view, in turn cuased the boom. Now Churchill, it could be imagined, was viewing his awful handiwork. There is no record of anyone’s having reproached him. Economics was never his strong point, so (and wisely) it seems most unlikely that he reproached himself. In New York at least the panic was over by noon. With the gallery closed, "organized support" now appeared. At twelve o’clock reporters learned that a meeting was convening at 23 Wall Street offices of J.P. Morgan and Company. The word quickly passed as to who was there - Charles E. Mitchell, the Chairman of the Board of the National City Bank, Albert H. Wiggin, the Chairman of the Chase National Bank, William C. Potter, the President of the Guaranty Trust Company, Seward Prosser, the Chairman of the Bankers Trust Company, and the host, Thomas W. Lamont, the senior partner of Morgan’s. .... The elder Morgan was dead. His son was in Europe. But equally determined men were moving in. They were the nation’s most powerful financiers. ... ...A decision was quickly reached to pool resources to support the market. Thomas Lamont met with reporters. .... "There has been a little distress selling on the Stock Exchange." He added that this was "due to a technical condition of the market" rather than any fundamental cause, and told the newsmen that things were susceptible to betterment." The bankers, he let it be known, had decided to better things.

<><><><><><><><><><><><><><><><>

William Manchester, The Last Lion; Winston Spencer Churchill; Alone 1932-1940 (Boston: Little Brown and Company, 1988)

p. 14 -15 ... men who have amassed fortunes while he has struggled year after year with creditors, hold enormous appeal for him. That was Bracken’s charm. It also explains, in part, Winston’s fondness for Baruch, though Baruch’s appeal is broader. He is American, he is Jewish, he recognizes the menace of an aggressive Germany, and Churchill is indebted to him for an extraordinary act of shrewdness and generosity. Winston was badly hurt in the Wall Street Crash three years ago. Had it not been for Baruch, however, it would have been much worse; he could have spent the rest of his life in debt. He is not a born gambler; he is a born losing gambler. In New York at the time, he dropped into Baruch’s office and decided to play the market, and as prices tumbled he plunged deeper and deeper, trying to outguess the stock exchange just as he had tired to outguess roulette wheels on the Riviera. In Wall Street, as in Monte Carlo, he failed. At the end of the day he confronted Baruch in tears. He was , he said, a ruined man. Chartwell and everything else he possessed must be sold; he would have to leave the House of Commons and enter business. The financier gently corrected him. Churchill, he said, had lost nothing. Baruch had left instrucitons to buy every time Churchill sold and sell whenever Churchill bought. Winston had come out exactly even because, he later learned, Baruch even paid the commissions.

<><><><><><><><><>

William Manchester, The Last Lion; Winston Spencer Churchill 1874-1932; Visions of Glory (New York: Dell Trade Paperback, 1984) (Copyright 1983 by William Manchester)

p. 826 ..... On the evening of "Black Tuesday," when the stock market, honeycombed with credit, collapsed of its own weight, sixteen million shares changing hands, he dined at Bernard Baruch’s Fifth Avenue mansion. The other guests were bankers and financiers. When one rose to toast their British visitor, he adressed the company as "former millionaires and friends." The next morning Churchill heard shouts below the Savoy-Plaza apartment and looked out, he wrote , to find that ‘under my window a gentleman [had] cast himself down fifteen storeys and was dashed to pieces, causing a wild commotion and the arrival of the fire brigade." .... .....Wall Street investors had lost over thirty billion dollars, almost as much as the United States had spent on World War I. Later he would realize that this "Economical Blizzard," as he came to call it, was responsible for turning all England into "one vast soup kitchen," driving the country back off the gold standard, doubling the number of British unemployed, and radicalizing politics throughout Europe, especially Germany. <><><><><><><><><><> Baruch’s New York Mansion 1055 Fifth Avenue Baruch made his initial millions speculating in copper stocks. @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@

1930

John Pearson, The Private Lives of Winston Churchill (New York: Simon & Schuster, 1991) p.225 Following the loss of office, the loss of so much money was a bitter blow. The optimistic years were over, and Churchill was badly hit by a midlife crisis. Harold Nicholson was shocked when he saw him in January 1930 - very changed from when I last saw him. A white round face like a blister. Incredibly aged. ... His spirits have also declined and he sighs that he has lost his old fighting power.”.....

<><><><><><><><><><><><><><><><><>

Freedom From Fear, loc. cit.

p. By the spring of 1930 many observers were cautiously optimistic. Hoover himself, in a statement that would later haunt him, proclaimed to the U.S. Chamber of Commerce on May 1, 1930: “I am convinced we have passed the worst and with continued effort we shall rapidly recover.” The following month he told a delegation from the National Catholic Welfare Conference that their pleas for further expansion of federal public works programs were “sixty days too late. The depression is over.”

Given available information, and given the scale against which the events of late 1929 and early 1930 could then be measured, these statements were not as outrageous as they appeared in retrospect. The wish for recovery might have been father to the thought, but circumstances lent the idea a measure of plausibility. The stock market had by Aptril 1930 recouped about one-fifth of its slippage from the speculative peak of the preceding autumn. Some rural banks had begun to crack, but the banking system as a whole had thus far displayed surprising resilience in the immediate wake of the crash; deposits in operating Federal Reserve member banks actually increased through October 1930. The still sketchy reports on unemployment were worrisome but not unduly alarming. Major employers were apparently abiding by their pledge to maintain wage standards, and private industry as well as local and state governments had publically acceded to Hoover’s request to accelerate construction projects.

But the reality, still only obscurely visible in the meager statistical data that the government could then muster, was that the economy was continuing its mystifying downward slide. Buy the end of 1930 business filures had reached a record 26,355. Gross national product had slumped 12.6 percent from its 1929 level. In durable goods industries especially, production was down sharply: as much as 38 per cent in some steel mills, and about the same throughout the key industry of automobile manufacturing, with its huge employment rolls. Despite public assurances, private business was in fact decreasing expenditures for construction; indeed, in the face of softening demand it had already cut back construciton in 1929 from its 1928 peak, and it cut still further in 1930. The exact number laid-off workers remained conjectural; later studies estimated that some four million laborers were unemployed in 1930..

Yet most Americans in 1930 saw these developments less clearly than did later analysts and evaluated what they could see against the backdrop of the most recent experience with an economic recession in 1921. Then GNP had plummeted almost 24 percent in a single year, twice the decline of 1930. Unemployment was somewhat larger in absolute terms in 1921 than in 1930 (4.9 million versus 4.3 million) and significantly larger in percentage terms (11.9 percent versus 8.9 percent). Americans could justly feel in 1930 that they were not - yet- passing through as severe a crisis as the one they had endured less than a decade earlier. This perception of the gravity of the crisis, joined with the recurrent belief that its momentum had been arrested and the corner turned, as had happened so swiftly in 1921, inhibited Hoover from taking any more aggressive antidepression fiscal action in 1930. Nor was he yet coming under any significant pressure to do more. He stood securely in mid- 1930 as the leader of the fight against the depression and he seemed to be winning - or at least not losing. Hoover, predicted the powerful Democratic financier and economic sage Bernard Baruch in May 1930, would be “fortunate enough, before the next election, to have a rising tide and then he will be pictured as the great master mind who led the country out of tis economic misery.”