Sunday, April 10, 2005

My Granddaddy, a True Victorian, Ordered Me to Memorize This Book

Only Yesterday


Chapter XIII is appropriately numbered. This chapter details the ugly death throes of the happy go lucky stock market/American can-do economy. The buy on debt/sell for a profit economy. The everyone can be a millionaire promise. The buy real estate and sell it for eternal profits dream.

Here: In view of what was about to happen, it is enlightening to recall how things looked at this juncture to the financial prophets, those gentlemen whose wizardly reputations were based upon their supposed ability to examine a set of graphs brought to them by a statistician and discover, from the relation of curve to curve and index to index, whether things were going to get better or worse. Their opinions differed, of course; there never has been a moment when the best financial opinion was unanimous. In examining these opinions, and the outgivings of eminent bankers, it must furthermore be acknowledged that a bullish statement cannot always be taken at its face value: few men like to assume the responsibility of spreading alarm by making dire predictions, nor is a banker with unsold securities on his hands likely to say anything which will make it more difficult to dispose of them, unquiet as his private mind may be. Finally, one must admit that prophecy is at best the most hazardous of occupations. Nevertheless, the general state of financial opinion in October, 1929, makes an instructive contrast with that in February and March, 1928, when, as we have seen, the skies had not appeared any too bright.

Some forecasters, to be sure, were so unconventional as to counsel caution. Roger W. Babson, an investment adviser who had not always been highly regarded in the inner circles of Wall Street, especially since he had for a long time been warning his clients of future trouble, predicted early in September a decline of sixty or eighty points in the averages. On October 7th the Standard Trade and Securities Service of the Standard Statistics Company advised its clients to pursue an "ultraconservative policy," and ventured this prediction: "We remain of the opinion that, over the next few months, the trend of common-stock prices will be toward lower levels." Poor's Weekly Business and Investment Letter spoke its mind on the "great common-stock delusion" and predicted "further liquidation in stocks." Among the big bankers, Paul M. Warburg had shown months before this that he was alive to the dangers of the situation. These commentators -- along with others such as the editor of the Commercial and Financial Chronicle and the financial editor of the New York Times --would appear to deserve the 1929 gold medals for foresight.

Remember as you read this book on line, and please read it carefully!--the results of this mess meant that literally over 30 million humans died hideous deaths because of this mess. They were killed in war, famine, murder, nuclear explosions, starvation, marched to death, trampled underfoot, drowned, whatever, the death machine ground all to a fine powder.

There are strong downside effects to these sorts of games. The rich might laugh it off, some might jump from windows or shoot themselves in the head like my great granddaddy on my mother's side in the Depression of 1892. Death wins in depressions.

The suicide rate in Japan, during this latest depression there, shot way up, even school children gave up and died. So many died. And now the skeletal spectres again stalk the Japanese who, in despair, destroy themselves.

The disaster which was impending was destined to be as bewildering and frightening to the rich and the powerful and the customarily sagacious as to the foolish and unwary holder of fifty shares of margin stock.

Here, for those readers inclined to think, if you have a formula, all can be plugged in and run smoothly:

Suppose a man walked into a broker's branch office between twelve and one o'clock on October 24th to see how things were faring. First he glanced at the big board, covering one wall of the room, on which the day's prices for the leading stocks were supposed to be recorded. The LOW and LAST figures written there took his breath away, but soon he was aware that they were unreliable: even with the wildest scrambling, the boys who slapped into place the cards which recorded the last prices shown on the ticker could not keep up with the changes: they were too numerous and abrupt. He turned to the shining screen across which ran an uninterrupted procession of figures from the ticker. Ordinarily the practiced tape-watcher could tell from a moment's glance at the screen how things were faring, even though the Exchange now omitted all but the final digit of each quotation. A glance at the board, if not his own memory, supplied the Missing digits. But today, when he saw a run of symbols and figures like

               R                         WX
                    6.5 1/2.5.4             9.8 7/8 3/4 1/2 1/4.8.7 1/2.7.

he could not be sure whether the price of "6" shown for Radio meant 66 or 56 or 46; whether Westinghouse was sliding from 189 to 187 or from 179 to 177. And presently he heard that the ticker was an hour and a half late; at one o'clock it was recording the prices of half past eleven! All this that he saw was ancient history. What was happening on the floor now?

I have witnessed panic in Wall Street. It is swifter than the fastest runner. It is as fast as photons flying through outer space. Zing! is there and gone! I remember one panic. The Reagan panic. Stocks began to collapse just like the WTC fell. swiftly and in one day, out of the blue. I was reroofing the mansion of this rich surgeon who had many investments. I play the radio when I am on a roof to keep up with weather reports in summer. Thunderstorms are bad news!

Well, I heard the melt down as it happened. By 2:00pm, they closed down trading to keep it from melting down to China. I shook my head. A Mercedes screamed into the driveway and a visibly distraught man leaped out, screaming, "I am finished!" I said, "Get a beer, come up the scaffolding and sit here with me, on the roof".

He did this. We drank and chatted. I helped him over this hump (told him, even if he couldn't pay, I would work to finish the roof, I wasn't going to let his house fill up with water!). In the end, things went OK and he paid me. But...this was then.

Today, when this happens, and it will, no evading this truth----our government won't be able to bail anyone out.

This book is a must read. As granddaddy told me, memorize this book.

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