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article number 311
article date 01-28-2014
copyright 2014 by Author else SaltOfAmerica
We Catch Market Speculation Mania Disease … Setup for the Great Depression, 1928
by James Truslow Adams

From the 1933 book, March of Democracy, America and World Power.

IN the mad decade, America was not wholly concerned with money-making, and the roll of accomplishment in the arts was a notable one. Eugene O’Neill in drama, Edwin Arlington Robinson and a host of others in poetry, Sinclair Lewis, Willa Cather, Sherwood Anderson, Thornton Wilder, Edna Ferber, and James Branch Cabell, to mention only a few in prose, and Frank Lloyd Wright in architecture, clearly indicated the stirrings of artistic life below the crass materialism of the period.

In science, generally considered as rather peculiarly the province of America, our contributions were for the most part of a practical nature and in the first three decades of the new century, in proportion to population, we were far behind Europe. A rough indication of this may be found in the awards of the Nobel Prize which, on the above basis, went six times to France, eight times to Germany and eight times to England as contrasted with once to the United States.

There was a leaven of noble and disinterested artistic and intellectual striving and achievement, but on the whole, as after the Civil War, and as in almost all post-war periods in all countries, life had become vulgarized, selfish, and material.

To realize the change which had come over the American people one has only to contrast the leadership of Roosevelt and Wilson with that of Harding, Coolidge, and Hoover. In spite of a certain lip-service to old ideals by the latter three, their real interest, as well as that of the people at large, lay in creating prosperity, it being assumed by all that happiness, contentment, and spiritual good would somehow automatically and inevitably follow in the wake of high wages, stock-market profits, and big dividends.

By 1928 the good life had become synonymous with the possession of ever greater amounts of money by the individual, and identified with the person of the President even more than with the Republican Party. Both the genuine basis of good business and the false marshlight of stock speculation had become known as the “Coolidge Prosperity.”

THE NATION PROSPERS. From 1925 to 1929 the general prosperity of the country passed all records. Treasury surpluses were shown, despite slashing reductions in federal taxes and large payments on the national debt. Typical of the nation-wide enthusiasm was Chicago, which spread many millions of dollars over new tracts of land. American city new buildings rose, municipal improvements were made, and plans laid for a future that never arrived.


In the early summer of 1928 the party conventions met for the nomination of Presidential candidates. Months before, Coolidge had made his famous statement that he did not “choose” to run, and the Republican Convention, which met at Kansas City on June 14, nominated Herbert Hoover on the first ballot. Senator Charles Curtis, of Kansas, whose chief claim to fame was the fact that he was partly of Indian blood, was named for Vice-President.

At the Democratic Convention at Houston, June 28, Governor Smith of New York was easily nominated for President on the first ballot, with Senator Joseph T. Robinson of Arkansas as his running-mate.

As usual, the platforms of both parties dodged the chief issues, and there was little to choose between them in the intentional haze of misleading verbiage.

In the campaign speeches, both candidates declared for a tariff, and both promised relief to the farmers, but whereas Hoover stood for prohibition and private development of our water-power resources, Smith, although promising enforcement of the Eighteenth Amendment, counselled a modification of that experiment and the retaining in the hands of the Federal Government, for the benefit of all the people, of the great water powers already in its possession.

THE 1928 PRESIDENTIAL CAMPAIGN. From the cartoon by Thomas in The Detroit News.

During the campaign Smith was bitterly assailed as a Roman Catholic, a “wet,” a representative of the Irish immigration, and a tool of Tammany. He was also accused of favoring saloons and commercialized vice, and of being unfit for office.

On the other hand, Hoover was proclaimed as the great organizer, executive, and engineer who would consolidate prosperity and lead the nation to yet greater wealth,—a description of his function and powers which the candidate himself accepted.

Asserting that America was at that moment nearer to the abolition of poverty than any other nation had ever been, and that “the policies of the government bear an increasing responsibility for continued national prosperity,” he also promised that “the victory of the [Republican] party will ensure stability of business and employment.”

COOLIDGE REFUSES TO RUN. In August, 1927, Calvin Coolidge, while on vacation in the West, announced, “I do not choose to run for President in 1928.” The nation misjudged the strength of the determination that was behind this homely New England phraseology. Coolidge’s administration was marked by continuing business prosperity and by his personal popularity, in great measure due to his refusal to embrace any idea no readily understood by the average man. This picture is typical of the many homely poses in which the President allowed himself to be photographed.

There was a much increased popular interest in the election as contrasted with that of 1924, as evidenced by the fact that 6.6 million more votes were cast. Although Smith polled only about 1 million less than Coolidge had in the former year in the great Republican victory, the 21.4 million votes for Hoover as against Smith’s 15 million gave the former a plurality of about 6.4 million votes.

Hoover had been elected not only on the promise of continued prosperity but of a prosperity which should be in part manufactured by the government itself. If there were any failure in the continuous flow of business and stock-market profits, the President would therefore be likely to be held accountable for it and would find it hard to avoid the responsibility.

Almost as soon as he had been nominated in June, talk began about a “Hoover market” to commence in September. During the summer, business improved and, under continued whipping of the public interest, participation in the delirious speculation had become phenomenal by the time September came.

On the 13th, The New York Times noted that the public was so wild about stocks that it would believe any yarn, and the next day Secretary Mellon gave out an interview about the great prosperity of the country, adding that he saw no indication of a possible depression.


The violent advance continued until October 26 when the American Bankers Association again issued a warning against the danger of the situation. On the 31ist, however, President Coolidge tried to counter this with a public statement that the foundations of business were very strong.

The following week, Hoover was elected but Coolidge had still four months to serve. The dangerous and fantastic game went on in Wall Street. The entire nation was participating, and the United States was drawing money from wherever possible to aid it in carrying stocks.

The whole world was becoming deranged by the process and in February, 1929, Governor Norman of the Bank of England found it necessary to come to Washington to consult with the Federal Reserve Board. Money was getting tight, interest rates rising to 12 per cent and more in New York, and responsible individuals and bodies were warning the public against the danger of the speculative orgy.

The Bank of England rate had to be put up 1 per cent to 5½ per cent, and the strain on European money centres was beginning to tell.

On February 8, the Federal Reserve Board issued a statement warning the American public and threatening that the Board would have to take measures if the brokers’ loans were not reduced to a point which would no longer endanger the stability of the commercial and financial structure.

Mr. Mellon then took it upon himself to issue a statement denying that the Federal Reserve Board intended to bring about a slump in stocks. A sudden reduction in loans, such as was absolutely essential, however, could mean nothing else, and stocks had slumped seventeen points after the warning.

Indeed, the very day after, the New York Stock Exchange had to close for a day, the reason suggested being the need to catch up with the bookkeeping.

In spite of Mellon, the Federal Advisory council, on the 15th, recommended that the regional Federal Reserve Boards should ask all member banks to co-operate in the curbing of stock speculation.

After a break, the market started up again as wildly as ever, and on March 1, big headlines on the first page of The Times announced “Stocks Swept High as Inaugural Nears. Lively Trading Brings Gains Up to 60½ Points in Renewed ‘Hoover Market.’”

STOCK MARKET RISES AS INAUGURATION NEARS. From New York Times (left) March 1, 1929, (right) March 2, 1929.

Although money was stiff at 10 per cent, the average price of industrial stocks rose to a new high of 366. Another heading on the same page of The Times read “First National Bank Stock Up $950 in 2 Days; Gain for Baker’s Holdings Put At $13,000,000.”

That the market value of one man’s holdings in one investment alone should rise $13 million in two days made it seem as though we were indeed in a “new era.”

The next day the first page of The Times carried the heading” ‘Inaugural Market’ Brings Public Back, Sends Stocks Higher. Sustained Climb on Belief in an Extended ‘Hoover Boom’ Puts Gains Up To 25 Points.”

On the 4th, Hoover, in his inaugural address, spoke of “our abounding prosperity” and of a future “bright with hope,” explaining again that the government should cooperate closely with business organizations to ensure the continuance of good times.

Although the new President stressed the growing lawlessness of the nation, the parts of his speech which struck the most responsive chord in the mind of the public were unquestionably those in which he discoursed of business and prosperity.

As ‘The Times’ said in the next morning’s leading editorial:

“… the moving principle of Mr. Hoover’s inaugural address, if it has one, is to be found in his assertion of what should be our ‘larger purpose’ at the present time. It is to ‘establish more firmly stability and security of business and employment and thereby remove poverty still further from our borders.’ This is the passage in his address which undoubtedly will be received with the greatest favor.

“Of course, he believes that incidentally this will yield moral and spiritual benefits of a high order. He thinks that individual betterment and social righteousness will go hand in hand with an enlarged prosperity. But prosperity is the great goal for which he will be found to be striving.

“Nor can it be said that in this he is not a true interpreter of the existing desires and plans of the American people.”

Opposed to the League of Nations, Hoover advocated our entering the Permanent Court of International Justice, but neither that nor his assertion that our increasing crime and lawlessness was the “most malign of the dangers” threatening the nation aroused much interest.

HOOVER INAUGURATED. The New York Times of March 5, 1929.

The continuance of Mr. Mellon as Secretary of the Treasury in the new Cabinet pleased the country, although the rest of the President’s appointments were unexpected, and the Cabinet was not as strong as the public had anticipated it would be.

Henry L. Stimson became Secretary of State, and Charles Francis Adams, representative of a distinguished family which had given the nation three Ministers to England and two Presidents, became Secretary of the Navy. Otherwise the public scarcely recognized the names of the new President’s advisors.

Almost immediately he disclosed his characteristic approach to problems in the appointment of commissions of enquiry, notably that headed by George W. Wickersham on law enforcement, including Prohibition, which was to be followed by almost innumerable other ones. In the complexities of modern life there is much to be said for fact-finding commissions.

A year later, however, the country was to be somewhat shocked to find that although the President had abdicated leadership in order to allow the National Enforcement Commission to discover the facts and give its opinions, he declined to be bound by them when found.

Of the eleven members who made their report in January, 1930, five advocated modification of the Eighteenth Amendment and two declared for straight repeal, leaving only four who wished to give the experiment further trial in its present shape, which they all agreed was eminently unsatisfactory.

Hoover, however, remained of the same opinion still. In spite of the year and more his commission had spent finding the facts, the President refused to face them.

Meanwhile, the Jones Act, passed by overwhelming majorities in both Houses of Congress in 1929, had made certain violations of the Prohibition law liable to punishment of $10,000 fine and five years in prison, raising them to the rank of felonies.

In view of the state of public opinion, few laws could have been devised more calculated to bring law into contempt, and to add to that disrespect for law which Hoover had rightly declared to be one of the greatest menaces to the national life.

In this he was right, for lawlessness had been increasing to an extraordinary extent, and apparently with little or no recognition of its seriousness by the ordinary citizen, who so long as he was making money, and was not personally interfered with, paid slight attention to this hideous cancer in our social system.

Although in such cities as London and Paris, millions of dollars in gold continued to be moved through the streets in ordinary trucks with no armed protection, New York City alone had to employ a fleet of 155 armored cars to carry pay rolls and any valuables that could not be concealed on one’s person.

The kidnappings, racketeering, and other evidences of violent crime had increased so rapidly as to make daily life in what we like to consider our civilized country take on the aspect of war in an enemy’s territory.


From 1900 to 1930 the homicide record in thirty-one leading American cities had steadily mounted from 5.1per 100,000 of population to 10.8, whereas in the latter year the rate for Liverpool was .5, that for London .8, for Canadian cities 1.6, and the average for the fifty-three chief cities of the entire world was 3.5.

In many of our States, although the honest citizen could frequently secure a permit to own a revolver only with the greatest difficulty, including perhaps the bribing of the police officer in charge of their issuance, criminals had no difficulty in providing themselves with entire arsenals of weapons, from pocket automatics to machine guns.

The public seemed to enjoy the show, much as they would a thrilling screen play, and to take no heed of the possibilities or to consider the situation as indicating a deep-seated disease in the body politic. The forces of municipal and State police appeared to be paralyzed, and our record of proportional captures and convictions was as small in comparison with European countries as our record of crimes was appallingly great.

America’s particular hero was the modest aviator Lindbergh, who properly occupied a position of peculiarly affectionate regard in the hearts of the public. Yet when his only child was kidnapped from its nursery in March, 1932, although a shudder ran through the country, nothing could be done about it, and our leading newspapers were soon treating every aspect of the case as a means of securing additional circulation, and the public read the story as a “thriller” with apparently little influence upon its attitude toward crime.

In spite of a gesture of the Federal Government, which pledged its aid to the recovery of the child, precisely nothing was done. The Lindbergh case was spectacular only because of the prominence of Lindbergh himself. It was, however, but one glance at what was going on all over the country, in many different sorts of crime.

For a few days it was hoped that the very prominence of the specific instance might awaken the public to existing conditions, but it did not, and after the one gesture, even the Federal Government relapsed again into supine surrender to the gangsters. The mention of this striking case is anticipating somewhat, and we must return to the beginning of Hoover’s term.

In accordance with his pre-election pledge of a special session of Congress to do something for the farmers, Hoover called that body together on April 15, but nothing was accomplished, after much discussion, beyond the appointment of a Farm Board which was authorized to expend $500 million.

In the course of the subsequent débâcle in American business, the Board was to prove extremely incompetent and ill-advised, and the several hundreds of millions which they expended in the purchase of wheat and cotton in a wholly vain effort to hold up prices were not merely wasted but, by creating hoards of vast amount of high-priced produce which overhung the market, continued to be a menace to the recovery of prices.

Back to the economy, in the autumn of 1929 came the “Great Crash” …

THE BRIDGE OF TODAY. The George Washington Bridge spans the Hudson River from New York City to Fort Lee, New Jersey. A huge steel structure of the suspension type, it has 3500 feet of river span and two towers measuring 635 feet above water. It is a single deck structure consisting of four roadway lanes and two pedestrian sidewalks. Additional roadway lanes and a lower deck intended for rapid transit service can be added to meet future requirements. 0. H. Ammann was the chief engineer and Cass Gilbert consulting architect. Ground was broken and construction started in May, 1927, and the bridge was opened to the public on October 25, 1931. It was built and is now owned and operated by The Port of New York Authority.
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