The Crash of 1929 & The Great Depression (PBS) 2of6

Summary

The transcript explores the rise of Wall Street in the 1920s, focusing on influential figures like Jesse Livermore and Charles Mitchell. Livermore epitomizes the speculative mindset, treating the stock market as a game of numbers, while Mitchell revolutionizes stock marketing, making it accessible to the average investor. This democratization leads to a surge in amateur investors, many of whom engage in risky practices like buying on margin. The narrative highlights the pervasive culture of speculation, the manipulation of stock prices by wealthy insiders, and the eventual consequences that culminate in the 1929 market crash.

Takeaways

• 😀 Jesse Livermore was a legendary stock market speculator whose fortune exceeded $100 million.
• 📈 Livermore's approach was based on numbers and speculation rather than company health or profits.
• 💰 The success of speculators like Livermore attracted many smaller investors to Wall Street.
• 🏦 Charles Mitchell of National City Bank pioneered mass marketing of stocks to the general public.
• 📊 By 1929, National City Bank became the largest distributor of securities in the world.
• 🎭 Notable figures, including Groucho Marx, participated in stock market speculation during the 1920s.
• 📞 Many amateur investors borrowed money to buy stocks, often using margin trading.
• 🔍 The stock market in the 1920s was unregulated, allowing for widespread manipulation by insiders.
• 📰 Financial journalism was often influenced by operators looking to promote stocks through favorable press.
• ⚠️ The collapse of manipulated stocks led to significant losses for small investors, but many remained hopeful for future gains.

Q & A

Who was Jesse Livermore and what was his approach to the stock market?

Jesse Livermore was a renowned speculator on Wall Street, known for his ability to make significant profits from stock trading without concern for the underlying health of companies. He viewed the stock market as an abstract game of numbers rather than a means to accumulate wealth.

What impact did Livermore and other large speculators have on smaller investors?

The success of speculators like Livermore lured smaller investors to Wall Street, creating a perception that anyone could also profit from stock trading.

How did Charles Mitchell change the banking industry regarding stock investments?

Charles Mitchell, president of National City Bank, innovated the mass marketing of stocks and bonds to the general public, shifting the bank's focus from large corporations to individual investors, which significantly increased the bank's presence in the market.

What role did popular culture play in the stock market during the 1920s?

The stock market became a topic of widespread discussion and interest in popular culture, with financial news covered in magazines, bestsellers offering investment advice, and characters in comic strips participating in stock trading.

Who was Evangeline Adams, and what unique approach did she take to predict stock movements?

Evangeline Adams was an astrologer who gained notoriety for predicting stock market movements based on astrological calculations, attracting a range of clients, including celebrities and wealthy individuals.

What was the concept of 'buying on margin' in the stock market?

Buying on margin allowed investors to borrow money to purchase stocks, requiring only a small percentage of the total stock price as a down payment, thus enabling smaller investors to participate in the market alongside larger players.

How did stock manipulation occur in the 1920s, and what tactics were used?

Stock manipulation in the 1920s involved wealthy investors forming pools to buy stocks, inflate their prices through coordinated trading and publicity, and then sell them to unsuspecting public investors, often leading to significant losses for those who bought in later.

What was the role of journalists in the stock manipulation practices described?

Journalists were often complicit in stock manipulation, as pool operators would bribe them to write favorable articles about certain stocks, which influenced public perception and encouraged more investors to buy in.

What happened during the stock manipulation of RCA in March 1929?

In March 1929, a pool led by Michael Mean pushed RCA's stock price up nearly 50% over ten days before selling off their shares for a significant profit, resulting in losses for many smaller investors who bought into the inflated stock.

How did the mindset of small investors reflect on their experiences in the stock market?

Despite suffering losses due to manipulation, small investors were often undeterred, believing they could eventually 'beat the system' and find success in future investments, reflecting a hopeful but naive perspective on stock trading.