TABLE TALK

That Wall Street Bubble

DENIS BROGAN

The present economic and political situation in the United States and its dependencies re- calls (absii omen) the immediate antecedents of the great smash of 1929. Not only in its disastrous consequences was that the equival- ent of the South Sea Bubble in England and of Law's 'System' in France: it did per- manent damage to the simple faith of the American people in the wisdom of their economic rulers. It is perfectly true that even today in people of my age there is a naive harking back to the golden era before 'that man' entered the White House; but the damage was done long before Franklin D. Roosevelt became President. Indeed, most of the damage was done by the time Herbert Hoover became President, and if there is a permanent nervousness and scep- ticism in the American public mind, it dates more, I think, from the crash of 1929 than from the First World War or from any of the previous panics.

John Brooks's recently published book Once in Golconda (Gollancz 52s) is a dra- matic and intelligent account of the great smash, centred on the career of Richard Whitney whose fate symbolised the ending of the old unquestioned power of the Wall Street oligarchy. For not only was Richard Whitney the broker for the greatest of American banking houses, the House of Morgan; his brother was one of the most important partners of Morgan's. And Rich- ard Whitney was not merely for a time the official head of the Stock Exchange. he epi- tomised physically and intellectually the arrogant complacency and unshakable self- esteem of what used to be called with awe 'The Street'.

As Mr Brooks points out, it is not certain even today that it was not mere pedantry or jealousy or dangerous radicalism that resulted in Richard Whitney's being sent 'up the river'. Richard Whitney was one of the chief figures in this small private world which made its own arrangements and for- gave itself for all its public offences but could not forgive offences among the mem- bers in the institutions of the financial olig- archy of New York. It is possible that Richard Whitney's astonishing self-control in the last days before his house of cards fell in, was due to a simple belief that he had, no doubt, broken the rules of 'the Club', which was very serious, but that he attached little importance to the fact that he had broken the law and, from the point of view of the average man, had been the symbolical criminal of the great smash from which, in some ways, the United States has not yet recovered.

There was a great difference between the decisions of George Whitney, the partner of J. P. Morgan, and those of his more daring brother, head of the firm of Richard Whitney and Company, which was the broker for the House of Morgan across the Street. Richard Whitney was a good deal of a speculator. His brother George and, more interesting, the senior partner of Morgan's, Thomas Lamont, did their best to cover up his defalcations at their own ex- pense. But again it was the breach of the rules of 'the Club' rather than the breach of the duties of the most famous of Amer- ican banking houses to the government of the us and, indeed, to the people of the us, that led to the condemnation of Richard Whitney by his brethren.

No doubt he was a scapegoat; but he was also the single American who did most to destroy faith in the American capitalist system when the roof began to fall in. True, the failure of the firm of Richard Whitney was not nearly as important economically as the failure of the Van Sweringen Brothers of Cleveland or of Samuel Insult of Chicago (originally of London, where he was and is commemorated by the National Temperance Hospital in Hampstead Road, r'wl); but it was failure in the heart of Wall Street, and so more catastrophic.

Richard Whitney, of course, suffered from a very serious weakness: he had far too little money for the role in which he

cast himself. He had very extravagant tastes: for example, in horses and servants (apart

from one possible scandal, not, it seems, in women). But his firm was too exclusive, too much the Morgan brokerage firm, to take advantage of all the openings for quick profits that the great boom years provided. It is also probable that Richard Whitney.

for all his abilities, was in fact a very bad speculator. He was in many ways a 'sucker'.

and indeed it was the childishness of many

of his investments that not only brought him down, but made it so easy for him to

borrow money, which he then lost, from

friends and even from mere acquaintances who could not imagine that a man of such

a great Yankee family could be such a fool.

Some of Richard Whitney's bad buys have their interesting psychological aspects. He

saw the possible profits of the legalisation

of hard liquor, but instead of imitating Joe Kennedy and buying great quantities of Scotch, he had a childish belief in the pos- sibilities of 'Jersey Lightning', a viciously unpalatable drink produced in his adopted state of New Jersey. Indeed, he had the opposite of a gold thumb, and he would probably have crashed sooner or later.

though less disastrously for the prestige of the great Wall Street firm if that had hap- pened before the market had already gone sick and sour.

Mr Brooks has told this story with a great deal of intelligence and a good deal of charity. Indeed, possibly there is too much charity, because there were a vast number of victims (some of them friends of mine) of people like Richard Whitney. His arrog-

ance was highly offensive and made him many enemies, although the Roman courage with which he faced his ruin did excite some admiration—usually not from people who had lost a great deal of money by

lending it to him or merely by following

the market. Not all the jokes about Richard Whitney were amiable. Many victims, often indirect victims, of Richard Whitney's finan- cial incompetence did not forgive him for a long time, and some have not forgiven him yet.

But the chief importance of Richard Whitney was as a symptom of the inbreeding of the WASP financial world, and the con- sequences of this inbreeding. Excessive trust in wAspish virtue ruined many people who might possibly have survived if they had not trusted the Anglo-Saxon leaders of the stock market and of the great investment houses. Of course, even following the great Jewish leaders of the market didn't alwaY' save you; but people didn't feel quite so indignant about being led up the garden path by them as they did about being led up the garden path by products of Groton and Harvard and members of the Porcellian Club.

If there is a crisis of faith in the us at the present moment, there are quite a lot of people alive, some of them now very prosperous, who never recovered the faith they lost between 1929 and 1933. They al- ways kept their fingers crossed, and I suspect

a good many people today are repeating the wisdom of their fathers, 'Put not your

trust in Wall Street'. Although I doubt whether it was planned that way, On' in Golconda is very much a tract for these very troublesome times.