This is the eighth and final article in my 1920s Week series.
It’s an axiom in history books that the Great Depression began with the catastrophic stock market crash in New York on October 24 and 29, 1929. (Yes, the “great crash” was technically two separate events, though obviously they are closely related). From reading history it seems like the October 1929 crash was to the Great Depression what Hitler’s invasion of Poland was to World War II ten years later–the proximate cause, if not the cause-in-fact, with no real time elapsed between one and the other. Therefore, you can be forgiven for thinking that the cause-and-effect relationship was pretty immediate. The stock market crashed on October 24 and 29, and overnight the country was filled with apple peddlers and Okies aimlessly seeking work.
The truth is a little more nuanced. It is clear, at least on a macro level, that the stock market crash did cause the Great Depression. Some people on the fringes, particularly those of an anti-government Libertarian persuasion, insist that it was the upcoming Hawley-Smooth Tariff, then making its way through Congress (it was eventually passed in June 1930), that triggered the slump, but that ideologically-motivated claim is patently ridiculous. Yet it’s true that it took several months after the crash for the Depression to really settle in. I thought it would be interesting, therefore, to look at what was happening in those last few months of 1929, after the crash–the very end of the Roaring Twenties, when the party was most certainly ending.
The crash was bad, but at first a lot of prominent people assured the public that it wasn’t as bad as it looked, or that its effects would be temporary. The day after the October 29 crash, stocks rallied briefly; the market was closed on Friday, November 1 and Saturday, November 2. (The New York Stock Exchange also closed briefly after the 1987 and 2008 crashes). John D. Rockefeller, bullish on the future, was buying stocks. “Bankers Optimistic” was one headline in the New York Times shortly after the crash. Most of the October losses were “paper losses,” weren’t they? (That was also said about 1987, but less so about 2008).
The fall of the stock market in October 1929 was epic. It lost nearly 40% of its value in less than a month, and did not regain its September 1929 peak until 1954–a quarter-century later.
Yet there were signs, that fall, that something was seriously wrong. It’s unclear to me whether the legends of stock brokers jumping out of windows is really true, but on November 8, 1929, James J. Riordan, president of County Trust Company of New York, committed suicide. He’d been ruined in the crash. Nevertheless, state bank examiners audited his accounts and found his bank “unusually strong,” begging the question of why he felt so bad that he ended up killing himself. Protestations of things soon returning to normal seemed a bit hollow. Blue chip stocks continued to decline through November. Less than a month after the crash, US Steel, General Electric, AT&T and many other stocks were at a year-end low.
Still, daily commerce continued. Want ads in newspapers were still very full in November and December 1929. A one-bedroom apartment in Manhattan, with a private bath and a Frigidaire (then a pretty new convenience), rented for $50 a month at the time, the equivalent of about $670 today. You could get an RCA radio called a “Radiola 46”, normally $179, on sale for $130, or about $1700 today–admittedly a luxury item, the equivalent of a very high quality HDTV. The features of the Great Depression we tend to think of–massive job losses, runs on banks–were still in the future.
The 1929 holiday season seems to have gone pretty much normally, with little appreciation of the magnitude of the economic disaster settling across the United States. Thanksgiving came late in 1929, on November 28, and the Macy’s Thanksgiving Day Parade proceeded up Broadway as normal. Figures for retail Christmas shopping did not decline significantly from 1928 numbers, at the height of the boom. Enough people still had money at Christmas 1929 to be willing to spend it. This was a remarkable difference from 2008, where the Christmas season was pretty depressed following the financial losses of the autumn.
President Herbert Hoover kept assuring the country that “the fundamentals of the economy are strong.” John McCain said the same thing in 2008, in exactly the same words.
New Yorkers, at least, rang in the new year of 1930 much as they had for the previous decade. Ballrooms, clubs, and hotels were filled to capacity on New Year’s Eve. Prohibition agents–liquor was still outlawed in the US at this time–swept Manhattan, raiding speakeasies and rounding up patrons seeking to toast the end of the 1920s with a bit of hooch. Times Square was as full that New Year’s Eve as it always was. The swank hotels charged a $15 cover for dinner, drinks and dancing–the equivalent of $200 today.
Still, something about the end of the 1920s seems melancholy and sad. The days of carefree innocence and unlimited boom were definitely over. Although it hadn’t hit yet, the protestations in the newspapers of “everything’s going to be fine”–including those from President Herbert Hoover–seemed a bit forced and disingenuous. By the time dawn came up on January 1, 1930, the storm hadn’t really hit yet, but the sky was cloudy and a few raindrops were definitely beginning to fall. The Roaring Twenties were over.