Nowadays, many people will stipulate that the Great Recession of a few years ago was just as bad, if not worse, than the Great Depression. There are similarities and patterns, to be sure. The effect globally was indeed worse this time around, because the world’s banks are far more intertwined and globalized now. People experienced a hard time getting back on their feet, and we had (and still have) a congress that is completely ineffective, throwing money at problems rather than actually fixing the regulations that allowed such a tremendous recession to take place. On the other hand, things were quite worse for the United States did in 1929 and few years following. Millions of people were left homeless, while others had to take on boarders to keep from losing their homes. There were no large bailouts, there was no money with which to bail out big businesses. Bread lines wrapped around corners, and people found themselves travelling across the country even at the smallest hint of a job. There were stock market crashes prior to and after 1929, but the stock market crash is likely to be the largest this country ever sees. Here is a look at how the New York Times and the Wall Street Journal reacted to the crash, and spent the first few years responding to it
For many economists and experts, the crash was not altogether that much of a surprise, though the level to which it hit was beyond belief for even the Rockefellers. Studied people in the markets, had studied previous crashes of the market in the late 19th century, and noticed a lot of the same speculative lobbying happening (Beschloss, 2014). Aside from these experts, there is tons of evidence that the American Public was not prepared for what was going to happen. Even as it was occurring, that very week, nobody believed it was really happening; seriously! Every newspaper, it seems, was in sheer denial, and those that weren’t reported the numbers only, as if they were completely without meaning. At that exact moment in time, starting on Black Thursday, there was little meaning to be assigned. The market had not crashed since becoming a multinational entity, and there had been a lot of false alarms over the twenties. More than anything else, though, it seems that people just could not envision their world without the luxuries that their stock options had afforded them.
The “roaring twenties” was truly one of the most flamboyant times in this country’s history, in every single way. Most newly urban people were very progressive politically, from a relative viewpoint. Conspicuous consumption was the key of being successful in the eyes of the public, with the newest cars and mansions for houses. The people of this era were partiers on a grand level, but well-studied. Unfortunately, this was mostly funded by quick money. Buy stock, letting it mature for a couple weeks, and withdrawing the money after the stock had grown almost exponentially. This was known as margin speculation. It had high interest rates, meant to keep stocks from plummeting. Many people generally overlooked this interest rate, knowing their stocks would grow at a much faster rate (Bartlett, 2012).
There were warning signs, advise that people keep their money in for longer periods of time, but little attention was paid to these warnings. People had too many things to buy, after all.
Finally, it all crashed down, literally. On October 29, 1929 a Tuesday, is one of three days cited as the official beginning of the crash. This was a Tuesday. The other two days were black Thursday, five days prior, and black Monday, the day before black Tuesday. By Thursday of the week prior, most economists were aware of fluctuations, especially when the stock initially fell 11%. The market was able to trade itself back up to a deficit of only 2%. The next day, the Dow rose by another percentage point. Traders took a sigh of relief, believing a crisis had been averted.
This is when it didn’t seem to matter whether a paper was directed towards conservative, liberal, or communist demographics. They all agreed that there was just no way these numbers could stay down, none of this could actually be happening. The New York Times used a fraction of its front page to say how many people had sold shares, but assuring that because now that stocks were so cheap, things would even out (Staff writers,1929). The Wall Street Journal paid less attention initially on October 29th, stating that everything was completely under control, that the market that its hand on the throttle. The next day, The WSJ reported that things were indeed returning back to normal.
One thing becomes very clear when reading the lead articles of both normally opposing papers. Both were hopeful of recovery. Neither account seemed to show any indication that there was any significant reason to worry. So what if 16 million stocks were sold, corrections would be made, the government would provide aid, and everything would soon get back to order. The Wall Street Journal was steadfast in saying that the markets remained “orderly,” while the New York Times claimed that that there were cheers as by the investors as the market started to rally towards the end of the trading day (Staff Writers, 1929). Other newspapers across the country seemed to share in the optimism, except for some papers harrowing from the Midwest, a region that would not directly be impacted as much by the market as it would by drought. Just as it was back in the twenties, it was in the midst of 2009 that everybody started to freak out (Shiller, 2009)
So the country, its newspapers, and people did not initially even believe that anything too bad had occurred. Sure there was a lot of liquidation, but the American people could pick up the slack, and not end up like London had just prior to Wall Street’s crash. The papers and their columnists did eventually start to believe what was happening was real. Though newspapers and reporting became very profitable at this time, it was hard to miss all the homeless and hungry people on the way to work. Eventually the headlines turned from blatant denial, to plausibility, and eventually grief mixed with a bit of shock in the New York Times.
The Wall Street Journal, however, had and still maintains a very different story than really most other newspapers. To this day, the WSJ continues to be very paradoxical of its account of what occurred during and immediately following the crash. Some articles seem to deny that the 25-year depression w.as really even that bad (Unknown Author, 1929). Throughout the 30’s, it seemed to be comfortable on reporting on anything but the crash. This is understandable, to some degree, the paper’s namesake meant that in a very direct way, it was responsible for debunking the “myths” of the crash, while maintaining that there were bigger stories to report on (Wilson, 2008). Until 1941, in the United States, this was just not the case. Most experts, economists and even laymen who remember that time, remember the name Ferdinand Pecora. This name seems to be where conservative and liberal newspapers really begin to differ when it comes to the Depression.
Ferdinand was brought in by the Hoover administration after several austerity measures had failed to correct the market. Roosevelt kept him on, and he became the ultimate whistleblower for all that was occurring that needed to change. One such person who was to go down and actually send to prison was Richard Whitney, who spent 3 years at Sing-Sing for his role in banking fraud (Beschloss, 2014). Despite the WSJ and stock brokers claiming that greed had no role to play in the Great depression, still even in the face of conspicuous consumption, Pecora saw right through the dirty mirrors. He acted as a Bernanke, Greenspan, and just about any other great economist of today, back then. During his commission, Pecora uncovered multiple abuses of power and money. “Pecora exposed a stock market manipulated by spectators to the detriment of small investors who could suddenly attach names and faces to their losses (Chernow, 2009). Pecora exposed, through his position, the entire underpinnings of the stock market crash. It was largely through his help that the depression did not last longer than it was already going to.
The WSJ and market holders tend to go with the belief that Pecora was nothing more than a glorified story-teller. “What little Pecora knew about banking and finance he had gleaned from prosecuting low-level frauds,” claimed the WSJ (Grant, 2010). In using an actual quote by Pecora, the WSJ seemed to contradict themselves and made a great case for the democratic “machine”:
In a dinner speech to the Elks Club of New York, he assailed the "men of might" on Wall Street who had taken "millions and millions of the hard-earned pennies of the people." As for what his investigation might achieve, Pecora ventured: "When the nation again comes to days of plenty and prosperity, let us seek to make it impossible for water and hot air to be sold to men and women for gold taken from their life savings. - (Grant, 2010)
The WSJ further attacks any idea that the crash could have been caused by anyone in the actual stock market by lurching out against President Roosevelt, who was wasn’t in office until 1933, as well as a handful of banks and CEO’s (Ip, 2015). Why is the WSJ reporting such a revisionist tale (they even call the crash and Great Depression nothing but a narrative, disparaging the tens of millions who had to suffer through those times)? It seems the answer lies as much on its namesake as it does on wanting to satiate the Republicans constant need to be right, regardless of whether they use facts or not.
The fact that the WSJ still cannot place blame for the Great Depression accurately 90 years after its onset is a perfect example of why market crashes still happen. The ingredients were all there a few years ago, just as they were in 1929. We had a whirlwind of over-speculation, housing bubbles, unresearched or worse, predatory lending to people who could never be able to afford being able to pay off their debt.
Today, as the Times points out, we saw the exact same things occur this time around. There is virtually no difference. Even the way it has been handled in Congress is similar, with the refusal to work together. If any conclusive statement can be made by this research, it is that while many in the general public have heeded the lessons of the past if they could help it at all, the Congress and WSJ have been unable to do the same. It is this inability to reason and reconcile with the real past that continue to allow crashes to happen. Perhaps if we took things a little bit more seriously, instead of griping about luxury items we can no longer afford because of money lost, we should be out finding the next Pecora, to investigate everything that has happened so that it never does again.
Works Cited
Beschloss, M. “From White Knight to Thief.” The New York Times. 13 Sep. 2014. Web. 18 May,
2016.
Chernow, R. “Where is Our Ferdinand Pecora.” The New York Times. 5 Jan. 2009.Web. 19 May,
2016.
Grant, J. “Out for Blood.” The Wall Street Journal. 14 Oct. 2010. Web. 18 May 2016.
Ip, G. “‘The Big Short,’ the Great Depression and the Evolution of Crisis Narratives.”
The Wall Street Journal. 28 Dec. 2015. Web. 19 May 2016.
Shiller, R. “Depression Scares Are Hardly New.” The New York Times, 2 May 2009. Web. 19 May
2016.
Staff writers. “STOCKS COLLAPSE IN 16,410,030-SHARE DAY, BUT RALLY AT CLOSE
CHEERS BROKERS; BANKERS OPTIMISTIC, TO CONTINUE AID.” The New York
Times. 29 Oct. 1929. Web Archive. 19 May 2016.
Unknown Author. “Market Orderly in Record Drop.” The Wall Street Journal. 29 Oct. 1929.
Web 20 May 2016.
Wilson, A. “Five Myths About the Great Depression.” The Wall Street Journal. 4 Nov. 2008.
Web. 18 May. 2016.
