The Great Depression (5 page)

At three, the closing gong sounded in New York to a chorus of boos, groans, and sighs of relief, producing a brief but blessed moment of silence before the wall of noise returned, fading finally from the paper-littered floor of the exchange. Brokers leaned dazed against the posts, their collars torn, their faces gleaming with perspiration. But it was not the end of the day for the thousands of employees of the financial houses, who would have to toil through the night to tabulate the day’s transactions.

Neither the bankers and brokers nor the politicians could get it through their heads that their world had stopped turning. A bankers’ pool, organized by the House of Morgan, tried to stem the tide by investing more than two hundred million dollars on the New York market. Thirty-five of the leading New York brokerage houses issued a statement insisting that the market was “fundamentally sound.” That was the phrase that would be parroted again and again during the turbulent months that followed. Herbert Hoover seized on it immediately. “The fundamental business of the country,” the President intoned, “… is on a sound
and prosperous basis.” These soothing phrases, together with the heavy investment by the bankers’ pool, helped to steady the market on Friday. But on Monday, October 28, prices resumed their tumble.

In Canada, the bankers followed the cheerful lead of their American colleagues. The man in the street might be pardoned for believing that the bottom had been reached, especially when the general manager of the Royal Bank announced that “fundamental conditions are sound … and there is no room for pessimism.” But with the total value of shares on the Toronto Stock Exchange dropping at the rate of one million dollars a minute, the financial community could no longer put faith in its own press releases. The brokers worked far into the night sending out margin calls by phone and wire, warning their customers that they could not protect them past ten o’clock on Tuesday morning.

In Toronto it was estimated that between five thousand and ten thousand margin calls went out that night. Early next morning people waited in queues at the brokerage houses, proffering cash and cheques, trying to hold on to their stock before the brokers sold them out. Prices were falling so fast that hundreds lost everything and still owed large sums.

There was no longer any stock that could be called “blue chip.” When the Toronto exchange opened – it was not possible to close the doors on the dense crowd – it was discovered that the bluest of the blue, International Nickel and Brazilian Traction, had dropped ten and eleven points respectively overnight – erasing a total of $200 million from the market value of the two companies. Black Tuesday, October 29, 1929, had begun.

It was far more Stygian than Black Thursday. In Montreal early that morning, thousands besieged the brokerage offices – “packed not unlike sheep in a pen,” to quote one witness – and waited silently for the ticker to spell out their fate. The market had scarcely opened before the crash was apparent. As the tickers hummed and clicked and the prices were chalked on the big boards, the silence was eerie. People talked in whispers. Then, as the dimensions of the disaster sank in, some women began quietly to sob. In one Toronto brokerage office a man fainted. He was hastily laid out in a back room and left alone to recover as everybody rushed back to the stock board.

Thursday’s chaotic scenes now appeared mild by comparison. Stocks did not rally briefly or follow an up-and-down sequence as they had the previous week. Prices plunged straight down as the big traders flung great blocks of shares onto the market – five thousand shares, ten thousand shares at a time. The word used most often to describe the pandemonium that day is “terror.” Suddenly, tens of thousands who had been seduced into seeing a bright future unhampered by debt or financial care could see nothing ahead but disaster.

The stunned hush in the brokerage offices contrasted sharply with the terrifying sound, animal-like in its intensity, that burst once again from the stone walls of the Montreal exchange. It was not confined to the trading floor. On the street outside, men and women jostled and shouted while hundreds more forced their way into the corridors and the gallery.

It was all but impossible to hear above the noise. Runners in blue and red blazers struggled through the mob on the floor, bringing scribbled instructions from brokerage houses to their men on the scene. Each trader would seize the piece of paper, then raise his voice in a hoarse cry, trying to sell something that nobody wanted to buy. So confused was the selling, so intense the sound, that traders standing within six feet of one another would often be screaming widely different prices for the same stock.

Stocks were sacrificed at almost any price. Runners carrying completed sales slips pushed their way back to the central desk, where clerks were supposed to relay the latest figures to the ticker and to the boys chalking prices on the big board in the gallery above. But the clerks found it impossible to keep up with the mounting piles of paper.

Gordon Bongard, who was thirty years old at the time, remembered that “there was a hell of a roar and it was pretty smoky, so it was awfully hard on your voice.” He told Doug Fetherling that “it was hard to find a buyer because everybody wanted to get out fast … and a lot of mistakes were made in the rush. At times there might be two or three different prices being quoted in different parts of the room.” Traders were supposed to fill out a slip and get the buyer to initial it, after which it went to an exchange employee who put it on the tape. But the confusion was such that many slips were improperly filled out and others were simply lost.

Beneath the big board, exhausted traders occasionally paused to scribble prices in their notebooks – prices that were already outdated. Then, “like cattle milling in a stampede,” they returned to the fray. There was scarcely time to draw breath, let alone light a cigarette. One man tried, but as he reached for a match, another order came along. He shouldered his way through the packed group near the centre of the floor with the cigarette dangling from his lips. It was still there, unlit, eleven minutes later.

In the scramble to sell, people were pushed, shoved, even trampled. Human values were forgotten. “There’s no more sympathy on that floor than at an abattoir,” one Montreal trader exclaimed. “It’s the coldest, cruelest thing in the world. Nothing matters but the dollar.” So much for the Regina
Leader’s
predictions of “a greater measure of brotherhood” in 1929.

The brokers got no rest again that night, for the records of the day’s business – the little slips on which buy and sell orders were recorded – were in chaos and had to be sorted out. St. James Street, that gloomy cavern of brick and stone, took on the deceptive trappings of high carnival as crowds jammed the financial area. Office windows, usually dark after five, glowed with light. Two thousand automobiles, many of them chauffeur driven, were angle-parked against the austere façades. Newsboys dashed about shouting the day’s shocking headlines: “
WORLD MARKETS NOSEDIVE TO
NEW DEPTHS
.” Taxis sped through streets usually deserted, bringing worried investors to the financial houses. Restaurants stayed open and did a roaring business. Those who had no time for dinner fortified themselves from the lines of peanut and popcorn wagons. Far into the night the spectacle continued, like a tribal rite marking the end of innocence – the final flare-up of a gaudy, get-rich-quick decade, which some future sloganeer would dub the Roaring Twenties.

The legacy of Black Tuesday was disillusionment. “Fundamentally sound!” shouted one man, as he dashed into his broker’s office with the afternoon paper. “Fundamentally sound? Look: Tunney and Dempsey are in the ring, and Tunney knocks Dempsey out. There he is, lying on the canvas. Fundamentally sound? Sure he’s fundamentally sound. But he’s out.”

Thousands who had counted their paper profits and found themselves rich now discovered that they were hopelessly in debt,
like Tom Gallagher, the manager of Dominion Securities in Montreal. Gallagher had invested everything he had – eight thousand dollars – to buy, on margin, eighty thousand dollars’ worth of stock. As the price soared he expected to pay for his shares with the profits and eventually become wealthy.
Eventually
– that was the weasel word that trapped so many. On the evening of Black Tuesday, Gallagher found that events had overtaken him, that his savings had vanished, and that he now
owed
eight thousand dollars.

There were those who took their losses philosophically. According to one story, perhaps apocryphal, a Toronto investor reached home on the evening of Black Tuesday to tell his wife he’d resigned from six clubs, sold their second car, put his garage up for rent, and cancelled all the family’s charge accounts. After that he fired the maid and went to bed.

The stories of brokers leaping from tall buildings is one of the myths of the great crash. But there were suicides. There was, for instance, the case of poor Lottie Nugent, the Toronto bookkeeper, who, it will be recalled, had invested all she had – $3,000 – as down payment on six stocks. Her broker friend, with all the optimism of his breed, urged her to hang on, certain that they would go up again. But when the brokerage firm went bankrupt, she was faced with a demand to close out her account and pay $4,421.27 owing on the stocks. She was given six days to pay; it might as well have been six years, for all the hope the creditors had of realizing a debt that was certainly equal to five years of her salary. Unlike Tom Gallagher, she did not have a father who could cover her losses. She went back to her room in a Huron Street boarding house and turned on the gas. When the police found her body, it was still warm.

Others far more prominent than Lottie Nugent were wiped out in the débâcle. These included a future prime minister, Louis St. Laurent, who would still be paying off his debts during the Second World War. R.B. Bennett, the Leader of His Majesty’s Opposition, also took a beating, but he could afford it. The cannier Mackenzie King, who ignored the crash in his voluminous diary, lost nothing; his fortune was secure in gilt-edged bonds. King, indeed, seemed oblivious to the implications of the market disaster. On October 30, in a remarkably smug statement, the Prime
Minister declared that “while no doubt a number of people have suffered owing to the sharp decline in stocks, the soundness of Canadian securities generally is not affected.”

“Business was never better, nor faith in Canada’s future more justified,” said Mackenzie King.

Canadians were not prepared for the Depression that followed. The businessmen weren’t prepared, the politicians weren’t prepared, and the people weren’t prepared. The coming disaster would call for bold, imaginative action, but Canada, in the twenties, was not a bold or imaginative country. Unlike the United States, it had yet to find its feet as an independent, united nation. Its semi-colonial status and its narrow regionalism had inhibited original thought and common endeavour.

The country’s ten million people were cooped up in scattered population islands that seem, in retrospect, to have been hermetically sealed. The modern communications network we take for granted was almost non-existent. There was no national broadcasting system, no national airline, no Trans-Canada Highway to provide a sense of community – and no unique flag or official national anthem to rally round. The long-distance telephone was expensive and awkward – beyond the reach of most people. And there was little sense of history. Other nations revelled in theirs; Canadians thought theirs dull. Outside Quebec, the majority thought of themselves as British first, Canadian second; to them, Quebec was an unknown country.

The chief unifying force was the railway system, but travel was expensive and denied to all but a select few. Ironically, the Depression changed all that, allowing thousands of young men to burst out of their isolation and, for the first time, gain a sense of country as they scrambled aboard the passing freights and criss-crossed the land.

By western standards, Canada was an old-fashioned country. Almost half the people lived on farms or in small towns, far from the centres of sophistication – such as they were. Except for the Group of Seven or the National Hockey League, there was little indigenous culture. The tiny minority who cared about theatre,
ballet, or opera made do with travelling companies from the United States or Great Britain, or staged their own amateur performances. Beer and rye whiskey were the accepted tipples; wine was for winos; and nobody used the word “gourmet” to describe the meat and potatoes fare of those days.

Such phrases as the “Roaring Twenties” or the “Crazy Twenties” give a distorted view of the decade. In Canada, life was tranquil and the pace was slow. Why hustle? The world was perfect as it was. The screech of traffic and the dissonance of the ghetto-blaster belonged to the future. The horse-drawn delivery wagons that clip-clopped through the quiet streets moved at a leisurely trot. Music was not yet part of the culture of the young. It was confined, sweetly, to the Sunday bandstand, the cottage gramophone, or the parlour radio. Radios were battery powered, and when the Depression struck and batteries became a luxury, some would fall silent.

For many the country was still emerging from the frontier. In the isolated prairie villages, people went without running water or electricity. Even in a city like Saint John, New Brunswick, bathrooms were unusual. The boarding house was still popular, hence the appeal of the Major Hoople comic strip. In the cities, one out of six home owners took in lodgers – a word that has long been out of use.

Sophisticated developments that we take for granted weren’t known in 1929: sliced bread, frozen food, wall-to-wall broad-loom, fluorescent lights, contact lenses, Teflon frying pans, credit cards – the list is endless. People didn’t rush to buy “health foods” – there were none – but they worried about diseases that have since become almost unknown. Only a few vitamins had been isolated; there were no antibiotics and few vaccines. Houses were quarantined for as long as a month for a host of childhood afflictions, including the dreaded diphtheria. The real horror for the young was infantile paralysis, as poliomyelitis was called. Tuberculosis was as frightful a scourge then as AIDS today. In most cases it was terminal. Jogging? The word wasn’t in the lexicon. Diet? Many were trying to
gain
weight. “
YOU SKINNY GIRLS
!” the Ironized Yeast ads shouted.
“Hundreds have gained 5 to 15 pounds this easy way.”