Pioneer magazine

The Wall Street Crash

The Wall street Crash occurred 80 years ago this month. This and the Depression it caused led to massive unemployment worldwide – and to the rise of Hitler’s Nazis. The powerful men involved were denounced by Pope Pius X1 as “those very few in numbers who form this deadly and detestable imperialism of money” and “have in their hands the destinies of the world”. They are identified for us by PAUL HURLEY, SVD

NEARLY 13million shares were traded on Wall Street in the morning of Thursday, 24 October 1929, so many that the Stock Exchange had to be closed at 1pm and its staff worked throughout the night to process the transactions. During the peak of the panic selling that morning, the Exchange had turned into a mad clamour of people looking for non-existent buyers. At noon New York’s leading bankers held an emergency meeting in JP Morgan’s offices. About an hour later its senior partner, Thomas Lamont, announced, “There has been a little distress selling on the Stock Exchange.”! Soon riot police had to be called on to disperse the hysterical crowds outside. Many people had mortgaged their houses and spent all their savings on the promise of wealth. Now they had nothing. Eleven of them committed suicide that night. But worse was to come, five days later.

They called it Black Tuesday, 29 October, the most infamous date in the history of Wall St. “At all 17 trading posts, large blocks of stock were dumped on the market for whatever price they could get,” wrote Alex Woolf in The Wall Street Crash. “The size of these blocks showed that it was now the millionaires who were panic-selling. Most of the small investors had already been wiped out by the Thursday and Monday crashes. RCA shares, once worth $420 each, were now selling for $26. Within half an hour, 3.5million shares had been sold for a combined loss of over $2billion…..Ten thousand people had crowded into Wall Street that day. Inside the Exchange, some knelt to pray at the side of the floor; others went to nearby Trinity Church, where Catholics, Jews and Protestants prayed together. A few hours later when the closing gong rang at the Exchange, the number of shares traded that day, 16,410,030, broke all records.”

Wall St was named after a wall built in 1653 by the Dutch founders of New York (which they called New Amsterdam), to repel an expected British invasion, says Dale Hoiberg. “Even before the Civil War it became the new nation’s financial capital and a symbol of the rapacious robber barons who exploited farmers and industrial workers. After the devastating 1929 Crash, it became the bastion of financial manipulators who are able to destabilize national economies.” (Wall Street).

Henry Luce reported, “Wall St was the breeding place of the worst form of gambling that ever cursed the country. Some 17 million Americans nationwide were playing the Stock Markets, from San Francisco to New York, most of them new, small and ignorant. They gambled to double their capital, rather than invest to get a steady increase. It was the most nerve-wracking crisis in U.S. business history.” (Panic in the Stock Market).

Nearly three million Americans were directly affected by the Crash. Thousands of families, whose furniture and cars had been bought on the instalment system, saw their possessions taken away. Many of the unemployed lost their homes and had to live on the streets. They formed huge shanty towns around the big cities and lived in shacks made from orange boxes. These shanty towns were called Hoovervilles, after President Hoover, who, they felt, was doing little to help them.

The Crash was followed by the Great Depression or Slump. “This blighted everybody, except the very poor who had nothing to lose,” Alistair Cooke reported for the BBC. “When steel stocks went from 90 down to 12, the car manufacturers simply let half their workers go. There were skyscrapers just finished that lacked tenants; truckers with nothing to truck; crops that went unharvested; milk that went undelivered to people who couldn’t afford it. When I first arrived here I couldn’t go out at night to mail a letter without being stopped by well-dressed men cadging dimes on the streets.” America’s desperate mood was well captured by the words, Brother, can you spare a Dime?

The Depression lasted until 1941 when America entered World War 2. But by 1932 there were already 14 million unemployed in the U.S. and soon there were also three million out of work in Britain and six million in Germany, where the economic chaos caused by Wall Street’s Crash led to the rise of Hitler’s Nazis.

In May 1931, two years after the Crash, Pope Pius X1 published his great Encyclical Letter, Quadragesimo Anno (On Reconstructing the Social Order), in which he stated: “It is patent that in our days immense power and despotic economic domination are concentrated in the hands of a few. This deadly and detestable international imperialism of money is most powerfully exercised by those who because they control money, also govern credit and determine its allotment, for that reason grasping in their hands the very soul of production, so that no one dare breathe against their will.”

A year later, in May 1932, he published another, but less well known, Encyclical Letter, Caritate Christi Compulsi (On the Depression), in which he wrote: “The whole of humanity is held bound by the financial and economic crisis. There is no state, no society or family which does not feel the repercussion. Even those very few in number, who appear to have in their hands, together with enormous wealth, the destinies of the world, are in great part the cause of so much woe.” (my italics).

Have these very strong statements any basis? Was the Pope talking through his hat - or zucchetto?

His indictment in fact only echoed what some eminent bankers and politicians had frankly admitted for a long time, though their confessions were not publicized and so are not well known. Some 13 years before the Crash, President Woodrow Wilson stated, “A great industrial nation is controlled by its system of credit. Our system is concentrated. All our activities are in the hands of a few men. We have come to be one of the most completely controlled and dominated Governments in the world – no longer a Government by the free vote of the majority, but by the duress of a small group of dominant men.”

Wilson made this admission following the 1913 Pujo Report. Named after its chairman, Arsene Pujo, a commission was set up by President Taft’s Government, at the behest of some honest congressmen, to enquire whether or not there was a Money Trust in existence in the U.S. Its Report stated, “If by a Money Trust is meant an established community of interest between a few leaders of finance, with domination over banks and industrial corporations and which has resulted in a vast and growing concentration of control of money and credit in the hands of a few men, then this committee has no hesitation in asserting that such a Money Trust exists in this country today.” It named the five banks which formed “its inner ring and directing force” as JP Morgan & Co; National City Bank; Lee, Higginson & Co; Kidder, Peabody & Co; and Kuhn, Loeb & Co (now known as Lehman Brothers). And it reported that these five New York banks controlled, through a system of interlocking directorates, no fewer than 112 financial, insurance, industrial, production, trading, transport and public utility companies (power, light, etc) with resources in capital totalling prodigious sums of money. It described the controlling power of the directors of the five banks in these ominous words: “The powerful grip of these gentlemen is on the controls, the wheels of credit and on their signal those wheels will turn or stop.” This is almost exactly as Pope Pius X1 described the power of those very few in number, who appear to have in their hands the destinies of the world. It must also be added, of course, that the power of “these gentlemen” is far greater now, nearly a century later, especially since the growth of the massive U.S. armament industry.

What Pius and Pujo described was also revealed much earlier by some British political leaders. Gladstone, who was four times Prime Minister between 1868 and 1893, stated, “From the time I took office as Chancellor of the Exchequer (1852) I began to learn that the State held an essentially false position as to finance. The hinge of the whole situation was that the Government itself was not to be a substantive power in matters of finance, but was to leave the Money Power supreme and unquestioned.” And Disraeli, another 19th century Prime Minister, told the House of Commons, “The world is governed by very different persons from what is imagined by those who are not behind the scenes.”

A very graphic, and pathetic, example of how Wall Street banks exercise their power outside America, was given by Thomas Johnston, Lord Privy Seal in Britain’s first Labour Government in 1924: “Twenty men and one woman – a British Cabinet – waited one black Sunday afternoon in a Downing Street garden for a final decision from a New York bank. These money-lenders in New York refused to give us a loan to support a balanced budget. Instead they demanded a cut in unemployment benefit.” (Bondage).

Writing in 1932, before television began, the financial historian A.N. Field stated: “One may search in vain through the newspapers and current affairs publications for any reference to these central, pivotal facts governing the financial and economic situation today. Why this silence? The answer is that the most powerful forces in the world today do not work in the open, so as to keep people unaware of them.”