The Stock Market Crash of 1929 – Part 3: The Music Stops
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Hello and welcome to Conflicted, the history podcast where we talk about the struggles that shaped us, the tough questions that they pose, and why we should care about any of it. Conflicted is a member of the Evergreen Podcast Network. And as always, I'm your host, Zach Cornwell. You are listening to the third and final episode of a limited series on the stock market crash of 1929. Now it goes without saying, if you haven't listened to parts one and two, you're gonna wanna check those out first.

In those first two installments, we laid the groundwork for a lot of narrative threads that are going to resolve in this final episode. And without that context, this episode might make sense, but it won't make you feel anything. But before we trip the disaster switch and watch this economic nightmare finally come to a head, let's take a second to quickly remind ourselves what happened over the course of the series thus far, so we can press forward with all that good stuff top of mind.

Way back in part one, we popped the cork on the roaring 20s and learned how Americans became so seduced by the stock market in the first place. As is often the case, one man's war is another man's windfall, and so it was with World War I. The United States of America got very, very rich, selling supplies and lending money to its friends across the Atlantic. By

By the time it was all over in 1918, the US was swimming like Scrooge McDuck in an ocean of gold. And that newfound wealth became a springboard for a new era of economic prosperity in the States. London was officially old news. Wall Street was where the party was at. Now, average Americans had dabbled in investing with liberty bonds during the Great War, but in the 1920s, they got hooked on the hard stuff.

Stocks and securities. Fueled by ignorance and avarice, the stock market became a cultural phenomenon. A fad, a trend, a meme in today's parlance. As historian Maury Klein writes, The market replaced chatter about sex among the smart set, about books among the literati, and about baseball in cheap restaurants. Wherever one went, declared a broker, one met people who told of their stock market winnings.

end quote basically if you wanted to get rich now was the time and god help you if you missed your window of opportunity as historian liakat ahmed observed quote watching other people become rich is not much fun especially if they do it overnight and without any effort end quote well that's all well and good but the problem was most people had no idea what they were actually doing as karen blumenthal writes quote so

End quote.

And up they went, as Blumenthal continues, quote, End quote. If Part 1 was about establishing the mood and mania of the times…

Part two was about the rot underneath it all, the sickness and dysfunction in the financial ecosystem that allowed the bubble to swell to such perilous proportions. Last episode, we met a lot of new faces.

– most of them culprits in the perpetuation of that bubble. We met Benjamin Strong and Montague Norman, the sad, strange pair of banking BFFs who sowed the seeds of the crash in the aftermath of World War I. We learned how Ben Strong deliberately kept the Federal Reserve's interest rates low in a misguided attempt to help his best friend Monty re-establish the British economy and return to the gold standard.

But those low interest rates ended up incentivizing an orgy of credit-fueled stock speculation in the U.S., which quickly spun out of control. By 1929, $8.5 billion was out on loan. And at the time, that was more than the amount of currency in circulation in the entire country. But the most important new addition to our cast was a guy named Sunshine Charlie Mitchell, chief executive of the country's largest commercial bank, National City Bank.

bank. Sunshine Charlie had a big hand in the crash too, although his deft touch was far more opportunistic and insidious than Ben Strong's misguided altruism.

Sunshine Charlie was a master salesman and a visionary leader, and in the early 1920s he cracked the code on how to persuade Americans to invest their meager savings in stocks and bonds, whether it was good for them long-term or not. In an unquenchable pursuit of profits for National City Bank, Sunshine Charlie unleashed an onslaught of predatory salesmen and carefully crafted advertising.

Mitchell was banging on the front door of middle-class America, hawking shady investment opportunities by the billions, and he did not take no for an answer. As a biographer wrote, quote, He saw himself as a man of destiny. If John D. Rockefeller had become the master of oil, he would become the master of money. End quote.

Sunshine Charlie became a celebrity in his own right. His power and influence eventually grew to such proportions that he was tapped to be a director of the New York Federal Reserve Bank in January of 1929. And it was Charlie himself who gave the regulatory Fed board back in Washington a stiff middle finger in March of that year, when they dared to suggest that he refrain from making Federal Reserve funds available to the public for stock speculation. He was accused by one senator of, quote,

slapping the Federal Reserve squarely in the face and of treating its policies with contempt." Sunshine Charlie didn't create the stock market bubble, but he refused to let it deflate, virtually guaranteeing that it would pop in the most traumatic, destructive way possible. There was one person, however, who saw this whole thing coming –

and that is the deeply flawed protagonist of our story jesse livermore in 1891 when jesse's mom stuffed a five dollar bill in his pocket and helped him sneak off the family farm she had no idea that her 14 year old son would end up becoming one of the most celebrated day traders of all time as a corn farmer's wife laura livermore could have never fathomed the kind of opulence her son would earn for himself

The yachts, the cigars, the canary yellow Rolls Royce, the seaside vacation homes and waterfront mansions. All she knew was that she had a smart kid, and he deserved more out of life than decades of toil and a twisted back. Over the course of the last two episodes, we watched Jesse Livermore transform from a baby-faced math whiz into a cigar-chomping, showgirl-spanking titan of Wall Street.

He was an outsider, a savvy, hot-blooded pleb in a stuffy world of calculating patricians. And unlike the J.P. Morgan types, Jesse didn't inherit his fortune. He made it, using what was between his ears. Unfortunately, Jesse was also a slave to what was between his legs. As much time as we've spent charting Jesse's professional success, we've spent even more time arguably examining his personal failures, specifically his turbulent marriage to his second wife, Dotsie.

Last episode, we spent an entire segment looking at things from Dotsie's perspective. How she'd first fallen for Jesse as a 22-year-old showgirl, how he'd put a ring on her finger that said forever and ever, and how she'd given birth to two young boys who looked like carbon copies of their famous dad. But like all good things, that happiness couldn't last. Dotsie became an alcoholic, Jesse cheated on her incessantly, and

and round and round they went on a carousel of marital misery. Eventually, Dots stopped feeling sorry for herself and started having an affair of her very own, finally managing to scrounge some happiness back into her life. The Livermore marriage was clearly kaput, but as we'll see in this episode, they would not disentangle from one another's lives for many, many years, with tragic results.

But Jesse Livermore's claim to fame is not a big house and a bad marriage. Livermore is famous because he not only predicted the stock market crash of 1929, he profited lavishly from it. Last episode, in part two, we watched as Jesse assembled his jigsaw puzzle, gathering intelligence from all across the globe to piece together a rough timetable of when the stock market would start to slide.

In September of 1929, his suspicions were confirmed as the market began to suffer a series of confidence blows, warning signs that built slowly and surely to a fever pitch of panic. When we last left him, Jesse was $20 million richer, but he was far from done. When the crash finally did come, Livermore was going to make more money than God, and he was the only person in America, maybe even the world, smart enough to pull it off.

So, now that we've refreshed our memories on where we've been, let's talk about where we're going. Today, we're going to be looking at the actual stock market crash of 1929, six horrific days that changed the course of history. As economist John Kenneth Galbraith writes, quote, "...in the larger history of economics and finance, no year stands out as does 1929."

It is like 1066, 1776, 1914, 1945, and now, perhaps with the collapse of communism, 1989. It ushered in, for the United States and the industrial world as a whole, the most extreme and enduring crisis that capitalism had ever experienced. End quote.

Of course, there's a slight misconception around the 29 stock market crash that it happened all at once in a single traumatic hammer blow. But the reality was much more disorienting. As John Brooks writes, quote, When the crash finally came, it came with a kind of surrealistic slowness. So gradually that on one hand, it was possible to live through a good part of it without realizing that it was happening. And on the other hand, it was possible to believe that one had experienced and survived it,

when in fact it had no more than just begun. End quote. That said, once things start happening in the story, they're going to happen very, very fast, but we've done the hard work of establishing perspectives and characters that can help guide us through the disorienting catastrophe. We've got Jesse, Sunshine Charlie, even the shoeshine boy Pat Bologna.

But that said, we'll be meeting some brand new characters as well who will enrich the story even more. But we won't just be covering the crash itself today. After a brief intermission, we'll also be looking at the federal investigation that attempted to assign blame and accountability for the disaster in the years that followed. There will be courtrooms, cameras, and big revelations on the witness stand. It is blockbuster stuff, and frankly, I can't believe that Hollywood hasn't made it into a movie yet. Honestly, I think you're gonna love it.

So with all that said, let's jump in and land this bird properly. Welcome to the Stock Market Crash of 1929, Part 3. The music stops.

It's 9.45 in the morning, Thursday, October 24th, 1929. We're on the floor of the New York Stock Exchange, and in 15 minutes at 10 o'clock sharp, the opening bell would ring, and then the trading day would begin. When that bell rang, an immense clockwork of human machinery would spring to life. 1,145 telephone operators, 4,000

500 page boys, and 480 clerks. Like quick-firing synapses in a gigantic brain, the employees of the exchange zipped to and fro across the cavernous trading floor, carrying the hopes and dreams of the entire world in their hands. It was a sophisticated and modern system, as Gordon Thomas and Max Morgan Witts write, quote,

A complex network of wires and cables, running under the floor and buried in the walls, ran to scores of brokerage houses in the financial district. They, in turn, were linked by telephone and private wire to thousands of cities, towns, and hamlets across America. Still other circuits tied in the rest of the world. A Japanese man in Tokyo could, if he wished, place an order and have it processed within three minutes. It took a little over one minute for orders from London, Paris, or Berlin to be executed.

When the 10 o'clock bell rang each day, dozens of stock tickers, those iconic brass machines under their glass domes, would

would begin clicking and clacking the prices of stocks onto thin spirals of paper. One exchange employee estimated that over 2,000 miles of paper would be printed on the trading floor in a single day. In this massive, highly choreographed system, the lifespan of a typical buy or sell order was miraculously short. When a new order crackled over the wires from as far away as Berlin or as close as Brooklyn,

A telephone operator scribbled the order onto a paper slip. He then handed that slip to a waiting page boy, who bobbed and weaved like a QB through the surging crowd to place the order into a pneumatic tube.

The tube would suck the order up and shoot it to one of 12 trading posts, where it was then processed by the clerks. And just like that, stocks were bought and sold around the world. The whole process only took a matter of minutes. But the real stars of this intricate system, the real VIPs, were the stockbrokers. The men, and it was only men at the time, who facilitated millions of trades on behalf of buyers and sellers.

In 1929, at the New York Stock Exchange, there were 900 brokers, and the best of them all was a guy named Mike Meehan. That's M-E-E-H-A-N Meehan. If you looked up the phrase Irish-American in the dictionary, you might find a picture of Mike Meehan. The 38-year-old stockbroker had fiery red hair, a friendly, freckled face, and a tongue bristling with an encyclopedia of profanity.

To the untrained eye, Mike looked like a pretty, normal, unremarkable dude. He was short, with bad eyesight and a bit of a potbelly. He was also deeply superstitious. As Karen Blumenthal writes, quote, "...he wasn't a fancy dresser and didn't worry much about appearances, except to avoid the color green." His brother had once dared him to wear a green tie on the floor of the stock exchange.

Mr. Meehan lost so much money with the tie on that he burnt the tie and swore off green forever. The map of Ireland's all over my face, he said. What do I need with a green tie? End quote. But Mike's modest appearance stood in stark contrast to his professional reputation. The name Mike Meehan meant something on Wall Street. He was one of the most respected stockbrokers to ever walk the floor, and the roaring 20s had been very, very good for his bank account.

Ten years earlier, Mike had been a Broadway ticket salesman, hawking cheap seats to musicals. But one day, he came home and told his wife he wanted to be a stockbroker. It would be hard, he told her, the hours would be brutal, the competition merciless, and the stress unending. But if he played his cards right, he would make their little family rich beyond their wildest dreams.

After all, he hadn't come all the way from Ireland on a boat with his parents at age 11 just to be poor in a different country. At first, his wife was hesitant, but after a stiff drink and a hard think, she relented, as she told her grandson years later, quote, If I'd ever said no, I'd have always been wondering, what if?

End quote. Now, in those days, you couldn't just waltz into the New York Stock Exchange and become a broker. You had to literally buy a spot on the trading floor. And in 1923, they were going for about $76,000 a pop. By 1929, a seat on the exchange was worth well over a quarter million dollars. And that seems like a lot of money to pay for the mere privilege of doing business. But the reason it costs so much was that you stood to make many, many times more.

once you actually had your foot in the door. Mike Meehan secured his spot in 1920, and his biggest break came when he identified the up-and-coming Radio Corporation of America, or RCA, as a very good investment.

At the time, most people looked at radio technology and saw a glorified parlor trick, a sideshow curiosity. Mike looked at radio and saw the future. It was like buying Apple in 1981 or Google in 2004. He got in on the ground floor of an emerging technology at the best time possible. And he kept his promise to his wife. In a few years, true to his word, he was a very, very rich man.

And to most casual observers, Mike's rags-to-riches story was an inspiring fable, a testament to hard work and tenacity, the very definition of the American Dream. But underneath the surface was a less than honorable modus operandi. One of the many ways that Mike continued to grow and sustain his fortune was

was a devious little racket called a stock pool. Well, what the hell is a stock pool, you might ask? Simply put, a stock pool is a conspiracy to artificially manipulate the price of a given stock. Stock pools are, of course, illegal today, but in the 1920s, they were rampant. As John Kenneth Galbraith writes, quote, "'While it lasted, there was never a more agreeable way of making money.'"

end quote as financial schemes go it was simple efficient and best of all it

Easy. Basically, it works like this. You get a small circle of wealthy investors together. Think five to ten guys, each with millions of dollars at their disposal. And you say, okay, gents, we all like money. We all want to make more money. But we don't like risk and we don't like surprises. So here's what we're going to do. We're all going to buy a bunch of stock in a particular company at the exact same time.

We're going to pool our buying power, millions and millions of dollars to artificially raise the share price of that stock. Now here comes the good part. The public is going to see that share price rise and draw the conclusion that it's a good buy, a solid investment.

As excitement around the stock heats up, people buy more and more and more. And consequently, the price continues to rise. But that's not all, guys. We'll pay off financial journalists to pump out articles to hype the stock even more. And just when the price seems like it can't possibly go any higher.

That's when we sell. Slowly, at first, little by little, bit by bit, we don't want to spook anybody. It'll just seem like a natural correction, a natural downturn. But in reality, we have all made a huge profit and left everybody else holding the bag. It was devious, it was unfair, and it worked. As historian John Brooks writes, quote, the point of a pool manipulation was simplicity itself. It was a way of inducing the stock exchange ticker tape to

to tell a story that was essentially false, and thus to deceive the public. "The tape doesn't lie" was the sucker's folk wisdom, but in fact, the tape could be made to lie.

End quote. And no one was better at making the ticker tape lie than Mike Meehan. His seat on the New York Stock Exchange allowed him unprecedented access to the kinds of stocks that could be easily manipulated. After all, every pool needed a manager, someone on the inside, to carefully coordinate the conspiracy of buying and selling. Mike managed dozens of pools throughout the 1920s. As long as he timed his transactions right and never wore his unlucky color, green,

His cut of the profits was guaranteed to be very fat indeed. On one occasion, Mike pocketed $500,000 as compensation for his services as a pool manager. The price of admission to the New York Stock Exchange had been very steep, but once you were in, the sky was your limit.

and the market was your own personal gold mine. Yes, the roaring 20s had been very, very good to Mike Meehan. But on October 24th, 1929, 15 minutes before the opening bell rang, Mike was scared. All 900 brokers at the exchange were scared, and anybody who said he wasn't was lying.

As the minute hand inched closer to 10 a.m. like an executioner's blade, Mike tried to hide his anxiety. He joked and swore and encouraged his staff, but the truth was when that bell rang, no one knew what was going to happen. For weeks, the market had been acting strangely.

There was a chill in the air, a sense of fear and uncertainty that even the old-timers on the trading floor had never experienced. As Mike replayed the events of the past several weeks in his head, it was hard to pinpoint exactly when the vibe had changed, when it had all started to go wrong. But the Babson break had been an undeniable turning point. On September 5th, the economist Roger Babson scared the market to death when he proclaimed that, quote, "...sooner or later, a crash is coming." End quote.

The Dow had dropped 5% that day, many of Mike's assets along with it. If Babson had been here on the trading floor, Mike could have decked him in the mouth for that stunt. Then there was the bad news from London, rising interest rates and the high-profile arrest of Clarence Hatchery, the would-be steel magnate who had defrauded his backers out of millions. That headline-grabbing scandal had been, as one historian put it, quote, the greatest financial fraud of the century, end quote.

All in all, the system was starting to feel broken. If the global economy was a house, people were starting to pull up the floorboards and find swarms of termites wriggling underneath. And to top it all off, there had been the utilities drama up in Boston. Edison Electric had wanted to split its stock at $400. The Massachusetts Public Utilities Board had responded that it was barely worth $200.

shocking the financial community and all but proclaiming that Wall Street was sitting on top of a speculative bubble like some kind of well-dressed Humpty Dumpty. As the air turned cold and October wore on, Mike noticed that he was processing way more orders to sell than to buy. People were getting scared. Like a starving man rapidly losing weight, the market seemed to slip a little each day. 3% there, 1.5% there, up a percent one day, down 2% the next...

Two steps forward, one step back. It was a slow, attritional agony for investors, who were hoping and praying for a surging recovery where there was none to be found. By October 23rd, the Dow Jones had dropped 20% from the previous month, and Radio Corporation of America, RCA, the company that had made Mike so rich in the first place, well, their stock was down 40% from its all-time high that summer. As historian Karen Blumenthal observed, quote,

Stock prices seemed to melt. Out of nowhere, everyone seemed to want to sell at the same time. End quote. All over America, margin calls were starting to come in. Brokers like Mike were calling investors who bought as much as 90% of their stocks on credit

And we're telling them that if they couldn't cover the loan and fast, the shares would be liquidated. Many people were realizing for the very first time that the stock market was a double-edged sword that could cut you very deeply. And today, Thursday, October 24th, today might be the day the dam finally broke wide open. Mike checked his watch. It was 9.55 now.

Just five minutes until the opening bell. Outside the exchange, just a few blocks down Wall Street, 19-year-old Pat Bologna was at his shoeshine stand.

And he was getting nervous too. If you'll recall, we met Pat Bologna last episode. He was the sweet-talking bootblack who shined shoes and doled out hot stock market tips. A local celebrity who boasted famous clients like Joe Kennedy and Sunshine Charlie Mitchell. Pat Bologna always had a joke or a tip or a zinger for every customer that walked up to his stand. But today, his tongue was tied. Something was happening on Wall Street. Something bad. Crowds were beginning to form in front of the exchange.

As Bologna remembered, quote, "...people just stood there, stopped talking, and looked towards the stock exchange. It was like the silence before the off at a big race." End quote. Adding to the sense of unease were the 400 policemen who had arrived on Wall Street that morning. They blocked traffic and fanned out in every direction, pinpricks of blue and a black mass of scared, anxious investors.

"The financial district was said to resemble an armed camp," wrote one historian. And when a passerby asked one cop why the force was there in such numbers, the policeman answered, quote, "In case there's trouble." Pat Bologna closed up his shoeshine stand early that morning. Maybe today wasn't the best day to be cracking jokes in shining shoes. And it's not like he didn't have skin in the game.

Bologna had $5,000 invested in the stock market, his entire life savings. And he was just as anxious as anyone about what would happen to it when the 10 o'clock bell rang. Back inside the New York Stock Exchange, Mike Meehan was already preparing to process orders that had come in overnight across the wires. Some were for RCA, others were for General Electric, others were for U.S. Steel. But they all had one thing in common –

A single word. A four-letter word worse than all the other four-letter words Mike knew. One that he would see over and over and over again that day. S-E-L-L. Sell. At 10 o'clock a.m.,

The bell rang. The market opened, as one broker remembered, quote, like a bolt out of hell, end quote. Within minutes, stock prices were dropping vertically in a, quote, absolute free fall, another said. Historian Maury Klein describes the sudden financial violence, quote, the dreaded tsunami of selling crashed down at once. Never had so many orders poured in so fast from so many places. 1.6 million shares changed hands in the first half hour alone.

and the pace never slowed. No sooner was a phone hung up, then it rang again. And it was not fear that drove prices downward, but rather the thousands of thousands of shares dumped on the market as a result of accounts wiped out by margin calls overnight. The giant edifice of prices was honeycombed with speculative credit and was now breaking under its own weight. Mike Meehan looked around the exchange floor and saw a complete breakdown in decorum. As Karen Blumenthal observes, quote,

As stock prices dropped lower and lower and lower, voices rose, tempers flared, and shirts became soaked with sweat.

It didn't take long for an animalistic panic to take hold of every man and woman on Wall Street that morning. One historian wrote that, quote, floor brokers were literally being pinned against the trading counter by the overwrought throng, end quote. And historian Parker Selwyn describes the scene in his own way, quote, the floor of the exchange was bedlam.

with jobbers caught in the middle. In vain attempts to be heard above the din, they were screaming orders to sell, and when that did not work, they hurled their chits at the chalk girls. Pushing and shoving, they fought to get to the front of the line. Others, transfixed by the plummeting share prices, simply stood where they were, in an almost catatonic state.

End quote. Across the board, prices seemed to be crumbling. Big companies, small companies, it didn't matter. General Motors was down $12. Westinghouse Electric was down $20. General Electric's share price fell $25 and Auburn Auto's fell $75.

The drops were so violent and extreme that they triggered a nightmarish chain reaction of stop-loss orders. Stop-loss orders are automated sell orders that take effect if a stock price falls below a certain level. Under normal circumstances, they're a protective measure. But on Black Thursday, they were like a string of landmines detonating in the belly of the bull market.

As John Kenneth Galbraith writes, "Brokers had placed many of these orders for their own protection on the securities of customers who had not responded to calls for additional margin. Each of these stop-loss orders tripped more securities into the market and drove prices down further. Each spasm of liquidation thus ensured that another would follow." Prices fell and fell and fell. All over America, brokers were calling their clients demanding more money to cover their holdings.

But so many people had bought their stocks on margin, so many people had invested with borrowed money that they simply could not pay. The brokers were forced to sell those shares, but to who? And so, the prices continued to spiral. As one compassionate broker remembered, quote,

It was agonizing talking to clients. When they were unable to put up the margin required, they often abused the broker, blaming him for not having sold their shares sooner when prices had been higher, or bemoaning the fact they might now receive nothing at all. Much human misery followed in the wake of those calls. End quote.

The entire thing was beyond the comprehension of every broker, trader, clerk, and investor as Richard Whitney, the VP of the exchange, remembered, "...all at once the inconceivable terrors of the unknown and the unfamiliar are thrust upon the public mind. Confidence is paralyzed. Chaos reigns."

The stock tickers installed at the New York Stock Exchange could print 285 characters per minute. But the brass machinery could not keep pace with the logjam of signals coming over the wire. Prices were falling so fast that the stock tickers were soon an entire minute behind, then five minutes, then 30 minutes, then an hour, then two. And it was the same at every barbershop, post office and brokerage in cities across America. When new prices came out over the ticker tape, they could be hours old.

Investors, big and small, had to make life-changing decisions based on unreliable information. As John Kenneth Galbraith writes, quote, "...many now learned for the first time that they could be ruined, totally and forever, and not even know it." End quote. Outside the exchange, the scene was even more chaotic, with thousands of people crowding along Wall Street desperately trying to get inside, trying to get face-to-face with a broker who could sell their shares while they still had some money left.

Pat Bologna, the 19-year-old boot black, was one of them. Right around 11:00 AM, at the fever pitch of the panic, Bologna was fighting and shoving and pushing his way into the customer's room. The $5,000 he'd invested in the market had been done on margin, and he was terrified that he was about to lose it all. All those endless hours, shining shoes and sweet-talking customers, it would all be for nothing if he couldn't get his money out.

Bologna remembered the pandemonium vividly well into his old age, and he describes the scene, quote, "'In the crowd there's a Chinese man wearing a hat which rests on his ears. He's got a dead cigar and a mouth of dead teeth. He's standing on tiptoe to see over the shoulders of a woman wearing a big fancy hat. She's holding out her wedding ring and shouting, "'You want more margin? You can't have more margin. He's drunk as a lord.'"

Everybody is shouting. They're all trying to reach the glass booth where the clerks are. Everybody wants to sell out. The boy at the quotation board is running scared. He can't keep up with the speed of the way stocks are dropping. The board's painted green. The guy who runs it is Irish. He's standing at the back of the booth on the telephone. I can't hear what he's saying, but a guy near me shouts, the son of a bitch has sold me out.

End quote. Bologna's mind raced with fear. But then, he remembered something a customer had told him once. The customer was a handsome, broad-shouldered man with a sunny disposition and a warm grin. A real big shot. Bologna remembered that the handsome customer had tossed him a quarter and then a gem. Quote, End quote.

That customer's name was Sunshine Charlie Mitchell, chief executive of the National City Bank. Pat Bologna took a deep breath, tried to calm down, and pushed his way back outside. He decided that he would hold on. The market would recover, just like it had always recovered before. It had to. As Bologna assured a man close by, quote, "...what goes down can always come up with help." The cavalry was coming.

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It was just after 12 p.m. on Black Thursday when the panicked crowd in front of the New York Stock Exchange caught sight of a man walking briskly down the sidewalk. He was a tall man in his early 50s, handsome, well-built, with a strong jaw, piercing eyes, and a reassuring grin. All the shoeshine boys and bootblacks recognized him immediately. After all,

Sunshine Charlie Mitchell passed this way every day on his six-mile walk to work at the National City Bank. It was a cold day, but Charlie's blood was running hot. He'd taken off his coat and rolled up his white sleeves to the elbow. No one appreciated the importance of sharp attire better than a master salesman like Sunshine Charlie, but today was not the day for decorum. He was a man on a mission. Two days earlier, on October 22nd, he'd arrived home in New York from a short European vacation. He'd

He'd barely had a second to walk through the door and put his suitcase down before he was assailed by a mob of pessimistic reporters screeching about an impending market break. Charlie had a stage actor's command of his facial reactions. He could smile and laugh and wink, even when his insides were boiling with contempt. But it

But it was getting harder and harder to be a ray of sunshine for these people. He was getting tired of all this constant fear-mongering, this contagion of cowardice that was seeping into the minds of once bullish investors all over America. After all he had given them, they still couldn't seem to find a backbone. Seven months ago, he had saved their asses. When the Fed board in Washington had told its branches across the country to stop lending for stock speculation, who had stood up to them?

Charlie Mitchell, who had made $25 million available for more loans when the public desperately needed reassurance. Charlie Mitchell, who had turned National City Bank into a powerhouse that was the envy of every commercial bank from Toronto to Tokyo. Charlie Mitchell. Me, me, me. When the reporters asked him what he thought about the shaky markets, he stifled a sneer and said it was a harmless case of cold feet. Quote,

I know of nothing fundamentally wrong with the stock market or with the underlying business and credit structure. The public is suffering from broker's loanitis." For someone whose personal wealth was as deeply entwined with the stock market as Charlie Mitchell, it was an understandably hopeful position. As historian Michael Perino observes, "...people have a remarkable capacity for self-delusion, particularly when those delusions are congruent with their own financial interest."

But on Thursday, October 24th, 1929, Charlie's self-delusion was beginning to falter. Even his beams of sunshine couldn't break through this much cloud cover. The stock market was in a full-on rout. The tickers were two hours behind, and Wall Street itself looked more like a prison riot than a financial district.

Half an hour earlier, at about 11.30, Charlie had been in his office at National City Bank trying to make sense of what was happening, and then the telephone rang. The person on the other end had been trying to reach him for 10 minutes, but the phone lines were so jammed they couldn't get through. Charlie mumbled a few words into the receiver, hung up, and bolted out of his office. He left so fast he

He didn't even have time to put on his coat. As he stepped outside, the blast of cold air hit Charlie like a wall. But he didn't have to walk far. He did six miles every day with ease. And today, his destination was just two blocks down Wall Street. After a few short minutes, Charlie arrived in front of a large, imposing building. There were no markings on the door. No name, no logo, no sign. Just the address –

23 Wall Street. As historian Parker Selwyn writes, quote, End quote. These were the offices of J.P. Morgan.

the largest and most influential investment bank in the history of the world. Once inside, Sunshine Charlie saw many familiar faces. It was a who's who of the banking elite, an Avengers assemble moment of Wall Street celebrities. One historian called it, quote, a gold-plated consortium, end quote.

The chairman of Chase Bank was there, reps from the Bankers Trust, the Stock Exchange, and of course, the top partners from JPMorgan itself. They represented, not even including JPMorgan, quote, more than $6 billion of masked banking resources, according to one source. All of them, including Sunshine Charlie, had been summoned for the most high-stakes brainstorm in the history of corporate brainstorms.

And the question on everyone's mind was how the hell are we going to avert this crisis? Now, when you get that many big egos and personalities into a single room, efficiency tends to take a nosedive. But these men understood what was at stake. The market had barely been open for two hours, and the exchanges in Montreal and Toronto had already crashed. Charlie and the boys understood that if they didn't do something, and fast, the world economy might collapse.

So, in a meeting that only took 20 minutes, the leader of each bank, trust company, and investment firm agreed to put up a combined total of $100 million to inject into the floundering market. Now, no one really knows how much they agreed to contribute – some historians say $240 million, others say $50 million – but regardless of the exact figure, it was a lot. Enough, they hoped, to prop up prices and stop the rapidly spreading panic.

So, led by Sunshine Charlie, the Wall Street Avengers walked out the front door of J.P. Morgan to tell a crowd of reporters what they had agreed to do. The sight of Charlie Mitchell had a calming effect on people, as Gordon Thomas and Max Morgan Witts write, quote, Mitchell's relaxed dress and demeanor worked like a potion on the people. The crowd's good humor gradually returned. On all sides, the cry was taken up, it's going to be alright.

End quote. Back inside the New York Stock Exchange, the banker's pool, or organized support, as it was euphemistically called, was already working its magic. The

The VP of the exchange, a hulking man named Richard Whitney, barreled through the mosh pit and ordered 25,000 shares of Union Steel at $205 each, $5 million in total, and cheers went up around the trading floor. The afternoon saw a merciful upswing in prices. John Kenneth Galbraith writes that, quote, "...the panic did not last all day. It was a phenomenon of the morning hours." End quote.

At lunch, it seemed as if the bleeding had finally stopped. The high priests of Wall Street, Sunshine Charlie and the J.P. Morgan partners, had stepped in and saved the day. I see nothing to worry about, Charlie beamed to the press. Although for many small-time investors, the support had come too late. They'd watched their life savings vaporize before their morning coffee was even cold. As one historian wrote, quote,

To many, many watchers, it meant that they had been sold out and that their dream, in fact, their brief reality of opulence had gone glimmering together with home, car, furs, jewelry, and reputation. That the market, after breaking them, had recovered was the most chilling of comfort. End quote. The trading day only lasted from 10 a.m. to 3 p.m., but to anyone with a single dollar invested in the stock market, it seemed as if eons had passed.

According to Karen Blumenthal, quote, When the gong rang at 3 p.m., the calls and yells of traders and floor brokers turned into a collective howl, a combination of groans, boos, and moans of relief. Exhausted and dripping with sweat, some traders leaned against their posts. Men stood dazed, holding handfuls of unfinished orders. Overwhelmed clerks threw torn paper, ticker tape, and memo pads in the air until it looked like a parade had come by. End

Everyone on Wall Street was dazed, numb, and emotionally exhausted. One journalist said at the time that, quote, people's expressions showed not so much suffering as a sort of horrified incredulity. Another said the brokers and employees at the exchange looked like, quote, shell-shocked soldiers, end quote. But

But even after the yelling and screaming had stopped, the stock tickers kept on clacking out the prices onto miles and miles of ticker tape. By this point, the tickers were printing on a four-hour delay. As Thomas and Morgan Witt write, quote,

At 7.08 p.m., 248 minutes late, the ticker finally finished recording the day's story. Brokers had traded in 974 different stocks during a crash which saw 12,894,650 shares change hands. A record. But the morning's losses of $6 billion had been halved during the afternoon. End quote.

Wall Street minds are some of the most opportunistic and creative in the world, and the tickers had barely stopped printing before some employees started slicing off portions of the historically significant tape to sell as souvenirs for 50 cents a pop. In the evening hours, reactions to the losses of Black Thursday ranged from zen-like acceptance to suicidal hysteria. The Wall Street Journal summed up the day's events, quote, "...prices were literally slaughtered." End quote.

The individual tales of woe were manifold. One young woman calmly told a reporter that she had lost $1 million in five hours. Her acceptance of the loss was astonishing, quote, I had a perfectly stunning time while it lasted. I never knew before what fun it was to make money. No wonder you men want to monopolize the business, end quote. One man, a grocer, said that he was $300,000 poorer on paper, if only he'd taken profits a few days earlier. But

But one of the most traumatic accounts of that day comes from the household of Edward Stone. Stone was a wealthy investor who'd done very well for himself during the stock market boom of the 20s. He lived with his wife and adult daughter in a lavish apartment overlooking Central Park. Well, on Black Thursday, Edward got wiped out. In a handful of hours, he'd lost $5 million.

And when he came home from work at 6 p.m. that day to the family apartment, his wife Mabel and his 22-year-old daughter Edith immediately realized that something was wrong. Edward opened the front door in a daze and then suddenly erupted into hysterical screaming, quote, End quote.

Mabel and Edith tried to talk to him, but he just pushed past them, heading for the terrace. Quote, I'm gonna kill myself. It's the only way. You'll have the insurance. End quote.

What ensued over the next few minutes was a fight for Edward's life. Mabel and Edith tried to pin him down, grab his waist, trip up his legs, choke him into unconsciousness, anything to stop him from getting to the balcony and flinging himself over the railing towards the street 20 stories below. But he was way too strong. It was only a matter of seconds before he might break loose and disappear over the railing. His daughter Edith, having no other options, tried to shock him out of hysteria with her words. Quote,

I called him a sissy, yelled at him, reviled him, hated him for what he was making me say and do. End quote. Mabel, the wife, slapped him hard on each cheek for good measure. And finally, his strength gave out. Edward crumpled like wet paper and burst into tears. Then the three of them, Edward, Mabel, and Edith, clung to each other on the balcony and cried. Mabel tried to comfort her husband saying, quote, Ed, it doesn't matter. Well,

will manage somehow."

But comfort like that was in scarce supply on Black Thursday, and some investors turned to less conventional sources for answers. Way back in part one, we met a famous fortune teller named Evangeline Adams, who specialized in providing clients with answers on what the stock market was going to do. Needless to say, on October 24th, her studio office above Carnegie Hall had a line out the door. There were so many people clamoring for her advice that Evangeline abandoned individual sessions and

and just started prophesying to large batches of people all at once. And they all desperately wanted to know, why was the stock market crashing? Was this the end? How bad would things get?

Should we buy the dip, sell everything, hold on a little longer? What should we do? Evangeline Adams shuffled her tarot deck and traced a finger over her crystal ball. No matter the client, no matter the situation, her answer was always the same. She said that the planets and celestial bodies were interacting to create, quote, spheres of influence over susceptible groups, who in turn will continue to influence the market. End quote. Friday and Saturday would be good, she said.

the next monday would be even better the worst was over good times would return again sweating under the hot lights in her crowded carnegie hall studio evangeline got a message from her own stock broker he informed her that she was down a hundred thousand dollars before continuing her optimistic prophecies she slipped a note back to her broker telling him to sell all of her holdings

at opening bell the next morning. Clearly, even Evangeline Adams wasn't willing to leave her fortune up to fate. But in the cold light of hindsight, it was abundantly clear what had happened on Thursday, October 24th, 1929. As Gordon Thomas and Max Morgan Witts explain, quote,

America, the richest nation in the world, indeed the richest in all history, its 125 million people possessed more real wealth and real income per person and in total than the people of any other country, was now paying the price for accepting too many get-rich-quick schemes. The damaging duels fought between bulls and bears, pool operations and manipulations, buying on overly slim margins, securities of low and even fraudulent quality, the

The indecisive and sometimes misleading leadership from the business and political world had contributed to the nationwide stampede to unload. End quote. The only question was, would this continue? Was this the bottom? Most people believed, or at least needed to believe, that this was just a nasty correction, not a real crash.

Surely it could not get any worse. President Herbert Hoover tried to step up and inject some calm into the equation, saying that, quote, the fundamental business of the country, that is production and distribution of commodities, is on a sound and prosperous basis, end quote. But when prodded by advisors to tell the public that stocks were currently cheap and a smart buy, he flatly refused. Sunshine Charlie Mitchell insisted that, quote, the fundamentals remain unimpaired, end quote.

The chairman of another bank reassured, quote, This crash is not going to have much effect upon business, end quote. A brokerage firm called Hornblower and Weeks placed an ad in 85 papers saying, quote, We believe that present conditions are favorable for advantageous investment in standard American securities, end quote. One investment trust placed an ad in the Wall Street Journal that read, quote,

S-T-E-A-D-Y steady. Everybody, calm thinking is in order. Heed the words of America's greatest bankers. End quote. Clearly, preventive incantation was in full effect on Thursday evening, but it was something closer to collective denial. It had been a very bad day for everybody.

Well, almost everybody. Somewhere uptown, in a discreet, rented apartment, Jesse Livermore puffed on a Cuban cigar and glanced at the sleeping young woman wrapped in the bedsheets next to him.

For days, he had been camped out at his offices on the 18th floor of the Heckscher building on Park Avenue, working 18-hour days. But occasionally, he allowed himself a few hours to sneak out and satisfy his appetites. The woman next to him was one girlfriend in a web of side pieces and flings, a welcome distraction after days of endless research and analysis, shorting and maneuvering.

He wondered what she would say if he told her that he'd made $14 million today. It wouldn't be easy to sleep tonight, but Jesse knew that he should at least try. Tomorrow was bound to be another big day on Wall Street. Overdressed cheerleaders like Charlie Mitchell might be trying to convince people that Black Thursday was rock bottom, but Jesse knew better. This was only the beginning, and he had the short positions to prove it. Maybe he was wrong, though.

It's not like he hadn't been wrong before, in the market or otherwise. He'd been bankrupted by bad deals and swindled by shady partners. Even his marriages had been a string of poor investments. Right now, Dotsie was probably on her fifth glass of wine at the Evermore Mansion in Great Neck. It was only 45 minutes away by car, but for all Jesse cared, Dots might as well have been on the other side of the world. His mind turned back to his short positions. The banker's pool, organized by J.P. Morgan, had saved the day.

reversing $6 billion in losses to, quote-unquote, only $3 billion. And Jesse's gains might have been much larger today had it not been for that little display. But it was a band-aid on a bullet wound. The bankers were trying to shepherd a panic herd of investors along the edge of a very steep cliff, and only time would tell if they would keep their nerve enough to safely navigate it.

If Jesse felt any twinge of guilt or remorse at profiting so heavily from the loss of so many others, millions of people, he pushed those feelings deep down. And what was he supposed to do? Go down in flames with the rest of them? People who had been living in a fantasy world and were now paying the price? No, this was inevitable. He was simply making the smart play. As Jesse once observed, quote, "...gravity works in the market as well as in science."

end quote but there was still plenty of work to do it wasn't just a matter of betting that everything would go down the waves of this panic would rise and fall and crash in unpredictable ways knowing which stocks would drop and recover and win that was a matter of pure intuition tomorrow the crash would continue and the next day and the day after that and the day after that and even jesse livermore could not fathom just how bad things were about to get

There are many myths surrounding the 1929 stock market crash, but one of the most persistent is that it triggered a suicide epidemic. Stop any random person on the street and ask them what they know about the great crash, and you're very likely to get an answer about ruined investors jumping off tall buildings to their deaths after losing everything in the stock market. It's a very iconic visual, and not for nothing. There's a famous cartoon. You might have seen it, but I'll be sure to post it on the show's social channels, and

And the cartoon shows destitute stockbrokers calmly forming a line to throw themselves out the window. The artist even included a sign that says "Line forms on the right." And this cartoon was drawn at the time, shortly after the crash. So, from the jump ,

this visual of suicidal brokers has been intertwined with the mythology of the Great Crash. And like all myths, it has its roots in fact. We've already heard the sad story of Edward Stone, who lost $5 million on Black Thursday and tried to throw himself out a 20-story window in front of his wife and daughter. Thankfully, Edith and Mabel were able to snap him out of it before he could do the deed. Others were not as lucky. The next day, that Friday, a Chicago real estate investor stuck his head in an oven.

Another man shot himself in Kansas City a few days later. In Scranton, Pennsylvania, a civil engineer lit himself on fire and burned to death. And in St. Louis, a stockbroker downed a belly full of poison. Another man left a suicide note that said, quote, My body should go to science, my soul to the Secretary of the Treasury, and sympathy to my creditors. End quote.

But these colorful cases were exceptions rather than the rule. The Great Crash of '29 did not trigger any substantial wave of suicides. But why is that perception so hard to shake? Why has that stuck with us so long? Well, the origin of the myth appears to come from a handful of contemporary comedians,

specifically a vaudevillian by the name of Eddie Cantor. Back in the day, Eddie Cantor was a hugely popular performer. He'd come up on Broadway, singing, dancing, and performing in shows like the Ziegfeld Follies. In fact, there's a pretty decent chance he knew Dotsie Livermore in her hip-shaking glory days. By 1929, Eddie was a huge star. But even huge stars are not immune to bad financial decisions.

And just like everybody else, Eddie got swept up in the stock market hysteria of the roaring 20s. So when Black Thursday came around, he got wiped out with all the rest of them. But one man's misery is another man's material, and Eddie Cantor made comedic hay out of his own stock market woes.

On Sunday evening, October 27th, three days after Black Thursday, Eddie was performing as the Master of Ceremonies at the annual Jewish Theatrical Guild meeting in New York. And like any good comedian, he couldn't resist the opportunity to do some topical riffing. He told the crowd, quote, If the stock market goes any lower, I know thousands of married men who are going to leave their sweethearts and go back to their wives. As for myself, I'm not worried. My broker is going to carry me, he and three other pallbearers. End quote.

Another joke he made at the time was, quote, End quote.

But Eddie told another infamous joke, one that is very likely to be the origin of the suicidal stockbroker myth. Quote, Yesterday I went to a hotel in New York and asked for a room on the 19th floor. The clerk looked up at me and asked, What for? Sleeping or jumping? End quote. Of course, Wall Street has always been fruitful ground for comedy, as Mark Twain himself wrote way back in 1894, quote,

October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February. End quote.

But suffice to say, most people were not laughing in the aftermath of Black Thursday, in particular, our old friend, Sunshine Charlie Mitchell. That night, Charlie sat at home stewing with anxiety. On most days, Charlie was a chatterbox, a quote, genial extrovert, as one historian put it.

But today, he was silent and angry, lost in a labyrinth of his own thoughts. A stock market crash is never convenient, but for Charlie and his bank, National City, Black Thursday had come at literally the most inopportune time possible.

possible. For months, Charlie had been working on a pet project. It would be his crowning achievement, the jewel in the golden scepter he wielded as America's favorite banker. For months, Charlie Mitchell had been negotiating a merger with another bank, an institution called the Corn Exchange Bank and Trust Company. The name was silly, but the deal was no joke. If this merger went through and National City absorbed the new holdings…

Charlie Mitchell would become the chief executive of, in his own words, quote, not only the largest and most powerful, but the most solid institution in the world, end quote.

In early October, the ink was all but dry. The last step in the process was a formal approval by the bank's shareholders, and they were all very, very excited about the merger. As John Kenneth Galbraith elaborates, "...holders of Corn Exchange stock were to receive, at their option, four-fifths of a share of National City stock or $360 in cash. The price of National City stock was then above $500, so it was certain that the Corn Exchange stockholders would take the stock."

Then came the crash. End quote. Sunshine Charlie watched in horror as National City's stock price went down and down and down. $500 a share, to $450 a share, to $425 a share. All of a sudden, stock in National City was worth less than the optional cash payout corn exchange shareholders were being offered. An event that was

And if that decline continued, National City might have to pay out $200 million in cash to investors, which it absolutely could not afford. The only option, it seemed, was to kill the merger. But Sunshine Charlie could not, would not, let his dream die. This was the apogee of his ambition, his big moment.

This wasn't just the culmination of a few months of merger negotiations. This was going to be the defining legacy of his career. He could not let a few panicked investors take this from him. He had to save the merger.

but how well he needed to get national city's stock price back up to its formerly inflated level and in the gloom of his office a light bulb went off in charlie's mind the next day friday october 25th the new york stock exchange opened surprisingly strong after the thursday bloodbath like a pair of flimsy oars in a hurricane the market held firm but barely

The next day, Saturday, was another disorienting combination of minimal losses and high anxiety. Still, it was a relief after the nightmarish selling on Black Thursday. As Galbraith writes, quote, Not only were things better, but everybody was clear as to who had made them so. The bankers had shown both their coinage and their power, and the people applauded warmly and generously. The financial community, the Times said, now felt, quote,

secure in the knowledge that the most powerful banks in the country stood ready to prevent a recurrence of panic. As a result, it had relaxed its anxiety. Perhaps never before or since have so many people taken the measure of economic prospects and found them so favorable as in the two days following the Thursday disaster. End quote. The stock exchange, as per usual, was closed on Sunday. Churches were packed and prayers were piling up at the pearly gates begging for a much-needed market rally. Because

Because the next day, Monday, October 28th, that would be a clear indicator as to whether Black Thursday had been a horrific fluke or a sign of things to come. And so America held its breath. And as you may have guessed, the New York Stock Exchange opened with a historically bad case of the Mondays. According to Karen Blumenthal, quote, Immediately after the opening gong, prices started to drop again. As on Thursday, the trading was fierce and downward.

But this day had a different feel. Huge blocks of thousands of shares were changing hands, not little groups of 100 or 200 shares. While the smaller, lesser-known issues were particularly beat up last week, today the blue chips, the best of the best, were getting whacked. The stocks of U.S. Steel, American Telephone and Telegraph, and General Electric, the most seasoned of companies, tumbled. The little guys were wiped out the week before, and now the big players were joining the panic.

The decline was gathering steam. End quote. That Monday was, as Scott Nations puts it, quote, a disaster. No stock was safe from ruinous collapse, according to Maury Klein, quote, speculative favorites, blue chips, banks, utilities, investment trusts, all dropped through low levels no one dreamed they would break.

By 1 p.m., the ticker was two hours behind again, and the same infectious cloud of panic that had enveloped the market on Black Thursday had returned with a vengeance. But then, just after lunch, a ray of hope broke through the clouds. The reporters and crowds on Wall Street saw a man marching down the street towards the offices of J.P. Morgan. It was the one, the only, Sunshine Charlie Mitchell. Relief and reverence swept through the crowds.

Sunshine Charlie was back with a vengeance too. He was obviously going to J.P. Morgan to rally another round of organized support, a banker's pool that would yet again stem the tide and save the stock market. Charlie waved at the crowds and smiled and then disappeared into the unmarked offices of J.P. Morgan. But what the people did not know was that Charlie was not there to help any of them. He was not there for another Avengers Assemble moment with the banking elite. Those times were long gone.

In fact, the opposite was happening. Most big banks were calling in their loans, trying to save themselves, which in turn pushed the prices down as accounts were liquidated from Texas to Toronto. The stock market was collapsing. Nothing could stop that now. Sunshine Charlie was at J.P. Morgan that afternoon to ask for a personal loan of $12 million to save the merger that would make National City Bank the largest financial institution in the world, Charlie's.

Charlie decided he would personally buy millions and millions of dollars of National City stock in an effort to keep the share price at an acceptable level. From J.P. Morgan's perspective, it was an incredibly risky loan. But banking is about relationships, and Charlie had an excellent relationship with the boys at 23 Wall Street. As Jack Morgan himself said of Charlie and the rest at National City Bank, quote, "...they are friends of ours, and we know that they are good, sound, straight fellows."

So, around 1.30 p.m., Charlie left the offices of J.P. Morgan with a smile on his face, confident that his bank stock would live to fight another day. The rest of the country did not have such well-placed friends. No cavalry was coming this time. And when the closing bell rang at 3 p.m., the butcher's bill was jaw-dropping, as Thomas and Morgan Witts write, quote, "'Nine million, two hundred and twelve thousand, eight hundred shares had been traded.'

It was less than on Black Thursday, but the fall in prices was far more severe. The Times' general average of stocks was down 29 points. This was the largest drop in prices during any day in the entire history of the New York Stock Exchange. All told, securities had fallen in value an estimated $14 billion. End quote. Monday, October 28th was the worst day in the history of Wall Street.

or at least it was for 24 hours.

The next day, Black Tuesday, would surpass any and all conceivable thresholds of what Wall Street thought possible. The morale of American investors was already beaten, bruised, and bloodied. Tuesday, October 29th, would snap that resolve with such traumatic force that the market would not recover for another 20 years. On the eve of Black Tuesday, the employees of the New York Stock Exchange were still reeling from the events of Monday.

working late into the night to process the avalanche of orders that had clogged the wires during the trading day. Wall Street had descended into a surreal state of anarchy and disorder, as one reporter named John Leonard described, quote,

Slum children invaded the district to play with balls of ticker tape. Well-dressed gentlemen fell asleep in lunch counters. All the downtown hotels, rooming houses, even flop houses were full of financial employees who usually slept in the Bronx. It was probably Wall Street's worst night. Not only had the day been bad, but everybody down to the youngest office boy had a pretty good idea of what was going to happen tomorrow. End quote. The worst was clearly yet to come.

As John Kenneth Galbraith writes, quote, "...the singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have only been the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to ensure that as few as possible escaped the common misfortune."

Bright and early the next morning, on Tuesday, October 29th, our favorite shoeshine boy, Pat Bologna, was riding the subway down to the financial district. Looking around at the other Wall Street-bound passengers, the brokers, clerks, and bank employees, Bologna saw what can only be described as a group of zombies. People who had battled through Thursday's crash, who had been hit again hard by Monday's break, looked like they couldn't take it anymore. They were at the end of their resistance.

End quote. Bologna went on to compare the subway car to the Titanic, heading inexorably towards disaster. The mood was equally grim on the floor of the New York Stock Exchange. Mike Meehan, the veteran broker who had made his fortune betting big on radio and kept it by operating shady pools, was dressed to the nines on Black Tuesday. With his crisp blue suit, pearl tie pin, and freshly polished shoes, he looked, according to one broker, quote, "...like several million dollars."

or a man going to a funeral. As for his staff, they were supposed to have resembled, quote, the defenders of the Alamo as they waited to be overrun, end quote. Up the street at National City Bank headquarters, Sunshine Charlie was quietly preparing to buy as much of his own bank stock as possible with the $12 million loan he had received from his buddies at J.P. Morgan.

And uptown, at his 18th floor command center on 5th Avenue, Jesse Livermore was holding his breath, waiting to see if the market would do what he'd bet his entire fortune and reputation that it would do. For Jesse, it would be the single most profitable day of his life. And for the rest of America, it would be something else entirely. As John Kenneth Galbraith writes, quote,

Tuesday, October 29th was the most devastating day in the history of the New York stock market. And it may have been the most devastating day in the history of markets. It combined all the bad features of all the bad days before.

End quote. Within the first 30 minutes of the trading day, over 3.5 million shares had been sold and $2 billion of wealth had vanished into thin air. The disaster machine was self-sustaining now, as Galbraith writes, quote, "...the market had reasserted itself as an impersonal force beyond the power of any person to control. And while this is the way markets are supposed to work, it was horrible."

End quote. The vice president of the New York Stock Exchange, Richard Whitney, could only sit back and marvel at the sheer financial violence of the selling spree. Quote, End quote.

The immense scale of the trading threatened to completely destroy the exchange's communication systems, the hundreds of miles of wires and electrical infrastructure that allowed the brokers to process the orders. By mid-morning, transatlantic calls had doubled, and the system was bottlenecking. As one witness said at the time, it was like, quote, trying to force a gallon of water into a quart bottle, end quote. And all the while, stocks continued to, quote, tumble into a seemingly bottomless pit, escalating

as one reporter put it. And the misery was not confined to Manhattan. The Montreal and Toronto stock exchanges collapsed in tandem. The smaller exchanges in Chicago, Boston, Philly, and San Francisco suffered grievous wounds as well. The roaring 20s, the age of prosperity, was officially over. As one historian wrote, quote, On the day the bubble burst, the land was dotted with houses bought on part payments, cars bought on credit, carpentry,

Clothes, jewelry, vacations, luxury goods of every kind, acquired on the promise to pay in the future, often when stock profits came in. Now, for too many, the money would never come.

Thomas and Morgan Witt write that in Flint, Michigan, witnesses saw men "...whaling like lunatics, saying they wished the motor car had never been invented. They were ruined from their losses in General Motors. Outside brokerage offices there were lines of "...white-faced men who already knew what misery lay ahead."

And one of those white-faced men back in New York was the boot black Pat Bologna. When the market opened up and the evisceration continued on Tuesday, Bologna decided it was time to get the hell out. And when he finally managed to get a broker on the phone, he learned that the $5,000 he had saved over the past several years had dwindled to a mere $1,700.

Nevertheless, he considered himself lucky to have made it out with anything at all. Up the block, sunshine Charlie Mitchell was not feeling so glass half full. The stock price of National City Bank had continued its downward spiral. All the money he'd personally borrowed from J.P. Morgan to keep the price afloat, it had done nothing to buoy the stock. A few weeks earlier, National City stock had been trading well above $500 a share. Now, it was only worth $300 a share.

His merger, his baby, was toast. Sunshine Charlie ended Black Tuesday angry, scowling, and in astronomical debt. For years, he had tried to be the captain of the eternal bull market, to spur it on to new heights of prosperity. But now, he was a passenger, a witness, a victim, just like everybody else.

Seven miles uptown on Fifth Avenue, Jesse Livermore was so exhausted he could barely stand. He had watched the stock market continue its collapse just as he had predicted. The phones had been ringing off the hook all day long as Jesse's staff navigated the rolling waves of selling and buying, but his shorts had been well-placed. And when his secretary placed the final profit tally on his desk that evening, it finally hit him. As biographer Tom Rubethan writes, quote,

He already knew to the last cent what the figure was, but seeing it on paper was truly surreal. End quote. That day alone, Jesse had made, quote, a reported $66 million profit to bring his total gain for the week at $93 million. Adding in the other smaller gains he had made in September and early October, his total profits exceeded $100 million. End quote.

His prophet on Black Tuesday was believed to be the second biggest single-day prophet of anyone in history.

End quote. Jesse looked at his watch. It was 9 o'clock p.m. It's easy to imagine a playboy like Livermore ordering a magnum of champagne, a curvaceous call girl, and roaring off into the night in his yellow Rolls Royce. He had more money than God, and most men in his position would want to celebrate that historic achievement. But Jesse just wanted to go home. After days in the trenches, he

he just wanted to see his wife and kids, strained as the marriage might be. He wanted to put his feet up at the house in Great Neck, pet his dog, and begin digesting what had just happened, not only to him, but to the country. As Rubethan writes, quote,

and Dotsie's mother was wailing in the background. They had heard the news on the radio about the market crash and that many leading investors had been ruined. Dotsie assumed her husband had been one of them. She was getting ready to hear her husband say that they would have to leave their houses, sell the cars and yachts, and return to living in a modest rented apartment in the city. Livermore took a few seconds to understand what was happening, and when he grasped it, he quickly explained to a stunned Dotsie that

Far from being ruined, they were now richer than anyone could believe. What he was saying took a few minutes for her to absorb and she said to him, quote, You mean we are not ruined? He replied, No, darling. I have just had my best ever trading day. We are fabulously rich and can do whatever we like.

Before we jump back into the story, I wanted to take a quick pause for what you might call an intermission. Not only to just step back and breathe after the traumatic events of the Great Crash, but to also let you guys know about something special I put together for you. The story of the stock market crash is so big and so complex and so multifaceted that

that to have any sense of narrative cohesion, we can only really glimpse it through a handful of perspectives. The unfortunate side effect of that, however, is that a lot of stuff ends up on the cutting room floor. To keep the main narrative brisk and focused, I had to leave out some really amazing side stories, B-plots, and supporting characters. And one of those stories involved a group of small-time embezzlers at a bank in Flint, Michigan.

These guys, and what they did, are absolutely infamous in the mythology of the crash, and I tried to incorporate them in some way over the course of the last three episodes, but it just wasn't happening. It wasn't working. So, instead of simply leaving it on the cutting room floor, I decided to record a short bonus episode that tells that story. And as a special thank you for your time and your patience, that bonus episode is live and completely free right now on the show's Patreon.

So if you finished this episode and you're craving a little more conflicted, head to patreon.com slash conflicted history podcast and enjoy that free bonus episode. Honestly, I don't do bonus episodes that often, but I felt compelled to share this one with you. It's just too good of a story to leave languishing in the drafts folder. And I hope you enjoy it.

Now, with all that said, let's continue our story. The stock market may have crashed and burned, but the tale is far from over. Someone has to pay for this calamity. Someone needs to see their day in court. But who deserves the blame for such a far-reaching catastrophe? Sunshine Charlie Mitchell? Montague Norman? Ben Strong? Jesse Livermore? Herbert Hoover? Well, put on your suits and open your briefcases. We are now entering the courtroom drama phase of today's episode.

And it begins, like all good courtroom dramas do, with a lawyer.

It's 1888, 40 years before the Great Crash. We're in New York City, in the Chelsea neighborhood on the west side of Manhattan. And at Public School 55, there's a new kid in class. As the teacher, an imperious woman named Miss Anderson, called roll that morning, the students' names sounded straight out of a Dublin phone book. Murphy, Doyle, Byrne, Kelly, and

O'Connor. At the time, Chelsea was an Irish-majority neighborhood, and the students at Public School 55 reflected that demography. But as she made her way down the list of students' names, Ms. Anderson arrived at a name that she did not know how to pronounce. P-E-C-O-R-A. Pecora? Pecora? She wasn't sure. The student the name belonged to was a small, six-year-old boy. Every other kid in the class had Irish heritage and the pink skin to prove it.

But this little boy had the dark olive skin of a Sicilian, and he stuck out like a sore thumb. Miss Anderson made eye contact with the little boy and asked him his name. He didn't speak English very well, but he said that his name was Ferdinand Pecora. The exotic pronunciation tied Miss Anderson's tongue into knots, and she told little Ferdinand that his name didn't sound, quote, euphonious. When little Ferdinand stuttered out a protest, Miss Anderson cut him off, quote,

Well, it's easier to say Pecora than Peckera." From that moment on, Ferdinand Pecora was his name. And 40 years into the future, it was a name that would send Wall Street bankers into a cold sweat.

There was no way for her to know it at the time, but Miss Anderson was teaching English to a kid that would go on to become known as the Hellhound of Wall Street, a crusading lawyer who would forever change the landscape of American banking. But for now, six-year-old Ferdinand's most pressing concern...

was making some friends at Public School 55. For the only Sicilian in a predominantly Irish school, that was much easier said than done. In 1888, Ferdinand and his family were literally fresh off the boat. Hailing from a small town in Sicily, the Pecoras had made their way to America in 1866, the very same year the Statue of Liberty was dedicated.

It was an immigration of necessity. Back home, the Pecoras were outcasts, Protestant heathens in a majority Catholic country. When Ferdinand's dad settled his family in the Irish neighborhood of Chelsea, he thought that he would be in the comfortable bosom of fellow Protestants. He was wrong.

It is difficult to overstate the racial hostility that Italians faced in America in the late 19th and early 20th centuries. But to give you an idea, let's take a brief tour of some of the things that were being said about Italian Americans in print at the time.

The New York Times wrote in 1886, quote, There has never been since New York was founded so low and ignorant a class among the immigrants who poured in here as the southern Italians who have been crowding our docks during the past year. Italians were, the Times continued, quote, not Americans but the very scum and awful of Europe. End quote. Six-year-old Ferdinand and his family were nothing more than, quote, sneaking and cowardly Sicilians. The dissidents

End quote.

That was the vibe up north, and things were predictably much worse for Italians down south. As historian Michael Perino notes, "...olive-skinned southern Italians like Ferdinand were not considered quote-unquote white, and in the south they could not attend white schools." In New Orleans, 11 Italian immigrants were lynched in the mid-1890s, and the local paper commented simply that "...desperate diseases required desperate remedies."

End quote. But regardless of the racial animosity Ferdinand Pecora was facing, he did not retreat into fear and resentment. About the same time 14-year-old Jesse Livermore snuck off his family's corn farm outside of Boston, 9-year-old Ferdinand Pecora was throwing himself headfirst into his studies. He particularly loved drama and acting.

His favorite play was Shakespeare's take on another famous Italian, Julius Caesar. But it wasn't easy in those early days. Pecora was an outcast among Italians and the Irish alike, hated for his Protestant faith by his countrymen and despised for his olive skin by his classmates. Pecora had little choice but to find a different way forward. As Michael Perino writes, quote, "...when he was young, he was embarrassed to be Italian."

Pecora simply wanted to fit in, to shed his foreignness, to become an American like everybody else. And Perino continues later in his book, If most people thought Italians were unintelligent, he would excel in school. If most thought Italians lazy, he would be industrious. If most thought they were lawless, he would become unintelligent.

By 1918, after years of odd jobs, relentless studying, and contentious stints in local politics, Ferdinand Pecora was sworn in as a deputy assistant district attorney at the age of 34. The shy six-year-old from Ms. Anderson's classroom was long gone, and in his place was a confident, gregarious lawyer who could move through courtroom intrigues like a fish through water. And he could talk. As one colleague remembered, quote,

Pecora was one of the most long-winded men God ever made." In his single-minded pursuit to be seen as an American first and an Italian second, Pecora had left the florid accent of the old country behind. According to Michael Perino, "...he had perfected the mid-Atlantic accent of a well-educated, upper-class, urban American. Indeed, his tones and cadences were remarkably similar to Franklin Roosevelt's."

But behind the well-manicured speaking style was a clockwork mind, perfectly suited for the rigors of prosecutorial work. As Perino describes, quote,

End quote.

Right away, Pecora established himself as a tenacious investigator, bent on finding the truth, even if it was inconvenient for important people. As he commented later, quote, I was never consciously overawed by being suddenly brought among persons whose names meant something. End quote.

one of his first cases involved a young black man named malcolm wright wright had been accused of robbing two women in broad daylight on 125th street the two women identified wright as the man who had robbed them and his alibi was weak by comparison it was an open and shed case it only took the jury an hour to come back with a guilty verdict but to ferdinand pecora something felt off the case gave him a quote weird feeling so the

So, the next day, he brought Malcolm Wright into his office for a face-to-face. In the absence of a hostile courtroom atmosphere, Wright told Pecora the full story. He had been picked up by detectives a few days after the robbery, and when he protested his innocence, the detective replied, quote, Well, maybe you're right, but it'll cost you $100 if you want me to believe it. End quote.

Well, Wright did not have a hundred bucks, so he went to jail. It was pay-to-play extortion, blatant police criminality, as one historian called it. And now Wright was facing 20 years in prison. Pecora decided to dig deeper into the Wright case, and he called one of the women who had identified Wright as the robber into his office.

He said to her, quote, End quote. Seconds later, the woman burst into ugly sobs. She

She admitted that Wright had not robbed her at all. She had been pressured by the police to identify him as a quick and easy culprit. Pecora took this new evidence back to the judge, and Malcolm Wright was acquitted. As Michael Perino writes, quote, End quote.

Pecora's fame as an uncompromising crusader continued to grow. A few years later, he took on a wrongful prosecution case in which a local poultry dealer named Joseph Cohen had been sentenced to death for allegedly hiring an assassin to kill a business rival. It took 18 months, but Pecora eventually uncovered that the conviction was built on perjured testimony. Seven minutes before Cohen was set to be executed, he got a stay of execution thanks to Pecora's efforts.

A few weeks later, a little old lady came to Pecora's office and started crying and hugging him. It was Cohen's wife. She said, quote, I came to thank you for what you have done for my husband. End quote. For the rest of his life, Pecora called it, quote, the

The best fee I ever received as a lawyer." Throughout the roaring 20s, Ferdinand Pecora sharpened his trade and sniffed out wrongdoing for the state of New York. Eventually, he got it into his head that he could do the most good at the top of the pyramid as district attorney. But sadly for Pecora, his talents in the courtroom did not extend to the ballot box. After he lost his race in 1929, he retired from public service altogether and joined a private law firm. He quickly realized that he was bored out of his skull.

There isn't much occasion in private practice for a lawyer to take part in any kind of litigation that is in any way out of the ordinary. It was 1932, and Ferdinand Pecora was in his early 50s and looking for a new challenge. He was about to get it. While Pecora's formidable talents were wasting away in private practice, the

the United States was slipping into a full-blown depression in the aftermath of the October crash. Now, it's really important to take a second to point out that the vast majority of modern historians and economists do not believe that the stock market crash of 1929 directly caused the Great Depression. There were many factors outside of Wall Street that contributed to the collapse of the American economy, but still, the crash was a mortal blow to the unbridled optimism of the 1920s.

As Karen Blumenthal points out, quote, End quote.

To some, it seemed like the crash was divine judgment after the hedonism of the Roaring Twenties. As John Kenneth Galbraith observes, "...a great many people have always felt that a depression was inevitable in the thirties. There had been at least seven good years. Now, by an occult or biblical law of compensation, there would have to be seven bad ones." It was the end of an era, as historian Maury Klein points out in his book, Rainbow's End. "...

End quote.

"Farewell has been said to an illusion," wrote the Wall Street Journal. But contrary to popular perception, the crash did not help usher in a depression overnight. As historian Charles R. Morris puts it, quote, "Timelines are compressed by historical memory. The American story therefore becomes, 'The stock market crashed and the Great Depression ensued.' But that's not how it appeared at the time."

End quote. After October 29th, the corpse of the American bull market kept twitching for months on end, refusing to believe that the good times were really gone. As traumatic as those six days had been, most people envisioned a quick recovery, a return to normalcy. After all, how much worse could it possibly get? One young investment banker recalled years later, quote, "...I thought it was temporary."

Most people thought it was temporary. End quote. But the destructive legacy of buying on margin, of buying huge amounts of stock with borrowed money, had left a crater in the banking industry. Those loans were never going to be repaid, and the banks themselves started to wonder how they were going to stay in business.

As one historian elaborates, quote, Without the return of borrowed money, banks began to feel the pinch and remaining solvent for day-to-day activities became an issue. Some banks were forced to close because of the shortfall. As news and rumors swirled about the health of the banking industry, more and more people lost faith in their respective banks and started to withdraw their money. It was a destructive cycle. The more people that ran to the banks…

Wanting their money they thought was safe caused more banks to fail. By 1932, more than 5,000 banks had failed. The run on banks accelerated the downward spiral of the economy. Spending had already been slower, but now with entire life savings wiped out, discretionary spending was all but non-existent.

End quote. Just as the crash had been precipitated by psychological factors, so too was the depression. As Karen Blumenthal writes, quote, "...when savings could disappear just as easily in a bank as in the stock market, no place seemed safe for hard-earned money." End quote. And with discretionary spending all but frozen, the layoffs at large companies began. No jobs, no money, no spending to bring back the jobs, it was an Ouroboros of poverty.

A snake eating its tail. And before long, everybody was feeling the squeeze.

As Gordon Thomas and Max Morgan Witts write, quote, Across the nation, cars stood idle because their owners could not afford to run them. The price of Texas oil dropped to four cents a barrel. Newspapers disconnected electric clocks to save current. Paper mills requested employees to use wood shavings for toilet purposes. Conrad Hilton of Hilton Hotels offered long-staying guests hotel rooms at rates below actual running cost.

closed whole floors to save heat, removed guest telephones to save 15 cents a month in rental charges, and ordered clerks to dole out stationery sheet by sheet. The Plaza Hotel, where so many stock market deals had been discussed, could no longer afford to clean its marble, tapestries, bronze, and the panels in the oak room. End quote.

Naturally, of course, unemployment skyrocketed. By 1933, 13 million people were out of work, one out of every four workers. Historian Michael Perino elaborates, quote, In Chicago, crowds fought over the garbage bins behind restaurants. In the coal fields of Appalachia, miners were earning less than $2.50 a day and were lucky if they could work three days a week. Hunger was a constant presence, with most diets consisting of little more than beans and bread,

And when one school teacher in an impoverished mining camp told a faint young girl to go home to eat, she replied, quote, it won't do any good because this is my sister's day to eat.

End quote. As the legendary comedian Groucho Marx joked later in life, quote, End quote. The government, of course, tried to help, but its efforts were misguided at best and mismanaged at worst. One of the most striking examples was an income tax cut. As one historian observed, quote, End quote.

As for the stock market itself, the magnitude of the losses was catastrophic. As John Kenneth Galbraith writes, "...U.S. steel, on July 8, 1930, reached a low of $22. On September 3, 1929, it had sold as high as $262."

General Motors was a bargain at $8 on July 8th, down from $73 on September 3rd. Montgomery Ward was $4, down from $138. AT&T was $72, but on September 3rd, 1929, it had sold at $304. Anaconda Copper sold at $4 on July 8th. The Commercial and Financial Chronicle observed that, quote, "...the copper shares are so low that their fluctuations are of little consequence." End quote.

And one mind-blowing statistic from Gordon Thomas and Max Morgan Witts really drives the point home.

In the five hours the market had gone mad on October 29th, it was later estimated that almost as much money and capital value vanished into thin air as the United States had spent on World War I. The loss was around ten times the budget of the Union in the entire Civil War. But the most visceral indicator of the stock market's implosion was the complete lack of activity of the nation's stock tickers. In

In the late 20s, they had been clacking around the clock. The week of the crash, they had been hours behind because of the volume. But now, as Maury Klein describes, quote, on 1930's second day of trading, the ticker paused at times for full minutes out of sheer lack of something to print. End quote. As the banks failed, businesses closed, and bread lines snaked around the corner, anger was

was rising in America. Someone had to answer for this. Someone had to pay. And in Washington, angry eyes began turning towards the high priests of Wall Street. Because at the time, the New York Stock Exchange was almost completely unregulated. According to one historian, quote, unshackled by any sort of public regulation and governed by rules of its own devising, it

End quote. Bankers and brokers had once been the rock stars, the celebrities, the folk heroes to look up to and emulate.

And now, they were public enemy number one. In March of 1932, the US Senate authorized an official investigation into Wall Street in general and the 29 crash in particular. But then as now, high-profile commissions and investigations tend to quickly devolve into empty exercises of political theater. A way for politicians to raise their national profile, get a juicy sound bite, with very little interest in anything resembling lasting change.

As one cynical observer wrote at the time, quote, There will always be committees. Some persons whose daily prayer will be, Lord, let the limelight shine on me, just for one day. End quote. As the investigation rumbled to life and the committee assembled, the Wall Street elite were not concerned in the slightest. One congressional staffer said grimly, I am reliably informed that Wall Street and the Exchange are well satisfied and believe nothing will be done.

End quote. And for the better part of a year, they were right. The investigation was aimless, ill-informed, and badly managed. The public was pissed off and itching for accountability, but the commission's investigators seemed unable to glean any actionable information from these bankers. Nothing that could move the needle or necessitate real reform. It was all a, quote, pipe dream.

as one historian put it. What the investigation really needed was a good lawyer, one who didn't care about people in high places or what they wanted, a person who pursued the truth for its own sake, who could tie even the slipperiest of vipers into verbal knots. In January of 1933, a phone rang in New York.

Ferdinand Pecora picked it up. The voice on the other end of the line belonged to Senator Peter Norbeck. He said he wanted to offer Pecora a job. Pecora already knew what the senator and the committee wanted him to do. The answer was simple, even if the task wasn't. They wanted the best cross-examiner in New York to take down the crooks on Wall Street.

It's Friday, September 16th, 1932. We're in a small courthouse in Reno, Nevada. As the judge flips through his notes and prepares for the next case on his docket, something catches his eye. Hundreds of people came through this courthouse every day, forgettable people with forgettable problems and forgettable names.

But the next name on the docket, the judge recognized immediately. It was a famous name, a celebrity name, a name that belonged to one of the top ten richest men in the world, Livermore. Sure enough, the judge looked up to see Jesse Livermore and his wife Dotsie walking into the room side by side, and then he watched them separate and take their places in the opposing plaintiff and defendant positions.

The Livermores were finally getting a divorce. That morning, Jesse had stepped onto a plane in New York. Long-distance commercial air travel cost a pretty penny in those days, but for a man with as much money as Jesse Livermore, it was a pittance. A small price to pay to close an ugly chapter in his life. And when his plane touched down, he took a car straight to the Reno courthouse. Dotsie was waiting for him there. Any affection or tenderness that she had once had for Jesse disappeared.

was gone. She could barely even look at him. As for Jesse, he just wanted this whole thing to be over with. And as they stood in the Reno courthouse, listening to the judge finalize the details of their divorce, Jesse looked over at Dotsie.

And she just looked straight ahead, staring at the wall. Jesse couldn't help but feel a pang of grief for the woman that she had once been. The woman he had loved so deeply. The woman with auburn curls and green eyes who'd given him two sons. The woman he had neglected, cheated on, screamed at, and ignored. The woman who had to be dragged out of his Fifth Avenue office.

who tumbled headfirst into alcoholism, who finally found a lover of her own and now wanted to be free of the name Livermore forever. As biographer Tom Rubethan writes, quote, 14 years of memories flashed through his mind, and he just shook his head at the waste of it all. End quote. As the judge droned on, Jesse's mind began to wander. Threatening.

Three years earlier, when he'd arrived home on the night of October 29th, 1929, Jesse felt like the luckiest guy on Wall Street. He had turned the greatest financial calamity of the modern era into his biggest payday ever, and he had $100 million in his bank account to prove it. Jesse went to bed that night one of the richest people in the world, in the history of the world. But when he woke up the next morning, the

the problems really began. As Rubethan observed, quote, from 1930 onwards, it seemed that Jesse Livermore single-handedly set out to prove the old adage,

Money does not buy happiness. End quote. Even in the best of times when you make lots and lots of money, people tend to get jealous. But when you make an insane amount of money while everyone around you is going broke, well then people get angry. The amount of money Jesse had made was so improbable, so massive, that most assumed that he had come by his riches dishonestly. The rumor mill raged and churned.

accusing him of insider trading, bribery, fraud, every financial crime under the sun. Livermore had sold America short, they said.

Some went so far as to say that his short-selling antics had contributed to the market's downfall. The Great Bear of Wall Street, they said, had been rooting for the American bull market to fail, and now the craven, womanizing miser was counting his riches like the dragon Smaug at his sprawling mansion in Great Neck. Jesse was obscenely rich when everyone else was dirt poor, and they hated him for it.

It wasn't long before that hatred manifested in some scary ways. As one historian explains, quote, Livermore received scores of extortion notes, intimidation letters, and death threats. Fearing for he and his family's safety, he hired a crew of armed bodyguards to escort them to and from all public places. Livermore reportedly hired a five-man jazz band who discreetly carried pistols and machine guns in their instrument cases and

and were tasked with accompanying his family to restaurants, shopping centers, nightclubs, and other high-profile locations.

End quote. As the mailbox at Great Neck filled with death threats and even a simple night out became a life or death affair, Jesse and Dotsie started fighting more and more and more. And that atmosphere of stress and anger took a terrible toll on their two adolescent sons, Jesse Jr. and Paul. The boys spent most months tucked away at an upstate boarding school, weathering insults and wedgies from bullies who called their dad a cheat and a traitor to his country.

On the rare occasions when the family was together, Dotsie was usually drunk to the point of belligerence. Well, at some point in 1931, both parents had had enough of each other, and Dotsie packed her bags, loaded the boys up in the car, and moved out to Reno to live full-time with her new boyfriend, the Prohibition agent Walter Longcope. Jesse found himself living completely alone in the 11-acre waterfront mansion. Evermore, he'd named the house when he bought it.

But now, it was just a reminder of his colossal failure as a husband and a father.

The implosion of the Livermore family reached its zenith at the small courthouse in Reno in fall of 1932. The judge was merciful and granted the divorce without incident. It was as quick as the legal system could possibly allow, but for Jesse and Dotsie to even be in the same room for 10 minutes was a kind of emotional torture. And after all the legalese had been finalized, Jesse hopped on a plane and flew back to New York the very same day.

But it was an important day for Dotsie for other reasons as well. It wasn't just her divorce day, it was her wedding day. As biographer Tom Rubethan writes, quote, Jesse had no idea what his wife had planned until he read about it in the next day's newspapers.

Twenty minutes later, she walked back into the court arm in arm with Walter Longcope and back in front of the judge. She had been single and divorced for less than an hour before she was married again and became Mrs. Walter Longcope." The final humiliation came a few months later, when Dotsie began auctioning off some of the jewelry Jessie had given her for a fraction of the original price. But of course for her they were totems of anger and regret.

reminders of an awful marriage to an awful man as she saw him. And one of the last items on the auction block was the golden wedding ring Jesse had given her in 1918, engraved with the inscription, Dotsie, forever and ever. It sold for just $10. The numbness of depression began to creep into the corners of Jesse's psyche, but he tried to look forward to the future. His family may have been broken, but his first love, his true love,

was still out there. The stock market was bruised and bloodied but there was always money to be made, always a trade to sniff out. Jesse had nothing to lose and a hundred million to burn. What could go wrong? A contemporary senator had once famously commented, quote, "There comes a time when the fun of making money is all gone. The battle is won. The goal is achieved. It is time for something else."

End quote. Well, that was not Jesse Livermore's style. As one historian framed Jesse's rekindled ambition, quote, the best decision at that moment would have been to retire. End quote. And as 1932 came to a close, another one of our main characters was licking his wounds, Sunshine Charlie Mitchell. October 29th, 1929 had been one of the best days of Jesse Livermore's life. For Sunshine Charlie, it had been one of the worst. A

A month before the crash, Charlie had been telling everybody that stocks were, quote, exceptionally sound and that the market was, quote, in a healthy condition. But in the grim hindsight following the October crash, Charlie didn't just sound incorrect. He sounded delusional and insane. As Michael Perino writes, quote, In bad economic times, Americans have traditionally suspected Wall Street's motives and its morals.

But now the country doubted its intelligence, too. End quote. Like most public figures, opinions on Sunshine Charlie were sharply divided. Some, like Senator Carter Glass, accused Charlie of being one of the chief architects of the crash, pointing to his defiance of the Federal Reserve Board in early 1929. Sunshine Charlie, Glass said, was, quote,

End quote. Others simply thought Sunshine Charlie was a victim of his own optimism. Sure, he had gotten caught up in the enthusiasm and positivity of the Roaring Twenties, but who hadn't? Charlie, some said...

was just as much a victim of the crash as the millions of investors who'd been wiped out in late October. Sunshine Charlie certainly thought of himself as a victim. As politicians lashed his reputation in the public square, he felt the country was, quote, crucifying him. But no matter how you looked at it, Sunshine Charlie had been very, very wrong about the state of the stock market. The New York Times joked that while the lines of unemployed workers were surviving on soup kitchens, Charlie was, quote, subsisting on a diet of crow.

End quote. Initially, there were some calls for Sunshine Charlie to resign from his chief position at National City Bank. He, of course, laughed it off, saying the resignation was, quote, "...too absurd to be considered by any sensible person." End quote.

Instead, Sunshine Charlie took the time-honored strategy of waiting out the storm. All these little people who could not understand or appreciate what he had done for them. After enough time had passed, well, they'd get over it. Tempers would cool, passions would calm, people would forget. Just like they always forgot.

And he was right. By late 1932, Wall Street's reputation was still in the gutter, but Sunshine Charlie had returned to his gilded eyrie of prominence and esteem. He advised Herbert Hoover on credit matters. He spearheaded a small business loan program in New York. He even made a list of the top 60 most influential people in the United States. Of course, he still owed J.P. Morgan about $6 million of the loan he'd taken out to prop up National City Bank stock, but the guys at 23 Wall were good friends.

Sunshine Charlie was never going to be strapped for cash or wanting for any luxury. While most people in America were struggling to survive, Sunshine Charlie was sipping cocktails on a beach in Bermuda. But on January 30th, 1933, Charlie received a surprising piece of mail.

It was a subpoena from some small-time immigrant lawyer named Ferdinand Pecora. The subpoena required Charles E. Mitchell to appear before the Senate committee in three weeks' time to testify about the activities of National City Bank and the Wall Street crash of October 29. Mitchell rolled his eyes. Here we go again. He had dealt with lawyers before, armies of them, in fact, and when faced with the blinding charisma of Sunshine Charlie, they'd all blinked and shielded their eyes.

some crusading, fresh-off-the-boat pencil pusher wouldn't be a problem.

So, when this Ferdinand Pecora requested access to National City Bank's records archive, Charlie waved his hand and said, "Sure, why not?" What harm could he possibly do? Charlie was planning to leave the States in a few days for a vacation to Rome, so Pecora would only have 48 hours to review the labyrinth of jargon-heavy banking documents. No man on Earth could possibly make heads or tails of all that paper in so short a time, much less find anything damaging.

Sunshine Charlie underestimated Ferdinand Pecora, and he was about to pay the price. And Charlie wasn't the only one underestimating Ferdinand Pecora in the early months of 1933. A Missouri newspaper spoke for many when it printed the following commentary, "...the idea of getting a cast-off Tammany legal hack to investigate the stock exchange is so ridiculous and in addition so tainted with suspicion of its good faith that even the United States Senate brand of intelligence ought to have comprehended it."

Pecora answered the tide of criticism with mild-mannered deflections. His interest in Charlie Mitchell and National City Bank was, quote, a fact-finding, not a head-hunting exploration, end quote. But in reality, Pecora was seeking to nail Sunshine Charlie and National City to the wall. To Pecora and many others, Charlie was a symbol for everything wrong with Wall Street. As Pecora remembered later, quote,

End quote.

Well, Pecora's goal was to deconstruct that myth and unmask the reckless greed at the heart of National City Bank. If he could bring down a figure as august as Sunshine Charlie, reform might actually be possible. As Michael Perino writes, quote,

No one had yet provided proof that Mitchell or any other leading Wall Street banker had in fact acted illegally or unethically. If Pecora could show improprieties at National City Bank, then he could go a long way towards securing federal legislation of the stock market.

End quote. But the idea of Ferdinand Pecora, a Sicilian immigrant, failed political candidate, and a private practice lawyer making a dent in Sunshine Charlie's reputation was absolutely laughable at the time. Pecora was no banking expert. He had handled a couple of low-level fraud and securities cases before, but nothing major. Sunshine Charlie and National City, by comparison, were

were almost untouchably powerful. As Michael Perino writes, quote, National Citibank was still considered a fortress. Its balance sheet, the, quote, envy of every bank in the United States, end quote. The expectations for Pecora's investigation were low to say the least. As one journalist put it at the time, quote,

You can expect National City's forthcoming inquisition by Mr. Pecora to be mild, if it takes place at all. End quote. And that power differential was on full display when Sunshine Charlie sauntered onto Capitol Hill on Tuesday morning, February 21, 1933.

Charlie's smiling face was nicely tanned from a recent trip to Bermuda. He was dressed to kill and flanked by a team of the best financial lawyers in the country. Ferdinand Pecora, on the other hand, had been working out of a shabby office on Madison Avenue with a limited staff. That Tuesday morning, Pecora and Charlie met face-to-face for the first time. As Michael Perino writes, quote,

Mitchell towered over the pocket-sized Pecora. With his thick neck, firm jaw, and iron-gray hair, he had the air, in the words of one salesman, of a commanding officer, a man of indomitable will who would not surrender. End quote. By the standards of the day, Pecora cut a slightly less regal figure, according to one historian, quote,

Stocky and under five and a half feet tall, with dark eyes and jet black hair just beginning to gray, which he wore swept back in a slick pompadour, Time magazine described him as a, quote, kinky-haired, olive-skinned, jet-jawed lawyer from Manhattan, end quote.

Needless to say, Sunshine Charlie was hardly threatened by the scrappy Sicilian as he sat down in the witness seat. This whole sham investigation was a formality, a nuisance at worst. This time next month, he'd be vacationing in Rome, spending time with less irritating Italians, the kind that served him drinks and fluffed his sheets. As he began his questioning, Ferdinand Pecora was prepared, energetic, and quote, exhilarated.

He was also angry. For weeks, he had been receiving and reading letters from former customers of National City Bank and its affiliate National City Company. Letters from people who had been duped by the bank and lost everything. One of the letters came from a widow in San Francisco named Helen Kirst. As Perino writes, quote, "'The bank's sales force convinced her to sell her portfolio of safe government bonds in order to buy the bank's stock, which they assured her was not only safe, but would yield her a much better return.'

And Helen explained, quote, Naturally, believing them to be honorable and a bank of highest standing and integrity, I was gullible. The longer that she held the stock, the more nervous she became. She repeatedly asked the local manager to sell the Citibank stock, and he repeatedly refused to do so. When the stock collapsed, she was left penniless and wrote Mitchell to complain. Mitchell wrote back a short reply. He was, he claimed, surprised.

Sorry that she had lost money, but it was really her own fault. After all, she, quote, shouldn't have gambled, end quote.

Another letter came from an elderly teacher named Christopher Lane. He was angry about the shoddy securities he'd been sold by National City. And here is his letter, quote, I am writing this from McGrath's Funeral Parlor in Brooklyn. My wife is lying in her casket in the next division. She died of pneumonia. Had I hoarded my $10,000, I could have taken her to the South for the winter. When you see Mr. Mitchell, you might ask him, if it comes within your jurisdiction, why his company or bank so trusted could prosecute

could palm off such poor stuff on an old retiring teacher.

End quote. Then there was the sad story of Edgar Brown. Brown had been a successful theater owner, and he retired with $100,000 in the bank. He came across an ad for National City Bank, one of those flamboyant marketing messages we covered back in Part 1, and he took the bait. Within a few months, his $100,000 was spread out across a dubious array of Peruvian, Chilean, Belgian, and Greek bonds. As Perino writes, quote, "...they seem to have only one thing in common."

They all went down in value." When those overseas bonds didn't pan out, Edgar swapped them for National City Bank stock which he assumed would be solid. But after the crash, those investments collapsed too. When he went to the bank's office to try and sell the stock to recoup some losses, the salesmen cornered him like a pack of dogs. As Edgar describes, "I was surrounded at once by all of the salesmen in the place and made to know that that was a very, very foolish thing to do."

In the end, Edgar was completely wiped out. As he wrote in a letter to the bank, I am now 40 years of age, tubercular, almost totally deaf, my wife and family are depending on me solely and alone, and because of my abiding faith in the advice of your company, I am today a pauper. Pecora read hundreds of letters like that.

Hundreds, but a few sob stories from across America wouldn't be enough to pin down Sunshine Charlie. He needed to get something incriminating directly from the horse's mouth. As Michael Perino puts it, quote, Over the next few days, Pecora had to prove to the American public that the bank's sterling image was and always had been a mirage.

In 1933, the length of a normal trading day on the New York Stock Exchange was five hours. And as we have seen throughout this episode, a lot can happen in five hours. Fortunes can rise and fall. Investors can be wiped out. Life moves very fast on Wall Street. Well, on Tuesday, February 21st, 1933, it only took four hours for Ferdinand Pecora to

to discredit and humiliate Sunshine Charlie Mitchell in front of the entire country. There are no pictures of what happened on that day in room 301 of the Capitol building, and that's because Pecora kicked every single photographer out of the room. Only journalists with good old-fashioned pen and paper would be allowed.

As Pecora said, "...there is no reason why a person who takes the stand in response to a subpoena should be subjected to any of the unpleasantness beyond that which might be embodied in the examination itself." In other words, cameras are the least of your problems.

And he didn't want any flash bulbs distracting Sunshine Charlie. Of course, kicking the photographers out had the added bonus of quieting down the senators in attendance. They were like a quote "Greek chorus," according to one historian, always jumping in with comments and asides. And without a camera to mug for, Pecora hoped that they'd pipe down and let him work. Pecora began his questioning of Sunshine Charlie Mitchell with a slow drip of tedious procedural questions.

Is this figure accurate? Is that figure accurate? When and where was this branch established? To whom does this person report to? That kind of stuff. It was boring, it was dull, and it was definitely not the fireworks show that everybody had hoped for. But it was also plain that Charlie felt that this entire sideshow was beneath him. The tone of his answers was, quote, both arrogant and condescending. He had the manner of a powerful man irked at wasting his time on a mundane and insignificant task.

according to one historian. And as Pecora put it, quote, Mr. Mitchell's whole attitude was not that of a servant, but of the master of his institution. End quote.

And all the while, the reporters scribbled down every dismissal, every sigh, every eye roll from Charlie. So far, so good, thought Pecora. The Greek chorus of senators in attendance, however, were not privy to Pecora's playbook. They wanted a show. They wanted headlines. So just before lunch, Pecora was interrupted by a line of moralizing questions from hot-blooded senators aimed at Sunshine Charlie.

The questions were clumsy and obvious, and Charlie evaded every trap and bait hook with ease. After all, Mitchell may have been arrogant, but he was no fool. As one observer said later, quote, End quote.

But after lunch, it was Pecora's turn again. This time, the Senators kept silent, and Pecora turned his line of questioning towards the bonuses that Charlie and the other executives at National City Bank received. At this, Charlie's ears perked up. Now, this was the kind of thing he liked to talk about – his compensation.

And the details dropped jaws, as Perino writes, quote, City Bank paid Mitchell over $3.5 million from 1927 to 1929. It is hard to even contemplate what those numbers must have sounded like to the people gathered in Room 301. Pecora was making $255 a month as counsel for the committee. The senators were earning $9,000 a year. Congressional pages about a tenth of that amount. End quote. End quote.

A vast majority of Charlie's $3.5 million came not from his official taxable salary, but something that the executives at National City Bank called a "management fund." Today, we might call it a bonus pool. Twice a year, the officers of National City Bank took 20% of the bank's profits for themselves.

the lion's share of that amount going directly into Sunshine Charlie's pockets. And on paper, there was nothing wrong with this, it was legal, so long as you paid taxes on it. So, Sunshine Charlie happily chatted away about how much money he had made from the $20 billion in securities that he had sold the American public over the course of the last decade. But the bonus pool had an important stipulation. The officers could only get their bonuses if the bank and its affiliate, National City Company, made above an 8% profit.

So to get their money, the officers had to ensure that more and more and more securities were being sold, no matter the quality of those securities. It was a system that emphasized short-term profit

at the expense of long-term stability. Ferdinand Pecora's point was beginning to take shape right under Charlie's nose. As Michael Perino summarizes, quote, "'The officers at National City Bank "'were paid potentially enormous amounts, "'but only if they were able to sell "'vast amounts of securities.'

And since they did not bear the cost of securities that went down in value, they had incentives to sell as many securities as possible, even if they were of dubious quality. The affiliate, Pecora wrote, was, quote, a gigantic, foolproof device for gambling freely with the stockholders' money, taking huge profits when the gambles won and risking not a penny of their own money if they lost.

And so Pecora continued to pursue this point. Did National City tell customers what they made off the sale of certain securities? Do they provide any information on the stability or health of those investments? In fact, did they disclose any information at all? Pecora had spent three days in National City Bank's archives, sifting through a stack of records as tall as he was. And he knew that the answer to all of those questions...

was no. Charlie Mitchell could not wrap his mind around the idea of transparency. National City was selling a product, pure and simple. We sell, a customer buys it. Transaction over. End of story. He responded, "...if I go in for a pound of coffee, there is no indication as to what the grocer paid for it and what profit he got for it."

Pecora fired back, "...but when a person goes to a store to buy a pound of coffee, he knows the merchandise that he is buying, doesn't he?" Charlie tried to say that those details were irrelevant, as meaningless as whether a bond certificate was "...printed on red paper or gray paper or yellow paper." At this, Pecora's temper flared, "...I am not discussing the best color. The color of the paper gives no information, does it, of the security to the public?"

Sunshine Charlie did not like this turn of events. The questioning was becoming more pointed, more hostile, more detailed. He was beginning to regret underestimating this diminutive immigrant. As Pecora remembered years later, quote, "...he seemed to be wondering where I got the information from upon which I based these questions. I don't know whether he had been told that I had spent three days from morning till midnight examining his books."

End quote. As the afternoon wore on, Pecora pulled more and more damning information out of Sunshine Charlie. And one of the biggest jaw-droppers concerned the aforementioned bonus pool and the way it was handled in the aftermath of the October crash. Those six days in late October had wiped out all of National City's profits for the year. And according to their own rules, Sunshine Charlie and the bank's officers should have been entitled to no bonuses.

Well, a history-making crash wasn't going to stop Charlie from getting his scratch. He and the other executives marked the money a "advance on future bonuses" and pocketed their normal amount anyway. But the most devastating revelation for Sunshine Charlie on that fateful day was of a much more personal nature. It was the culmination of Pecora's scalpel-like precision and attention to detail. He never asked a question to which he didn't already know the answer.

As Perino writes, quote, "...there are few surprises for great cross-examiners, who almost invariably know the answers to their questions before they ask them. It is really the only way to pin down evasive witnesses, who are unlikely to concede anything important unless confronted with the documentary evidence that leaves them with no other choice."

End quote. In the final bomb of the day, Pecora asked Sunshine Charlie a question to which he already knew the answer. Quote, Mr. Mitchell, did you also sell during the year 1929 any substantial portion of your holdings of National City Bank stock? End quote. Charlie gave a long, rambling non-answer. As of 1933, he owned more stock in his own bank than ever, he said. Pecora smiled and responded, quote, No, my question was...

Have you also sold very extensively of your holdings in that period, or before the end of that year? Charlie realized that he was trapped.

He reluctantly gave the answer, as Michael Perino describes, quote, At the end of 1929, Mitchell sold 18,300 shares of Citibank stock to establish an investment loss and then turned right around and bought the stock back for exactly the same price in early 1930. There was absolutely no economic reason for the transaction. It was a sham done with only a single goal in mind. End quote. Why did you sell it? Pecora asked.

Charlie answered, quote, I sold it, frankly, for tax purposes, end quote. And who did he sell it to? Pecora went in for the kill, quote, By the way, that sale of this bank stock that you referred to in the latter part of 1929, that was made to a member of your family, wasn't it? End quote. Charlie replied, quote,

It was, sir, yes. It then came to light that to avoid paying taxes on his $1.1 million in 1929 bonuses, Charlie Mitchell had sold millions of national bank stock to his wife, Elizabeth.

Ferdinand Pecora had just gotten the most preeminent banker in the United States to confess to tax evasion in a room full of senators and reporters. As Perino writes, quote, the portrait of a greedy banker willing to use any artifice to hang on to every cent of his enormous salary was now complete. In truth, the picture Pecora painted on that first day of testimony was of a corporation run with only a single purpose in mind, to maximize the financial returns of its officers and

especially its chairman. Nothing else seemed to matter. Not the shareholders, who were kept in the dark about how much the officers were raking in. Not the customers, who trusted the institution to provide them with sound financial advice. And certainly not the federal government, whose tax bills could be easily evaded with a couple of ledger entries. If Pecora's goal was to create outrage, he succeeded magnificently. The only thing dividing most newspapers is

which part of the testimony was more outrageous. And the reaction to the revelations was absolutely blistering. Sunshine Charlie's picture was on the front page of the Washington Post the next day, followed by an extremely unflattering breakdown of his testimony. Another paper wrote, quote, Charles E. Mitchell, president of the National City Bank and a man who has always been held in high regard, admits a cheap dodge to avoid paying income taxes in 1929. And

End quote. A Montana senator said at the time, quote, The best way to restore confidence in our banks is to take these crooked presidents out of the banks and treat them the same way we treated Al Capone. End quote. Another journalist took the outrage even further, quote, If the general public realized the ignorance, smallness, futility, and greed of the average New York banker, I think they would certainly hang a few of them, beginning, I hope, with Charlie Mitchell. End quote.

Sunshine Charlie was not the last casualty of the Pecora Commission, as it came to be known, but he was the most important. In four hours, Pecora turned Wall Street's invincible optimist into a symbol of everything wrong with finance in America. Pecora went on to question and expose dozens of banking officials over the next several months, fully cementing the need for reform in the minds of citizens

and lawmakers all over the country. At one point, an anonymous figure approached a friend of Pecora's and suggested bribing the crusading prosecutor with a quarter of a million dollars. The friend said that it wouldn't be enough. And when the shadowy briber asked what would be enough, Pecora's friend responded, quote, "'You don't own all the gold in the world, but if you did, that wouldn't be enough.'"

Many of the regulatory laws that govern Wall Street today were a direct result or hastened along by Pecora's investigation into National City Bank. As Pecora remembered later, quote, It lasted just nine days, but in those nine days a whole era of financial life passed away.

In the coming months, Congress passed the Glass-Steagall Banking Act of 1933, the Securities Act of 1933, and the Securities Exchange Act of 1934. Wall Street, it seemed, was finally subject to some long overdue oversight. As for Sunshine Charlie Mitchell, Pecora noticed him leaving Capitol Hill on the final day of the hearings. As Michael Perino describes, "...the confident, commanding swagger was gone."

Mitchell's head was bowed as he made his way across the plaza. The entourage had vanished too. Mitchell was completely alone, forced to carry his own suitcase as he headed back to New York. One senator thought that in that moment he looked like Napoleon being shipped off to exile. And shortly after, the board at National City Bank accepted Sunshine Charlie Mitchell's resignation.

On March 4th of that year, the newly elected president, Franklin D. Roosevelt, gave his inaugural address. In it, he said that, quote,

Rejected by the hearts and minds of men, money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to ancient truths." For an entire generation of bankers, brokers, and day traders, the world had changed. The rules, or lack thereof, that had made it possible for them to so easily amass vast fortunes were no longer relevant. They were dinosaurs, and their planet-killing comet had finally come.

Times they were a-changin', and this was especially, painfully, apparent to an old friend of ours, Jesse Livermore. When a new decade arrived in 1930, Jesse had started it off with over $100 million in assets, all profits from his ingenious and insightful maneuvering during the October crash.

To this day, it is one of the most impressive individual achievements in Wall Street history. In those days, $100 million was Richard Branson money, Elon Musk money. But by late 1933, Jesse had lost all of it.

When his marriage to Dotsie ended and she took the boys 2,500 miles away to the West Coast, Jesse tried to numb his pain by returning to the stock market. He tried to recapture that indescribable feeling of satisfaction and accomplishment that he had gotten on October 29th, 1929. He tried to bottle that happiness. But the stock market didn't make sense anymore.

The crash had changed the landscape, turned up into down, black into white, and for the first time in his life, it seemed like every decision he made was wrong. He was like a fighting bull whose horns had been shaved.

or a musician who woke up and just couldn't play anymore. He couldn't feel the currents of the market. He couldn't read the ticker tape as he once had. As biographer Tom Rubathan puts it, quote, "...it was a period of total inconsistency and illogicality during which, by his own rules, he should have been out of the market, sitting on his money."

But he wasn't. Having conquered the world, he wanted to climb the mountain again. End quote. As 1931 became 1932 became 1933, Jesse lost more and more money. It felt like every trade he made was wrong. He knew he should stop, that he didn't have to do this, but the awful truth was...

What else was left for him to do? And then came the Pecora Commission, and the hearings and the tough legislation that made the pirate's paradise of Wall Street into an unrecognizable alien planet. As Gordon and Morgan Witts write, "...his triumphs had been based on the old Roman maxim, caveat emptor, buyer beware. But in May of 1933, the Securities Act effectively made it mandatory, in all stock dealings, for the seller to beware." End quote.

And Tom Rubithin elaborates, quote, Speculative shenanigans that were perfectly legal the year before were now punishable by prison and large fines. It was a nightmare for a man over 50 who suddenly had to play by some rules where none had existed before. End quote. By the summer of 1934, Jesse was bankrupt and deep in debt to creditors, friends, enemies, even mobsters. One historian noted that, quote,

End quote. But the boy trader, now 55 years old, believed he still had some magic left in those middle-aged fingers. Quote, End quote.

Things weren't going much better for the other side of the Livermore clan on the West Coast. Dotsie had managed to squander her money as well. The $10 million divorce settlement that she'd gotten from Jesse was almost gone. The new husband, Walter Longcope, was long gone too. After just one year, he'd left Dotsie and moved back to the East Coast.

To make matters worse, the Livermore boys, Jesse and Dotsie's sons, were in their teens, and they were behaving about as well as you'd expect after years of family upheaval. The biggest problem child was Jesse Jr., the eldest at 16 years old. Junior had grown up in the Evermore estate, with a front row seat to some of his parents' nastiest arguments. He'd seen his dad come home late smelling like other women. He'd seen his mom be carted off to bed by the servants reeking of white wine and whiskey. He'd grown up rich.

but most certainly not happy. When the family imploded and split up, Junior blamed his mom and her drinking. By the time he was 16 years old, Junior was acting out in ways that were eerily reminiscent of his womanizing father. As Tom Rubethan writes, quote,

His exceptional looks and muscular physique made it very easy for him to seduce women, and he started sleeping with his mother's friends, causing terrible problems with their husbands, which Dotsie then had to deal with. He also occasionally drank heavily, which she didn't like, and Dotsie accused him of throwing his life away. End quote.

Things between Junior and his mom got worse and worse and they came to a head on Thanksgiving Day, 1935. Rubeth then continues, "...he and Dotsie got into a heated argument over her drinking. Jesse Jr. grabbed a quart bottle of whiskey and downed a quarter of it in one slug, shouting, "'I'll show you I can drink as much as any woman.'"

Over the next hour, he finished it off ostensibly to show his mother how unattractive drunks could be. The young Paul Livermore, that's the younger brother, watched the argument unfold and sensing there might be trouble later, retired to his bedroom and locked the door. As Jesse Jr. drank more and more of the bottle, he grew more and more excited. Then, it turned ugly, as Dotsie shouted, quote,

I'd rather see you dead than drinking that way. Jesse Jr. grabbed a .22 caliber rifle he had under the bed and rushed downstairs and challenged his mother to make good on her threat. Obliterated by alcohol, she took the rifle and almost randomly squeezed the trigger. A millisecond separated the bang and the bullet entering Jesse Jr.'s body. The bullet raced past the 16-year-old's chest, narrowly missing his heart,

puncturing his kidney and finally lodging in his back near the spine. He seemed to freeze until the full force of the shock hit his body and he fell to the floor half-conscious, whispering almost inaudibly, Mother, you did it.

Less than 24 hours, Jesse Sr. was stepping off a plane in L.A. and rushing to the hospital. When reporters cornered him, he growled, quote, If anything has happened to that boy, I will see that she pays, end quote. But when he stood over his son's hospital bed, watching the 16-year-old cling to life, he broke down and whispered, quote, Fight, boy. I'm standing by you, end quote.

It took Jesse Jr. three months to recover from the gunshot wound. He managed to pull through and eventually forgave his mother. Dotsie was initially brought up on charges of assault with intent to kill, but the local DA quickly dropped him, mostly thanks to Jesse.

He hated his ex-wife, to be sure, but he felt that for his boys, watching their mother serve a lengthy jail sentence would be even more damaging to their precarious future. The whole debacle was, quote, yet another extraordinary saga in the life of the Livermore family, according to biographer Tom Rubethan. Five long years passed, and Jesse Livermore's luck in the stock market did not improve.

On the afternoon of Thursday, November 28, 1940, Jesse went to a cocktail bar in the Sherry Netherland Hotel in Manhattan. The bartender served him two martinis, and while Jesse quietly sipped his drinks, the bartender noticed he was writing something down on a notepad.

Maybe it was his memoirs or to-do list or some kind of stock strategy. The bartender didn't think much of it when Jesse got up from his stool at around 5.30 p.m. and disappeared into the bar's bathroom. A few minutes later, a hotel attendant making his hourly rounds entered the bathroom and

and saw Jesse slumped in a chair. At first, he thought he was just asleep, another high roller down for the count after too many stiff drinks. But then, he saw the pistol on the floor, and the trickle of crimson spilling onto the ground from Jesse's left ear. Jesse Livermore had taken his own life at the age of 63, and no one had heard so much as a pop of a gunshot. A

On his body, the police found a suicide note addressed to his third wife, Nina. Quote, I cannot help it. Things have been bad with me. I am tired of fighting. I cannot carry on any longer. This is the only way out. I am unworthy of your love. I am a failure. I am truly sorry, but this is the only way out for me.

Above that, a single phrase had been written over and over again. My life has been a failure. My life has been a failure. My life has been a failure.

Historians Gordon Thomas and Max Morgan Witts gave a brief but fitting elegy for Jesse Livermore in their book on the Great Crash, quote, Livermore died as he lived, sensationally, end quote. Historian John Brooks had something slightly more meditative to say about the great bear of Wall Street, the boy trader, the farm boy wunderkind who could read the ticker tape like a sheet of music, the man who followed his market obsessions into the grave with a

with a kind of unique purity. Quote,

because he came so uncomfortably close to being the embodiment of a prevalent American dream. And yet we pity him at our risk, because his ghost may rise up to call us what we cannot call him,

A hypocrite. End quote. Of course, it's hard not to be struck by the irony of Jesse Livermore's suicide. The great myth of the stock market crash of 1929 is that it provoked a wave of suicides among men who lost it all during that terrible week in October. We know now that that supposed academic was a gross exaggeration of a few scattered cases. But in a sad twist of fate, it was the man who profited most from the great crash who ultimately decided to kill himself.

Before we end today's episode, I want to leave you with an anecdote. After all we've been through, all the twists and turns, a downer ending just won't do. So let's leave things on a lighter note. About 20 years after the stock market crash of 1929, the New York Stock Exchange had bounced back to its old self. With government regulations in place and the SEC on the prowl, Wall Street appeared to be in a new age of responsible investing.

Well, one day, in the 1950s, the exchange got a very special visitor. It was the famous comedian, Groucho Marx. Back in 29, Groucho had suffered heavy financial losses during the crash. He'd invested hundreds of thousands of dollars on margin, and when the market went sideways, he lost it all. And 20 years later, he was here, in New York, touring the epicenter of that disaster.

And in typical Groucho fashion, he made it a very memorable day for the employees of the exchange. As Karen Blumenthal describes, quote,

It turned out that the comic could neither forgive nor forget. After watching the trading for a few minutes from the visitors' gallery, Groucho stood up on his chair and began belting out the song, When Irish Eyes Are Smiling, at the top of his lungs. The traders stopped their work to look up at the nut in the gallery. They didn't recognize Groucho without his mustache. The advisor tried to stop his friend, saying, quote, Groucho, I'm afraid they don't appreciate clowning in the stock exchange.

A guard told him to be quiet or he would call the police. Listen here, you crooks, Groucho shouted, now that he had everybody's attention. You wiped me out of $250,000 in 1929. For that kind of dough, I think I'm entitled to sing if I want to. This has been Conflicted. Thanks for listening.

I'm Ken Harbaugh, host of Burn the Boats from Evergreen Podcasts. I interview political leaders and influencers, folks like award-winning journalist Soledad O'Brien and conservative columnist Bill Kristol about the choices they confront when failure is not an option. I won't agree with everyone I talk to, but I respect anyone who believes in something enough to risk everything for it. Because history belongs to those willing to burn the boats. Episodes are out every other week, wherever you get your podcasts.

We'll be right back.