Episode 22: Hottest On Record
As the heat wave continues to soar, so does the stock market. A new peak brings hope for an even better tomorrow and clouds judgement for the dangers ahead.
The heat of Labor Day weekend causes many to flee the city only to cause traffic jams upon return. But it’s the heat on Wall Street that really has everyone excited. The ever ambitious Nanaline Duke invests heavily with stockbroker Bill Wright. To celebrate the summer’s profits, Bill whisks his wife & opera singer Cobina Wright off to Paris.
Archival music provided by Past Perfect Vintage Music, www.pastperfect.com.
Publish Date: January 21, 2021
Length: 20:57
Opening Music: My Heart Belongs to Daddy by Billy Cotton, Album The Great British Dance Bands
Section 1 Music: Button Up Your Overcoat by Jack Hylton, Album Fascinating Rhythm – Great Hits of the 20s
Section 2 Music: Just As Long As The World Goes Round And Around by Jay Wilbur, Album The Great British Dance Bands
Section 3 Music: I Guess I Will Have To Change My Plan by Ambrose & His Orchestra, Album The Great British Dance Bands
End Music: My Heart Belongs to Daddy by Billy Cotton, Album The Great British Dance Bands
AS THE MONEY BURNS
Podcast by Nicki Woodard
Episode 022 – Hottest On Record
00:00
[Music – My Heart Belongs To Daddy by Billy Cotton, Album The Great British Dance Bands]
AS THE MONEY BURNS is an original podcast by Nicki Woodard. Based on historical research, this is a deep exploration into what happened to a set of actual heirs and heiresses to some of America’s most famous fortunes when the Great Depression hits.
Each episode has three primary sections. Section 1 is a narrative story. Section 2 goes deeper into the historical facts. Section 3 focuses on contemporary, emotional, and personal connections.
00:26
Story Recap
Opera singer Cobina Wright struggles with her husband’s cheating, and Reigning It Girl Louise Van Alen worries about losing her secret lover despite her successful debut, which teen heiresses Barbara Hutton and Doris Duke hope to emulate next year.
Now back to AS THE MONEY BURNS
Title
00:46
Hottest On Record
[Music fade out]
Episode Tag
00:48
As the heat wave continues to soar, so does the stock market. A new peak brings hope for an even better tomorrow and clouds judgement for the dangers ahead.
00:59
[Music – Button Up Your Overcoat by Jack Hylton, Album Fascinating Rhythm – Great Hits of the 20s]
Section 1 – Story
[Music fade out]
01:10
Monday September 2nd, 1929, the heat rises to sweltering temperatures of 94 along the New England coast.
By evening, throngs of people return from their seaside escapes. Too many in fact for the highways. Traffic jams surmount leaving many stranded miles from their final destinations – home and work in the concrete jungle.
By evening, some are forced to abandon their autos and walk. Lucky ones will grab subways or trains into the city.
As the train fills up with unexpected new passengers, the elite hover back in their private cars. In awkward teen heiress Doris Duke’s private car, opera singer Cobina Wright and her golden boy stockbroker husband Bill chat with Doris’s ambitious mother Nanaline Duke. Bill is overly excited as he watches from the windows the autos piling up.
02:01
Bill exclaims, “I suspect rubber is going to go up in price. I know more sophisticated stocks are the trend, but never forget the basics. That said Montgomery Ward is climbing and outperforming Woolworth by a good 137%.” He lifts his eyebrow as a point. “I know Woolworth plans on opening more international stores, but there is no way they will catch up soon. You would think Hutton would be more proactive on Barbara’s behalf.”
Nanaline’s eyes gleam with intrigue. Her portfolio has increased nicely these last few weeks, and she wants further in.
02:36
At the train station, the various cars deboard. The Dukes and the Wrights run across the Huttons politely nodding as they plan to go their separate ways. While the Wrights go to collect their luggage, Franklyn Hutton leans over and warns Nanaline to be cautious with Wright. His uncharacteristic warning seems weird and does more to piss Nanaline off.
02:58
Monday September 3rd, the heat lingers. But the real heat seems to be on the floor of the New York Stock Exchange. Fans blast as the trading floor is on fire with all the stocks flying about. The floor littered with slips, and in the middle of the sweaty circus Bill Wright commands the action like a conductor leading his most famous symphony to finish or suffer damnation. Hutton skeptically watches from the galley.
Later at the Wright, Slade, & Co office, the ticker reports the day’s totals only 20 minutes behind despite the wave of transactions that day. Phenomenal and exciting. The exhausted but exhilarated stockbrokers clap each other on the back as if they had won a major championship. There’s one meeting to be handled before celebrations begin.
Back in Bill’s office, Nanaline peruses a large portfolio while she waits for Bill. He enters in triumph and apologizes for his slight disheveled appearance due to the heat. He exudes rawness and manly sexuality of a prized athlete after a major victory. He smiles. She smiles. She picks up a pen and signs all the necessary paperwork. She’s investing a sizeable portion of her savings.
04:09
Still resituating to relatively new home at Sutton Place, Cobina gets ready for dinner. She blots her glistening face. Bill bursts in with arms open, holding a large nearly wilted bouquet, and sweeps Cobina in his arms and dances with her across the room.
His boisterious spirit is contagious. Cobina basks in his attention. “My dear, we shall dance the night away in Paris.” He chatters nostop. “I’ve already booked our passage for next week. We will shop, dance, promenade, maybe a jaunt to the Monte Carlo casino. It will be like another honeymoon.”
They dance around the room as she melts in his arms. Their love could be revived. He would be all hers again. No more rumors of secretaries or other women. A new day comes.
05:00
A week later, Cobina and Bill Wright board an ocean liner for France.
Back on Wall Street, a group of bankers gather to review the stock prices. Heads are shaking. Arguments break out, and then a solemn choice is made.
05:16
[Music – Just As Long As The World Goes Round And Around by Jay Wilbur, Album The Great British Dance Bands]
Section 2 – History & Historiography
[Music fade out]
05:29
Labor Day weekend of 1929 was full of record heat, and the advent of the automobile gave people greater mobility to find more pleasant locations. In 1929, 4.5 million automobiles were sold. This meant many resort and vacation spots had record breaking attendance that weekend, which added even more to the belief that life was good and prosperous. Long Island had 500,000 visitors, and another nearby beach hot spot the Rockaways estimated 400,000.
05:58
Over 2.1 million people visited Coney Island over that weekend. 600,000 on Monday alone. Surprisingly no drownings, and the 75 lost children were all back at home by the end of the day. 25 injuries were reported due to broken glass, and 5,000 people slept on the beach with patrolman watching their safety.
One young lad Harold Underworth, age 19, took a holiday from his multiple jobs at Hotel Annex and a Brooklyn hospital and went to the famous boardwalk for a day of fun. After losing a chunk of money in the side games, he took his last 25 cents and bought a bottle of iodine, went to isolated spot, and downed the poison. One onlooker spotted and got him to the hospital, where he was filled with milk and eggs to counteract the poison. Harold survived.
06:46
Returning daytrippers and vacationers had to deal with some inconveniences. Luckily, popular train lines between Connecticut and New York had added 9 extra sections to the most heavily traveled 6 lines to handle congestion. However the highways would be packed with automobiles to the point of break downs and eventual abandonment in the desire to get home and be at work the next *morning. One auto traffic jam occurred after a driver passed out. One New York bound train was delayed due to the swarm trying to board in the evening.
07:14
Multiple places across the United States suffered from heat. Five died in the Midwest, while Montana experienced 5 inches of snow. Getting a bit of both ends – Bismarck, North Dakota by the afternoon had a 20 degree temp drop on September 3rd and hopes for the 4th that .58 inches of rain might signal the end of a long drought. Hints of the future Dust Bowl dilemma teeters on the edge.
07:37
But the real heat people were focused on was the stock market. Throughout the 1920s, regular people began investing in stocks. Formerly only the wealthy and specially licensed brokers had access but now people from all walks of life were buying in. They believed if they owned even 1 or 2 shares of stock they could potentially become rich.
Another strong factor – available credit. People started to borrow money to invest in the stock market – 6 billion by 1928. In August 1929, brokers lent investors 2/3 the value of stock. In 1929, these loans eventually accumulated to over 8.5 billion.
08:16
The craze of buying led to an overinflated valuation of stock. Twenty-five leading industrial stocks had reached 452 points by September 1929. Speculative favorites included retail chains Montgomery Ward and Woolworth’s – that’s right Barbara Hutton’s grandfather’s legacy and source of her sizeable inheritance. Montgomery Ward had 46.7% increased sales in August alone and was expected to be even higher by the end of the year. On September 3rd, Westinghouse opened at 131 and closed at 286, Montgomery Ward at 137, and Woolworth only at 99.
Relative comparative stocks – Macy Company at 253, American Tobacco (the Duke entity) at 200, Dupont 215,… Less glamorous stocks like energy and gas, another source behind Doris Duke’s fortune, were up but not as sexy of a pick. US Steel was at 262, Tel and Tel at 304, General Electric at 396. Copper was a good bet. Out of the 12 copper firms, Anaconda Copper was a rising favorite at 130.
09:20
Industry and technology was booming and showing lots of promise.
One future stock pick was the cutting edge Zeppelin, with interest in expanding into transatlantic fights. Plans now were to have floating dirigibles regularly cross the Pacific and Atlantic Oceans. In August 1929, the supersized Graf Zeppelin circumnavigated the globe in 21 days, 5 hours, 31 minutes. William Randolph Hearst placed female journalist Grace Hummond-Hay aboard the flight to report the experience. Over Labor Day weekend, head of Zeppelin Dr. Hugo Eckener was out promoting his company and participated in the National Air Races and Aeronautical Exposition in Cleveland. The Hindenburg disaster didn’t occur until 1937.
10:03
Believe it or not, in September 1929, the Times (London) also had an advertisement for an early television set. The Baird Televisor. Back on January 26, 1926, inventor John Logie Baird gave his first public viewing of his new invention in London. Large mechanical disks rotated and scanned images then transmitted electric pulses via cable to show up on a screen as low resolution pattern composed of light and shade.
In 1929, Baird released his first set of televisors for public use. The sets had 30 scanning lines, and the size of the unit was 3 ft wide and 2 ft high. The images were somewhat orange-red images, and the screen size was no larger than a dollar coin or postage stamp. 1000 sets were made and sold for 36 pounds a piece. By March 1930, the BBC had a series of programs transmitting sound and pictures together. Comedians, ballet dancers, and musical performances were featured on the regular schedule each day.
Most of 1929 looked like the end of the rainbow with an endless pot of gold flowing in, technology expanding, and life was all around good.
11:07
September 3rd set a record peak 381.17 on the Dow Jones, and it was not to be matched again until 1954. But there was also a realization that the bull market was near an end.
11:19
The first 6 months of 1929 saw the State Bureau of Securities investigate over 500 companies involved in trading stocks and resulted in multiple indictments. Over 72 tipster stock firms fled Wall Street. One large fraudulent scheme uncovered revealed that after readers trusted their tipsheets from these firms, the racketeers would then add fake stocks with false quotations to boost sales.
By September 5th, the Sage of Wellesley Roger Babson already began predicting a turn towards a depression similar to the earlier fate of Florida (briefly covered in Episode 9 An Heir With A Spare). Prices slowly began to drop by 10 points or so, nothing to cause too much worry or alarm.
11:59
By the second week of September, corrections started to be made on over evaluated and thus inflated stock values. On September 11, 1929 the Wall Street Journal printed this quote from Mark Twain – Don’t part with your illusions; when they are gone you may still exist, but you will have ceased to live.
12:16
Later on September 20th, the first sign of bigger doom in Great Britain was the failure of investor Clarence Hatry and his Hatry Group. Hatry was a man who had suffered 3 major bankruptcies yet ended up richer and with the residual opulent life. In early 1929, he was the hot investment with influence in the merger of steel and iron in the British United Steel Companies. He was busted attempting to borrow $1 million on worthless stock. His empire quickly collapsed.
By the 22nd, New York papers warned against the long running bull market and warned profits are usually lost shortly after the markets reverse. Still throughout September loans continued to another $670 million, the largest of any one month prior.
12:59
By October, there was still encouragement. Swedish businessman and investor Ivar Kreuger broke his long held policy of silence and granted an interview for the October 12th edition of the Saturday Evening Post, where his interviewer and journalist Isaac Marcosson remarked Kreuger applied engineering type precision to his businesses. Kreuger attributed his success to three things – they all being his silence. Kreuger’s largest corporation made matches. Yes, those little tiny pointy sticks with a tip that when striked correctly produces fire.
13:31
In the 1920s to raise financing, Kreuger created two types of shares A & B, with one having a small fraction of voting power to maintain his control. He loaned money to nations then took control over their match market. Yes, he was the match king or more like czar establishing monopolies around the world – Sweden, Germany, America,… Large investments and loans came from the U.S.
Kreuger’s silence was a cover to one of the largest frauds which would change regulatory practices. His Ponzi scheme and gambling would be revealed upon his 1932 suicide, or as his brother later claimed murder. Kreuger was quite possibly the first Madoff and Enron – an unimaginable fraud in size and nothing the world had seen or could compare before that time.
14:17
The term Ponzi was coined after 1920s swindler Charles Ponzi. An Italian immigrant to the United States who excelled in the art of pyramid schemes so much so that eventually they became synonymous with his name. He worked mostly out of Boston from the summer of 1919 until his arrest in the summer of 1920. Yes, only roughly a year, his scheme involved purchase of international reply coupons, a system of basically trading international stamps purchased in one country but redeemed for a higher value in another. Essentially one could buy a coupon in Italy to redeem at a better rate in Germany.
14:50
Ponzi set up prestigious offices and began trading quickly, investors made great returns, and he made money fast and spent it faster. It was his rapid trajectory that would flag interest in his activities and lead to his getting busted. 75% of the Boston police force had invested in his scheme. One local Boston financial writer tried to point out the returns were not accurate, and Ponzi sued for libel and won a $500k settlement. Had investors demanded their money, there needed to be Titanic sized ships filled with the coupons to break even. However most investors reinvested their percentages, which kept the scheme afloat. It was investigative journalism that finally broke the fraud on July 26th, 1920. Ironically, had Ponzi actually traded as he had claimed he would have done well, but not the 50% profit within 45 days guaranteed to the investors.
15:42
No one could anticipate the 3 dismal years that will soon follow, nor the catastrophic losses to production, prices, and income would continue throughout the following period. Universal trust will be replaced with universal suspicion.
15:58
[Music – I Guess I Will Have To Change My Plan by Ambrose & His Orchestra, Album The Great British Dance Bands]
Section 3 – Contemporary & Personal Relevance
[Music fade out]
At the moment of writing this, it’s hard not to point out the fantasy of having large sums of money when the two major American lotteries are high – MegaMillions is at $850 million and Powerball at $730 million. Such a win would yield only a portion of the pot – whether you take lump sum payment yielding 58% or 30 year annuity payments yielding 75%.
Of course when the pots get that big, they jump up even higher as each round as more finally opt to play due to the FOMO what if factor. Occasionally we hear of those who won big then lose it all and sometimes even their lives within a few years. Murdered by relatives or other greedy associates, or downfalls to drugs and addictions.
16:50
I guess I should reveal a little more personal history to explain my ability and foresight into financial matters. My father had a long career in real estate mostly as an appraiser. In the boom of Houston and Texas real estate markets, I grew up knowing plenty of successful businessmen and bankers. Just as I was becoming aware of that stuff, it all imploded in the massive Savings ‘n’ Loans scam.
Luckily, my father hadn’t been involved, the loan process and fraudulent practices were just too much hassle in his mind. The best man at my parents’ wedding was making it big and bought a huge mansion in Dallas, less than a year later he was living out of a camper on the back of a pickup. He would serve several years in club fed only to be out by the time I was in high school. My parents both talk periodically about what happened around them and behind the scenes. One day at the communal pool at my townhome, at 16 I explained the SnL scandal to a 30 year real estate broker.
17:41
Ironically when I finished my masters, Arthur Andersen attempted to recruit me. I couldn’t imagine why anyone would pay a 25 year old consultant on advice not earned working in the field. People first balked at my decision as it seemed like sure thing 2 years and financially set up. Instead within 18 months I was exactly where I had intended working at a company doing History Channel docs when the Enron and Arthur Andersen debacle exploded. Houston was devasted just like the SnL aftermath before it.
18:10
In my various occupations, I’ve been exposed to other scams. A waiter who altered credit card receipts. An assistant who went on an elaborate spending spree. The worst, an owner’s brother-in-law was forging and cashing company checks. The same brother-in-law also continually attempted a preposterous shell game of ad sales much infuriating the accountant and confusing my boss, the owner. The longevity of that game far preceded my arrival and exit.
18:34
In addition, I worked for a couple years as an accounting clerk, gaining an ability to estimate numbers instantly and correcting small and large errors in debits & credits. To flesh out personalities and patterns, I’ve devoured much the investigative series American Greed. It provides an endless supply of various con artists, scams, and fraud with both the perpetrators and victims stories.
18:55
Retelling these tales requires an understanding of history, personalities, and little technical training especially when it comes to the scams. Bubbles burst. Bull markets turn to bear markets. It’s very cyclical in life. For each swing a dilemma occurs and new scams are always forming and being exposed. The transitions can be slow or swift and brutal. And we’re bound to have more, so hopefully we learn the lessons in time.
19:22
History is so much more than something of a distant past. There are often remnants and living elements today. One such place is Coney Island. Want to learn more about it? Check out the two presentations in the last week of January and the first week in February through New York Adventure Club www.nyadventureclub.com. Also upcoming I will give my own presentations on the original Waldorf-Astoria on Feb 4th and Waldorf-Astoria NY on Feb 11th. Only $10 each, live presentation with access for a week later. Information can also be located in the News & Events section of asthemoneyburns.com as well as at www.nyadventureclub.com.
Hook
20:08
[Music – My Heart Belongs To Daddy by Billy Cotton, Album The Great British Dance Bands]
Next when we return to AS THE MONEY BURNS…
The summer is over, and for our young heirs and heiresses that means returning to school. Money doesn’t guarantee popularity, especially when even wealthy resent the wealthier.
Until then…
Credits
20:26
AS THE MONEY BURNS is an original podcast written, produced, and voiced by Nicki Woodard, based on historical research. Archival music has been provided by Past Perfect Vintage Music, check out their website at www.pastperfect.com.
Please come visit us at As The Money Burns via Twitter, Facebook, or Instagram. Transcripts, timeline, episode guide, and character bios are available at asthemoneyburns.com.
20:57
THE END