Author Archives: jgrantalexander

William Durant

William Durant did not think much of ‘horse-less carriages.’ In fact he made his first million investing in a horse-drawn carriage company. He felt the public would hate the stink of fuel and the smoke from automobile engines. Rather than depend on government regulation, he decided to jump in and create a car company that produced cleaner products.

He acquired the foundering Buick Motor Company, and soon rolled in other manufacturers including Oldsmobile, Cadillac, Pontiac (Oakland) and others. He then partnered with engineer Louis Chevrolet on another brand consumers know today all under the umbrella of ‘General Motors.’

Durant’s philosophy differed from Henry Ford’s. Ford created only one model of car in ‘any color you want, as long as it’s black.’ GM produced many models of cars and in different colors. He had the vision to create what we call car dealerships today. Finally Durant introduced the idea of buying a car on credit.

The visionary also created parts manufacturing companies. This vertical integration guaranteed a supply of components for General Motors. For example there was a radiator company, a bearing company and Dayton Engineering Laboratories (Delco).

During WWI, William Durant, as president of GM, refused to build war supplies. This alienated powerful people around him, and set him on a course where he would be replaced as top guy in the company by Alfred Sloan.

He then went on to start another automobile company, Durant Motors. It did not perform as well as GM, now the largest carmaker in the world. As Black Tuesday arrived Durant, with the Rockefellers, dumped a ton of money into the Market to show confidence. It was for naught and he was financially ruined.

Picking himself back up, in the late 1930s, he opened a bowling alley/restaurant in his home in Flint, Michigan. He even worked in the kitchen. He felt it could grow into a profitable chain, but it never materialized.

Durant’s machinations are part of the sprawling story of Speaker of the Street.

Gloria Swanson

Gloria Swanson toured a film studio because a girlhood crush on matinee idol Francis X Bushman. From that visit she got a walk on in a film. From that walk on, Gloria Swanson grew to become one of the biggest stars of the Silent Era.

She worked with Valentino, Charlie Chaplin, Cecil B DeMille, Mack Sennett, Raoul Walsh, Lon Chaney and almost every other big name in the business.

Erich von Stroheim directed her in a production of Queen Kelly which never got made and cost her boyfriend, Joe Kennedy, a ton of money. At the time they were both married to other people.

Her hypnotic eyes and lithe movements made her an early film sex symbol. Her parts moved between elegant rich heartbroken women and dangerous femmes fatales.

With the dawn of talking motion pictures, Swanson’s gigs became less frequent. She had a brash spirit which was not always appreciated by the male-dominant business.

In 1950 William ‘Billy’ Wilder, one of Hollywood’s most forward-thinking directors wanted to get the biggest star of the Silent Era. The part was a bitter, narcissistic former superstar now living in her own fantasies. The star was Mae Murray and was absolutely offended at lowering herself to such a part.

Gloria Swanson had no such reservations. She embodied the role of Norma Desmond in Sunset Boulevard. Which included her buddies Cecil B DeMille as himself, and Erich von Stroheim as an ex-husband turned chauffeur. The film gave us the immortals lines “I am big. The pictures got small;” and the oft-imitated “All right Mr. DeMille, I’m ready for my close-up.”

She was nominated for the third time for an Academy Award, and it revivified her career as she became a staple on television for years after. Today she is a camp favorite and will always be remembered as the deluded, but sassy Norma Desmond.

Charles Schwab

Charles Schwab, no relation to Charles R Schwab, the man that started the finance company we know today, started out in Pennsylvania as a stake driver for Andrew Carnegie’s steel company. By the time he was 35, he was president of the company.

A dynamic risk-taker and partier, Schwab negotiated with JP Morgan, Carnegie and Elbert Gary secretly to form United States Steel. Morgan combined Federal Steel with Carnegie and the group created the first billion dollar company ever.

He didn’t like Morgan or Gary that much and he left USS to go to Bethlehem Shipbuilding company, where he turned it into the largest independent steel supplier in the world.

During both World Wars, Bethlehem manufactured all the armor plate and heavy guns for the military. After the first World War, Schwab, like many business moguls, was branded as a profiteer. He got cleared of wrongdoing, but his reputation remained tarnished.

He always seemed ready to scheme, during WWI he snuck his goods through Canada to work around neutrality issues, for example. Later, it is rumored he gave a $200,000 gift to the mistress of Grand Duke Alexis of Russia. This supposedly gave him the gift of supplying all the steel for the construction of the Trans-Siberian Railroad.

Schwab enjoyed his millions. He had a 75-room palace built on the Upper West Side of New York, later Mayor La Guardia refused it as a gift home because it was too decadent. Today it has been torn down and is an apartment block. He also had a 45 room estate in Pennsylvania, which is now part of St. Francis University.

He liked fast cars, lots of women and gambling. (His wife did not appreciate any of those qualities) He had frittered away a lot of his fortune when the Crash of ’29 came to finish it off. Charles Schwab’s rags to riches story went back to rags as he finished his life in a small apartment.

Had he been around a few years later, he would have witnessed Bethlehem Steel getting another war contract for WWII munitions, restoring his fortune.

Jack Morgan

Jack Morgan, Jr had to fill really big shoes – not only was he the son of JP Morgan, but his mother was the 18th great granddaughter of King Edward the First. A quick study and diplomatic, Jack ably controlled the House of Morgan through almost two World Wars. He also made a lot of money doing it.

Jack, like his dad, did not like to be in the spotlight. In fact, he eventually chose to stay on his yacht The Corsair, rather than hotels or his mansions. When his father passed in 1913, Jack took over. Senior had conglomerated a bunch of banks into Guaranty Trust. In a couple of years the international powerhouse worked both sides of the Atlantic.

During the first World War, the bank, now called JP Morgan & Co, loaned tons of money to Russia, and even more to Britain and France. At the time, many questioned Morgan. America had never been enemies to Germany, and England was our enemy twice. So was Morgan trying to sway us into war against Germany? Further, the French were suspicious of Morgan as it was clear its actions favored the British.

The House of Morgan became the official purchasing agent for the British government, buying supplies, commodities and making commission off of every purchase. Enraged at the war-mongering and profiteering, a would-be assassin, Eric Muenter, broke into Jack’s estate on Long Island and shot him twice. Morgan was back at work in a month.

At the conclusion of the war, the House of Morgan oversaw reparations from Germany. The new argument held that France demanded crippling fees from Germany, and it weakened them to the point of weakening the entire European economy.

Like his father, Jack Morgan donated works to the Met. He also created the Pierpont Morgan Library (now known as the Morgan Library & Museum) and gave his mansion in London to be the United States Embassy.

After the Crash of ’29, the House lost 40% of its value, but clearly kept itself righted. Jack Morgan became a symbol to some, especially opportunistic politicians as the embodiment of banking evil and the Senate convened the Pecora Hearings which galvanized Main Street against Wall Street.

In 1940 he took Morgan & Co public which protected its assets and allowed him a more peaceful end to his life three years later. Today JP Morgan is synonymous with wealth, big banking and to those that are conspiratorial – the center of all behind-the-scenes world machinations.

Allan A Ryan

Was ever a successful person ever so ill used? Allan A Ryan ran a well-regarded investment house on Wall Street in the late Teens and early Twenties. He was known as a major Bull.

Bulls make a lot of people money, but the risk is, high prices can come down for myriad reasons; then everyone accuses the Bulls of being manipulators.

It works the other way as well, if someone bets against the market, a Bear, they profit on people’s losses. The public tends to be annoyed with Bears – it’s like a Craps table – when the pretty girl is rolling the point over and over everyone wins and celebrates. However when the crabby old guy bets against her, the table tends to complain about jinxing.

Ryan supported many well-performing stocks. but his pet stock was Stutz Motor Company makers of the sexy Bearcat – one of the coolest cars ever built. He held so much, he eventually became the President of the company. Stutz wasn’t even very rich, as stock issues go, but people loved this car so much they bought stock in it.

In the Bull Market of post-war demand, Stutz climbed from 40 to 144. Then Bears started to get into the campsite which resulted in depressing stock prices, but Stutz held firm – a share sat at 100. Suddenly, though, Ryan saw his stock’s price slip for no apparent reason. He figured it to be a Bear Raid.

A Bear Raid is a group of investors combining to spread negative rumors about a stock and selling short to drive it down ASAP; which they plan to cover once the stock plummets.

His holdings would soon be worthless. He sprang into action and starting buying every Stutz share out there. Soon he had ALL of Stutz – he cornered it. Incredibly, after a few months, he had helped pump the stock to 391. He borrowed millions to buy more stock and kept giving the Shorts as much stock as they wanted. They would have to cover eventually, or possibly face prison time for Breach of Contract. As manipulator Daniel Drew famously posited ‘He that sells what isn’t his’n; must buy it back or go to pris’n.’

The Shorts, sure of easy pickings on Stutz were Bear-trapped – they had to replace the borrowed stocks, but there weren’t any. Allan A Ryan then announced he would sell the shorts all the Stutz they needed … at 750! He shrewdly outsmarted those that would undermine his business. The problem was – many of the Shorts were actually members of the Board of Governors of the Stock Exchange itself. They blithely changed the rules, threw Stutz off the board, and refused to honor their short obligations.

When asked at a press conference how the Board could do such things, the answer was ‘The Board can do what it wants.”

Ryan was bankrupt in a few years. His father, the powerful Thomas Fortune Ryan – tobacco magnate, owner of Royal Typewriter – refused to help his son as they hated each other. When Thomas died he willed his son a set of pearl shirt studs.

This story is dramatically portrayed in our book ‘Speaker of the Street.’

Joe Kennedy

Father to John F. and Robert, Joe Kennedy began his banking odyssey as a bank president at the age of 25. At the time, the youngest in the country. Quickly Joe learned the vagaries of the market. Soon he himself becoming a major inside trader and market manipulator. Luckily he avoided injury on The Street at the time of the vicious terrorist explosion in 1920. He got knocked to the ground.

Hollywood

In the mid-20s he went to Hollywood where he made a fortune streamlining the film business and forming RKO Productions. One story has him trying to take over Pantages Theater for eight million dollars. The owner Alexander Pantages refused. Kennedy hired Eunice Pringle to falsely claim Pantages raped her. The scandal jeopardized his business, so he sold out to Kennedy for 3.5 million. During this time, Kennedy had a pretty public affair with movie starlet Gloria Swanson. He also courted Marlene Dietrich.

Crash

Fortuitously, Kennedy massively shorted the market before the Crash of ’29 which made him millions. He also made tons in selling scotch, though it is not clear if he bootlegged it. Joe cleverly bought a defunct barrel-making factory up in Vermont, figuring that Prohibition would eventually end, and companies would need barrels.

SEC

Amazingly, in 1934, in exchange for campaigning for Franklin Roosevelt, Joe Kennedy became the first head of the Securities Exchange Commission. This prompted people to openly wonder why a guy who ran stock operations now had to oversee finding stock operators. He aggressively reformed the way stocks got traded, stunning many observers with his hypocrisy.

Family

Tragically, of his nine children with Rose Kennedy, his eldest died young, two more assassinated and he lobotomized a daughter without telling her mother about it. Eventually, his son Jack married Jackie Bouvier, daughter of a stock operator with whom Joe finagled with – gambling, drunken, lecherous Black Jack Bouvier, who may get his own space in this gallery.

Get to know Joe Kennedy as a character in our compelling novel “Speaker of the Street.“

Jesse Livermore

“I had a hard time convincing my mother that I was not gambling, but making money by figuring.”

Jesse Livermore started his star-crossed career as a 14 year old ‘chalk boy’ at Paine Webber. He wrote ever-changing stock prices up on a big board so Boston ‘investors’ could make their bets at what was called a ‘bucket shop.’ Our book deeply discusses bucket shops, but for now think they are basically what we call ‘day trading’ now.

By the time he was 16, we was making more speculating at the bucket shops than his job. He earned the nickname ‘The Boy Plunger.’ By the time he was 20, Livermore had piled up more than $10,000 profit and was banned from every bucket shop in Boston.

Jesse fascinated himself with how crowd mentality affected stock trading. He kept copious notes on market trends, news affecting the market and human nature. Some believe he might be the secret author, or at least the model for the narrator in the investing classic Reminiscences of a Stock Operator .

Career

Livermore bounced from New York to St; Louis, and back to New York, where in the 1900s he made a half million going long on Northern Pacific, a quarter million going short on Union Pacific and finally made a full million in one day when he was short before the Panic of 1907. His friend JP Morgan requested he stop selling short, and true to form he went long on and netted $3 million on the market rebound.

Then the giant pendulum of the stock universe swung against him as he declared bankruptcy twice in ten years. Relying on his sense of the public mass mentality he bet heavily against the market – $6 million short – in 1929. When the crash came, he was worth over $100 million. He now was called ‘The Great Bear of Wall Street,’ and many blamed him for the crash.

Suicide

In the 30s his mental health slipped and he eventually lost his entire fortune. In November of 1940 Jesse Livermore left his cocktail at the Sherry Netherlands Hotel in New York, went into the cloakroom and shot himself. His note to his wife said:

“My dear Nina: Can’t help it. Things have been bad with me. I am tired of fighting. Can’t 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. Love Laurie”.

Jesse Livermore appears as a suave trader in our new book “Speaker of the Street.“

JP Morgan

John Pierpont – JP Morgan might be the greatest single financial person in history. By the end of his, life he had amassed millions, created General Electric and US Steel, accrued the largest private collection of art in the world, bailed out the US Treasury twice and created a bank that is still a powerhouse today.

Born the grandson of the man who founded Aetna Insurance, Pierpont matriculated to Europe where he learned banking, French and the Arts. He returned to New York where he and his father created Guaranty Trust, eventually called JP Morgan & Co. The Morgan’s had strong ties with London financiers. The bank grew in importance through solid business decisions by Pierpont. Many of these were around the dynamic railroad stocks of the time.

At the beginning of the 20th Century, the bank brokered the creation of General Electric. Next he created US Steel which became the first-ever billion-dollar company. In 1893, the United States Treasury was running out of gold. Morgan organized his vast network of foreign investors to pump in more gold and keep the government from collapse. He repeated his magic, in a different way, in 1907.

Robber Baron?

During this run Morgan became the target of President Teddy Roosevelt’s grass-roots attack as a ‘Robber Baron of Wall Street.’ Despite the backlash in America, Morgan stood as a national hero in England as a wise and benevolent financial leader.

Philanthropy

Later in his life, Morgan donated heavily – money and amazing artworks – to the Met, helping it attain its eventual grand reputation. He also sat on the board of, and the largest donor to, the Natural History Museum. Through him, the museum acquired innumerable artifacts. Finally, Pierpont worked diligently with his Episcopalian Church, even taking part of the revision of the Book of Common Prayer. He donated millions to help build the Cathedral of St. John the Divine.

Though he doesn’t appear in the book, his ‘House of Morgan’ does, in a big way in “Speaker of the Street.”

Charles Mitchell

Scoundrel or scapegoat? A month after the Crash of ’29, Senator Carter Glass (D-VA) placed the blame for the disaster squarely on the shoulders of Charles Mitchell. Mitchell at the time was the Chairman of National City Bank (today Citibank), and had brazenly loaned out $25 million specifically for investment. The Fed at the time was begging people not to speculate – today a buyer can purchase a stock with 50% down – this is called ‘buying on margin.’ Back then, a buyer could get a stock on a 10% margin. Buying with only 10% down is great when the Bulls are running; but in a downturn, a few thousand dollar investment could cost the buyer hundreds of thousands.

A Different View

More recent scholars hold that Charles Mitchell was following a not unreasonable path, and there were other overwhelming factors that forced the Crash; for example the fiscal policy of the Fed (which Mitchell had a say in). In any event, ‘Sunshine Charley’ had lost his charm among the investing world and faced trial in 1933 for tax evasion, which he basically admitted to. He didn’t go to jail, but he did fork over $1 million to the government. Senator Glass, obsessing on Mitchell’s activities, put his name to the Glass-Steagall Act which separated investment banking from commercial banking and created the Federal Deposit Insurance Corporation (FDIC). Years later, Mitchell chaired another investment bank, repaid his debts and a bit of his good reputation in the market.

TODAY’S PARALELL: Margin debt is pretty freaking high right now, it was at an all-time high in June, 2021 and is just below that level now. Corporate debt to GDP is the highest ever. A slip in production was the match to the fuse in 1929 – today if corporate earnings slip a little it will be harder to address this outstanding debt crisis. In other words, a downturn as bad as 1929 could be as soon as Ford Motors underperforming in a quarter.

Read how scary the parallels are between 1929 and right now in our book “Speaker of the Street.”

Street Talk

Welcome. This is our blog. Here we will highlight the spooky similarities between today’s economy and the economy around the worst Stock Market fail in history – the Crash of 1929. Every now and then we will hear from our crack financial reporter stationed back in the Twenties, J. Grant Alexander – whose turgid and overwrought articles will delight and outrage you at the same time.


We want you to comment, argue, advocate and generally get your voice into the ongoing conversation about sane money management.

Crypto

by J. Grant Alexander

Well it seems like the bad old days are here again as this beleaguered, but belligerent broad-sider boasts of Bitcoin bubbles over the bathtub of Babylon. Crypto – accent on the ‘crypt’ has arrived. And where does this could-be-more humble documenter of the dismal science get off the downtown local in order to make such indignant declarations? With the support of none other than Doctor Michael Burry – who was captured deftly by the star that played him in The Big Short, Christian Bale – who has snooped around looking for ways to short the crypto(nite)currency. Even as the dark and dreaded demigods of the Market are considering making futures for the digital drachmas a thing, Burry/Bale has cried ‘Bubble Bubble Toil and coming Trouble!’ for the latest gimmick on the Street. As you and I know (and we doubt the over-suited, under-dressed marketeers realize) ‘scion’ means descendant and the leader of Scion rarely descends past the point of jabbing the good eye of a blinkered attitude which could be characterized as Tony Curtis intoning ‘Up up up!’ in Some Like it Hot; or rather, like two children trying to lift each other up so both float in the air of a playground. Naturally, a government agency that, despite its name, seems uninterested in ‘Security’ or ‘Exchange’ but may look for ‘Commission,’ looks to encourage Stock-y children into such an impossible game and looms over our ersatz hero like a paper tiger in a newsprint zoo. The SEC (ironically (?) cognominatively invoking a suspiciously stacked athletic conference) wants us to cheer the ever-growing opportunities like Bit(off more than they can chew)coin instead of listening to those that actually pay attention to this stuff. Their final say, as in a Sin of Commission, seems unlikely to bite as that body rarely shows any spunk, they often ‘Burry’ those that are smarter than they.