WGBH Series Crash of ’29 features Babson College Founder                                              Peter RovickWellesle...
WGBH Series Crash of ’29 features Babson College Founder                                        Peter RovickAt that time m...
WGBH Series Crash of ’29 features Babson College Founder           Peter Rovick1. http://www.pbs.org/wgbh/americanexperien...
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The crash of 29 wgbh american experience_peter rovick

  1. 1. WGBH Series Crash of ’29 features Babson College Founder Peter RovickWellesleys Babson College founder featured in WGBHseries on Crash of 29By Peter Rovick/Guest columnistPosted Nov 10, 2009 @ 11:31 AMhttp://www.wickedlocal.com/wellesley/news/lifestyle/columnists/x809126060/Wellesleys-Babson-College-founder-featured-in-WGBH-series-on-Crash-of-29"Blue skies, smilin’ at me. Nothin’ but blues skies do I see.” Such was the sentiment in the late 1920sreflected in the lyrics of the popular song by Irving Berlin. Thus begins the episode “The Crash of1929,” in the miniseries “The 1930s” on American Experience, produced by WGBH.The Crash of 1929’ captures the unbounded optimism of the age, a time when the stock marketepitomized the false promise of permanent prosperity ... Based on eight years of continuedprosperity, presidents and economists alike confidently predicted that America would soon enter atime when there would be no more poverty, no more depressions.”www.pbs.org/wgbh/americanexperience/crash/introductionThe rich were growing richer and financial firms now invited the average person, “the smallinvestor,” to capitalize on markets that only seemed to be heading in one direction … up. Evencelebrities like Groucho Marx wanted to get in on the action, leveraging tactics known as “buying onmargin,” which allowed one to borrow a sum of $10,000 with only approximately $1,000 (or 10percent) down. Marx invested most of his wealth in the stock market, seeking to cash in on thebonanza. As optimism rose, The Marx Brothers also highlighted the boom in the Florida real estatemarket with their first feature-length film “Cocoanuts.”Not everyone saw this as a time for unbounded optimism. “The Crash of 1929” highlights oneprominent businessman who warned of consequences of this speculation noting “There’s going to bea crash and the aftermath is going to be quite terrible.”Roger W. Babson, prominent local businessman and founder of what is now known as BabsonCollege, even found his patriotism questioned for challenging the status quo. Instead, many evenpreferred to listen to the seemingly sage advice of people like popular astrologer Evangeline Adams,who predicted that the Dow Jones “could climb to heaven.”Page 1 of 3
  2. 2. WGBH Series Crash of ’29 features Babson College Founder Peter RovickAt that time many including Michael J. Meehan, a prominent stock specialist, legally manipulatedthe press, pushing stock prices up to lock in gains for the large investors. The episode notes, “Apublicity man called A. Newton Plummer had canceled checks from practically every majorjournalist in New York City.” Meehan and others helped to prop up the stock price of RadioCorporation of America (RCA), prompting inflows by small investors hoping to build their ownfortunes. Yet, the small investor was later caught standing as the song stopped in the game ofMusical Chairs. Infamous mobster Al Capone even noted “It’s a racket…Those stock market guysare crooked,” preferring instead to invest $100 million of his money in bootleg liquor business.Several warning signs appeared in early 1929, including the plummet of Blue Chip stocks on MondayMarch 21. As stock prices dropped, brokers would inform investors who had leveraged themselvesthat they would have to invest more money or else their stocks would need to be sold. As stocks weresold, often not even covering initial margins, prices continued to drop triggering additional margincalls. Panicked attempts to borrow money in order to cover margin led to soaring interest rates and acredit crunch.One attempt to stop the panic initially worked. Charles E. Mitchell, president of National City Bank,who played a major part in initially mass-marketing stocks and bonds to the general public,personally attempted to intervene by announcing that National City Bank would make available $25million of credit. This action did in fact help to alleviate the panic and reduce credit rates; however,this only produced a temporary effect.A period of economic slowdown ensued and stock prices remained high, seemingly unrelated to theactual company valuations.“On September 5th, economist Roger Babson gave a speech to a group of businessmen. ‘Sooner orlater, a crash is coming and it may be terrific.’ He’d been saying the same thing for two years, butnow, for some reason, investors were listening. The market took a severe dip. They called it the‘Babson Break.’ The next day, prices stabilized, but several days later, they began to drift lower.Though investors had no way of knowing it, the collapse had already begun.” Transcript, “TheCrash of 1929.” p. 17.The Crash of 1929 and additional episodes of this miniseries can be viewed on WGBH or online.Additional details including story highlights, timeline, and show transcript are available for freeonline at http://www.pbs.org/wgbh/americanexperience/crash/.Peter Rovick lives in Wellesley and is an active volunteer for WGBH, the local PBS affiliate based in Brighton.With a strong affinity for the ‘GBH mission “to entertain, educate, and inspire,” Peter donates his time andenergy as a Community Ambassador and as a docent for the WGBH television and radio studios. Free publicstudio tours are available. For more information, see: www.wgbh.org/about/studioTours.cfm.Page 2 of 3
  3. 3. WGBH Series Crash of ’29 features Babson College Founder Peter Rovick1. http://www.pbs.org/wgbh/americanexperience/crash/introduction2.Transcript, “The Crash of 1929.” p. 10.3.Transcript, “The Crash of 1929.” p. 17.Page 3 of 3