In the street, the scene was extraordinary. A crowd of men had gathered on the steps of Federal Hall. They seemed to be in shock. He saw a fellow come out of the Exchange and burst into tears. An old broker he knew passed him and remarked, with a shake of the head: “Ain’t seen anything like this since the crash of 1907.”
But in 1907, old Pierpont Morgan had been there to save the day. Maybe his son Jack could do something? But Jack Morgan was on the other side of the Atlantic in England, for the shooting season. The courtly senior Morgan partner Thomas Lamont was in charge.
As if on cue, at that moment, a group of men went up the steps of 23 Wall Street, the House of Morgan. He recognized at once the heads of the greatest banks. Could they stop the rot?
It seemed they could. At one thirty that day, Richard Whitney, the president of the Stock Exchange and a broker for Morgan, walked calmly out of 23 Wall Street, went straight to the floor of the Exchange, and started buying. Big money, big stocks, at well above the asking price. The banks had given him $240 million to use if he needed, but he only had to use a fraction. With a great sigh of relief, the market began to calm down.
The godlike spirit of Pierpont Morgan had descended from Olympus to rule the street once more.
That night William attended a big meeting of brokers. Everyone agreed the panic was unnecessary. On Friday, and on Saturday morning, the market suffered no further crisis.
He spent the rest of the weekend quietly. On Sunday, Charlie came by for lunch. “Technically,” William told them, “this sell-off has left the market in better condition than it’s been in for months.” After that, asking Charlie to keep his mother company, he went for a walk in Central Park.
The truth was, he needed some time alone, to think.
What had really happened? The underlying problem, he reckoned, was that for the last few years, there had been too much cash in the stock market. Funnily enough, it wasn’t that everything was booming. Farming and commodity prices had been weak, so instead of investing in those traditional staples, people had been looking for gains in stocks. Cash flowed in; brokers, banks and other finance houses mushroomed. Even in the huge American economy, there weren’t really enough productive stocks for all this cash, so prices rose. And then, of course, giddy greed set in.
Small investors, who should have been putting some savings in solid stocks, were buying wildly. Out of the total population of a hundred and twenty million, two, maybe three million were in the market now. That was a hell of a lot. And more than half a million of these little guys were even buying on a ten percent margin—putting down only a hundred dollars for every thousand they invested, with finance houses lending them the rest. Respectable brokerage houses like his own were lending clients two-thirds of the funds to purchase stocks. Money pushed stock prices ever higher. You couldn’t lose. And not only stocks. William knew damn well that some of the banks were parceling up their worst Latin American debt and selling it to suckers as valuable bonds. So long as everything went up, nobody noticed.
And not just the man in the street—the brokers and traders were not much better. Seduced by their own success, most of them had never seen a bear market in their lives.
William walked right across the park, until he was opposite the Dakota. Then, deep in thought, he walked slowly back.
Maybe this market shock was a good thing. Maybe it was time for a shock to the system. Not only to the market, but to the whole city as well.
The fact was, the whole of New York seemed to have forgotten its morals. What had happened to responsible investing? To hard work and saving? What had happened to the old puritan ethic in the world of speakeasies, and bootleggers, and gangland killings, and loose women? Life was too easy; they’d all gone soft. He himself was just as guilty as any of them. Look at Charlie. Charming, and all that, but at bottom, a spoiled rich kid. And it’s my fault as much as his, he thought. I let him get this way.
So what was to be done? He was damned if he knew. But if this little crisis reminded people about the fundamentals of life, then maybe it was worth whatever it had cost him.
Truth to tell, he wasn’t quite sure how much that was right now. The brokerage must have taken a hell of a hit, but they weren’t wiped out. He’d have to go over the books with his clerk in the morning.
Charlie Master was in the office with his father all the time that week. Maybe it was something his mother had said, or perhaps an instinct for drama had drawn him there. If so, his instincts were rewarded. For Wall Street’s Black Monday and Black Tuesday were events never to be forgotten.
During the weekend, the public had read the newspapers, pondered the reassuring statements of the bankers, and come to their own conclusion. It consisted of a single word. Sell.
On Monday, Charlie watched as the market collapsed. That day the Dow fell over twelve percent. Yet Tuesday was even more dramatic. The percentage fall was almost the same, but it was the volume of shares that was so astounding. Over sixteen million shares changed hands. No one had ever seen anything like it. The number of transactions was so huge that the ticker-tape machines were two and a half hours behind. As he watched his father anxiously, he wondered if any brokerage house could withstand such carnage.
Perhaps it was as well that William Master knew his son was watching him. It helped him get through. Courage under fire, grace under pressure: call it what you will, he did his best to set his son an example. As the market lost a quarter of its value in two days, his face never once broke into even a grimace. He was grave, but he was calm. On Wednesday morning, Joe drove him to his office as normal, in the silver Rolls-Royce. When he got out, he summoned all his people and told them: “Be vigilant, gentlemen. Very soon, perhaps even today, there will be a great buying opportunity.”
And lo and behold, there was.
On Wednesday, October 30, the market went back up by a staggering twelve and a half percent. A little before noon, William confided to Charlie: “I’m buying.” The next day, the market closed at lunchtime, up another five percent. As they left the office, he told Charlie: “I just sold again.”
“Already?” said Charlie.
“Profit-taking. I lost a bit of money last week, but I just made half of it back again.”
The following week, however, the market slumped again. Five percent on Monday; nine percent on Wednesday. And it just kept sliding, day by day. By November 13, the Dow was at 198, only just over half its September high.
Investors, small and large, with big margin calls were being wiped out. Brokerage houses that’d lent money that couldn’t be repaid were failing. “Plenty of the weaker banks may fail, too,” William told Charlie. But each morning the street witnessed William Master arriving at his office in his silver Rolls-Royce, as he calmly carried on with business as usual. “We’ve taken losses,” he told people, “but the firm is sound. And so is this country’s economy,” he liked to add. He said the same thing to his wife and son.
His confidence was rewarded: after reaching its November low, the market stabilized; and as 1930 began, it started to rise. “There’s plenty of credit, at low rates,” William pointed out. “And if people are borrowing more carefully, that’s no bad thing.”
Meanwhile, Charlie became aware that his father was trading vigorously on his own account. He didn’t see the trades, but he knew they were large. “Are you buying on margin?” he asked. “Somewhat,” was the reply. Late in March, however, when a clerk checked one of these deals with him instead of his father, Charlie saw that William was borrowing nine dollars for every one he put down himself—just like the ten percent margin boys before the crash. When he asked his father about it, William took him into his office and closed the door.
“Fact is, Charlie, last November I had to put my own money into the brokerage to hold things together. Don’t tell your mother. Or anyone else. Confidence is everything in this game. But I’m making my money back pretty fast.”
“You’re sure the market’s going up?”
&
nbsp; “Look, 198 was the bottom, Charlie. I don’t say we’ll get back to 381, but we’ll see 300. I’m sure of it.”
And from that day, this message became the daily litany of the Master brokerage. “We’ll see 300,” they told each other. “We’ll see 300,” they told their customers. “Mr. Master says so.” And before long, it looked as if Master was right. On April 30, the Dow hit 294.
It was a hot morning in August and Salvatore Caruso was high in the sky. He was setting bricks rapidly and with precision. But he was hardly paying attention to his work. Every few minutes he found himself glancing down, searching the street far below, looking for signs of news.
Not that he was unhappy in his work. He’d been on several sites in the last eighteen months, but this one was easily the most exciting. The job was on Fifth Avenue, down at Thirty-fourth Street. At the start of the year it had still been magnificently occupied by the Waldorf-Astoria Hotel. By March there had been nothing but a huge hole, forty feet deep, down to the solid bedrock below. Now, arising from that bedrock with astonishing speed, was the skyscraper to surpass all the skyscrapers that had gone before.
The Empire State.
Everything about the project was larger than life. The entrepreneur, Raskob, had risen from poverty to be the right-hand man of the mighty du Pont family, and chairman of the General Motors finance committee. The frontman, Al Smith, was still poor, but he’d been New York’s Democratic governor, and might have been elected President of the USA if he hadn’t been a Catholic. Both men were flamboyant. Both hated the hypocrisy of Prohibition. Both loved a challenge.
And if Walter Chrysler thought that his clever, stainless-steel spike was going to leave him king of the New York skyline, then he’d better watch out. The Empire State Building was going to top it, and soon.
Salvatore had been working with the same team of bricklayers for the last couple of years. They went from site to site together, and were known as a good gang. They all got along, but sometimes, for all that had happened between them, he missed the days when he and Angelo were working side by side.
His eyes searched the street again. He was waiting for news of Angelo now.
The site was organized to perfection. In order not to disturb the residents of Fifth Avenue, the roadway was always kept clear. Every morning, on a strict schedule, the trucks swung into the site from one street and left by the other, while their loads were hastily raised to the floor where they were needed.
The materials came from so many places. The big T girders from Pittsburgh, limestone from Indiana, timber from the Pacific coast, marble from Italy and France, and when those suppliers couldn’t keep up, the contractors had bought a whole quarry in Germany.
Most dramatic of all was the speed of the work. As the vast steel framework climbed steadily into the sky, the bricklayers and stonemasons followed right behind it. The Empire State Building was going up almost a floor per day.
Just then, a few floors up and to the left, a large iron girder swung silently into view. Sitting astride it were a couple of men.
“There go the Injuns,” one of the gang remarked.
There were scores of Mohawk Indians on the site. Whole families of them had learned their ironworking skills on Canada’s bridges half a century before. Now they had come down from their reservation to work on the skyscrapers of New York. Salvatore liked to watch the Mohawks sitting calmly on the girders as they were swung up to dizzying heights in the sky. There, they guided them into the building’s mighty frame, where the riveters, working in teams of four, went about their deafening work. The Mohawks and the riveters were some of the most highly paid men on the site.
Salvatore’s own pay as a bricklayer was excellent: more than fifteen dollars a day. Most important of all, he was employed. For there were plenty of good men who couldn’t find work, these days.
It was a strange irony. Just as the Empire State Building had started to go up, America itself had begun to stagger. The country wasn’t hit by another stock market crash—there was no sudden crisis—but like a boxer who has taken a series of heavy blows, and starts to lose his legs, the mighty American economy had finally begun to sag.
From its April high, the stock market had given up its new year rally. Each day, as the Empire State Building went up another floor, the market went a little lower. Not a lot, just a little. But day after day, week after week, the market kept on falling. Its defenses were down; it had given up the fight; it no longer saw any reason to rise. By summer, credit was getting tight. Companies were laying people off; companies were failing. Quietly, steadily, it just went on and on.
Of course, many people declared that things would soon get better, that the market was now undervalued, and the economy still sound. Like seconds in the corner, they were shouting at their man to keep his gloves up. But their man was giving ground, and he seemed to have lost his heart. Wherever jobs were to be had, there were long lines waiting for them.
At eleven o’clock, Salvatore noticed a silver Rolls-Royce passing down Fifth Avenue. He remembered the lady with the silver Rolls who’d once taken him and Anna to Gramercy Park, and wondered if it was the same person.
As it happened, it was. Far below, Rose had just remarked to a friend: “When I think of my poor Mrs. Astor—and I mean the Mrs. Astor, of course—and that hotel they put on her house … Well, that was bad enough, but now they’re building this huge, dreadful thing …” She turned her head away from the site. “I won’t look at it,” she declared.
When lunchtime came, most of the men went down to the base of the building, where an excellent cafeteria had been provided. Only the Italian workers stayed away. They knew that only Italian food, prepared by Italian hands, was edible. They brought their own lunches.
Salvatore had just put some ham and mozzarella on a piece of bread when he looked out over the edge of the building again. A few floors above, the stone setters were at work on the outer face of the building, on a duckwalk suspended from above. Just below him was another line of suspended scaffolding, to catch anything that fell, and about fifteen floors below that, a second line of netting. There had been very few injuries on the huge site so far. Nobody had fallen off the outside.
He was gazing down at the netting far below when he caught sight of Uncle Luigi. He was standing, perilously, in the middle of Fifth Avenue while the traffic went past him. He was waving his arms like a lunatic.
The news had come. It didn’t take Salvatore long to reach his uncle, who embraced him and kissed him on both cheeks.
“The child is born, Salvatore. All is well.”
“Bene. Another girl?” Angelo and Teresa had produced a baby girl within a year of their marriage. They had called her Anna.
“No, Salvatore. It’s a boy. A boy for the Caruso family.”
“Perfetto. We shall drink to him tonight.”
“You’d better.” Uncle Luigi beamed. “He will be called Salvatore. They want you to be his godfather.”
William Master didn’t go straight home that evening. Walking up Fifth, he paused by St. Patrick’s Cathedral. At the moment, the city appeared to be quite untidy—there seemed to be building sites wherever you looked. Down on Thirty-fourth, the Empire State Building was the tallest edifice going up, but the biggest construction site was surely the huge complex that ran for three blocks all the way from Fifth Avenue to Sixth, which John D. Rockefeller, Jr., was developing single-handed. Master had no doubt the finished article would be wonderfully elegant, but it was going to take years to complete, and until it was done, the area opposite St. Patrick’s was going to be a big mess.
On Fifty-second Street, he turned west and walked a few yards to a doorway on the north side of the street. He needed a drink.
The 21 Club had only been there since the start of the year, but to those in the know, it was already the place to be seen. Charlie had taken him there soon after it opened, for its owners were the two young men who’d run the Fronton speakeasy down in the Village. Having moved up
town, they’d finally settled at number 21 West Fifty-second Street, a much tonier address than where they’d started.
In the big downstairs room, you could sit at one of the booths round the walls and have a drink in peace. If the 21 Club was ever raided, the police might have some difficulty locating the liquor—it was behind a concealed, two-and-a-half-ton metal door, in the basement of the house next door.
William sat quietly and nursed his drink. He was glad to be alone. Charlie was coming round to dinner that evening, and he’d be glad of his company. But there were still things he hadn’t told his son. Things he hadn’t told anybody.
Damn it, the market couldn’t keep going down forever. But if it didn’t pick up soon, he didn’t know what the hell he was going to do.
When he got home, Charlie was already there. He kissed his wife, and she gave him a friendly smile. He was glad of that.
He’d been sleeping badly for a month now. Sometimes he’d been so restless that he’d retired to the couch in his dressing room, to let Rose get some sleep. It had been some time since he’d made love to his wife. Partly he’d just been too tired; but more than once lately he’d tried, and been unable. She was very nice about it, but these failures hadn’t helped his morale.
Their supper passed pleasantly enough. They talked of this and that, but nobody mentioned the markets. They had fruit for dessert, and as Rose was cutting an apple, she casually remarked: “I’m going to need another hundred thousand dollars for Newport. You don’t mind, do you?”
William stared at her. He hadn’t even seen the damned house at Newport this summer. Rose had been up there, but she told him it wasn’t habitable with all the workmen. He hardly knew what she was doing to the place, though she assured him it would be spectacular when it was done. Meanwhile, she talked about her plans to all her friends.
Strangely enough, her activities had been quite helpful to the brokerage. “If Master’s spending all that money on his Newport house,” people said, “the brokerage must be in good shape.” At a time when so many others were going under, it had raised his prestige on the street.
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