Making Profit Out Of Crisis
There’s a little secret that history teachers tend to leave out of the lecture. More about that in a moment. On the day of October 24, 1929 (aka Black Thursday) crisis could be felt in the heart of the Big Apple, where elite Wall Street bankers teamed together to find a solution to the financial emergency. The market had lost 11% of value as the bell signaled the start of a busy day. Important leaders that attended one particular business meeting were: Thomas W. Lamont of Morgan Bank (J.P. Morgan & Co.), Charles E. Mitchell of National City Bank (Citibank), and Albert Wiggin of Chase National Bank.
On October 28 (aka Black Monday) there was more reason to panic as the Dow dropped precipitously at 38.33 points (13%). On October 29 (aka Black Tuesday) the Dow dropped 30 points (12%). In two days time the market had lost over $30 billion. The market lost $14 billion on October 29 alone, in the space of one day. Only the insiders would profit from these events.
We know the rest of the story. The Great Depression would bring 10 long years of economic hardship for some and would forever leave an imprint on the American economic psyche. Legislation was enacted to prevent this type of catastrophe from happening again, but the bankers would find more complex ways to avoid these laws and would become much more esoteric in the process. Smoot–Hawley of 1930 raised tariffs and Glass–Steagall of 1933 separated commercial and investment banking. Both very effective until gutted and abandoned some years later.
The Pecora Investigation starring Ferdinand Pecora
This however, is not the end of our journey. The Pecora Investigation, that had begun on March 4, 1932, would attempt to determine the causes of the 1929 Crash and Ferdinand Pecora was in charge of the report which would expose several institutions, including National City Bank (Citibank). The president of the bank lost his job due to the publicity generated and Mr. Pecora plowed forward with the interrogations.
The most influential bankers were closely examined, media coverage continued and a wide range of abusive practices would surface. The meetings finally ended on May 4, 1934 and Pecora was appointed Commissioner of the U.S. Securities and Exchange Commission (SEC).
The investigations were quite effective but hostility from Wall Street would foster in the aftermath, as Ferdinand Pecora described in his 1939 memoir Wall Street Under Oath: “Had there been full disclosure of what was being done in furtherance of these schemes, they could not long have survived the fierce light of publicity and criticism. Legal chicanery and pitch darkness were the banker’s stoutest allies.”
The wizards of today’s Wall Street magic ensemble portray these white shoe boys as amateur apprentices, for real. Escapology has evolved into a fine art form on contemporary Wall Street. These former chumps must have studied under Harry Houdini, as he challenged police forces to try to keep him locked up.
Albert Wiggin makes $4 Million selling short during Crash of 1929.
Back to our story. Albert Wiggin is our central character of interest. Wiggin held several prominent positions in the banking industry before becoming Chairman of Chase National Bank in 1917. Wiggin was a proponent of free trade and he became an important player to help establish global banking, starting in Europe.
Our man Wiggin can be found in the annals of the Pecora Investigation. In September of 1929, Wiggin began selling short his personal shares in Chase National Bank while simultaneously using the bank’s money to achieve his goal. He shorted over 42,000 shares, earning himself a handsome bonus of over $4 million in tax-free revenue.
In the David Rockefeller Memoirs [p. 125], Uncle Winthrop Aldrich was urged to remain at Chase National Bank after the knowledge of the Wiggin incident had caught on: “But the situation changed dramatically in late 1933 when Albert Wiggin admitted at congressional hearings that he had lent large amounts of the bank’s money to himself and his associates on favorable terms and that they had made $10 million selling Chase stock short during the 1929 crash!”
Wiggin was not alone in his profitable venture and his acts were not illegal, but this would force him to resign his post with the Chase bank. Wiggin began retirement in December and he kept adding to his art collection with the help from his bonus.
Paul Warburg foretells the Stock Crash on March 8, 1929.
Paul Warburg, an advocate, participant, and co-founder of the U.S. Federal Reserve System, was notable for his warning (March 8, 1929) of the disaster threatened by the wild stock speculation then rampant in the United States, foretelling the crash which occurred in October.
The Federal Reserve caused the Great Depression? Milton Friedman thought it did.
The Federal Reserve definitely caused the Great Depression by contracting the amount of money in circulation by one-third from 1929 to 1933 (National Public Radio interview Jan 1996) — Milton Friedman
Louis McFadden accused the Federal Reserve of causing the Great Depression.
Louis McFadden, Chairman of the House Banking Committee accused the Federal Reserve of deliberately causing the Great Depression. McFadden gave a 25-minute speech on June 10, 1932: “It was not accidental. It was a carefully contrived occurrence…The international bankers sought to bring about a condition of despair here so that they might emerge as rulers of us all.”
