Faith, Bankers & Panic

(See front cover)

Black, Starr & Frost-Gorham, Inc., famed Manhattan jewelers, opened the doors of their new Fifth Avenue store last week. The interior was 16th century Italian Gothic. Displayed was a $750,000 pearl necklace, exquisitely matched.

Lee and J. J. Shubert and Max J. Kramer, Broadwayites, announced that they would build on Broadway a $15,000,000 theatre-hotel.

U. S. Steel and American Can declared extra common dividends of $1.00. American Tobacco Co. declared dividends of $2.00 each on both common and common B shares. Bon Ami declared $1.00 on its A stock, 50-c- on its B stock.

Westinghouse Electric & Manufacturing Co. reported nine months' net profit greater by $5,254,176 than its corresponding net last year. Similarly the Southern Railway System showed an increase of $1,549,000.

For failure to meet their obligations the firms of John J. Bell and Lynch & Co. (Manhattan) were barred from the New York Curb Exchange. In Madison, Wis., H. M. Warner & Co., brokers, closed their doors. In Worcester, Mass., Riley Fitzgerald & Co. did likewise.

In Manhattan, the pawnbroker nearest Wall Street said his loans had tripled.

Someone had to show faith. The first to do so was T. B. Macauley, president of the Sun Life Assurance Co. of Canada, who said that his company (large institutional stock-buyers) was not selling, was buying (TIME, Nov. 4). Others quickly followed his lead. From Washington Dr. Julius Klein, Assistant Secretary of Commerce, radioed to the nation that its business was sound, that only 4% of U. S. families were affected by the break. Others were Stuart Chase and Irving Fisher, famed economists, Paul Shoup of the Southern Pacific, Bowman Gray of the R. J. Reynolds Tobacco Co., Luther Blake of Standard Statistics Co., Walter P. Chrysler, Roy A. Hunt of Aluminum Co. of America, Matthew C. Brush, Walter S. Gifford of American Telephone and Telegraph, K. R. Kingsbury of Standard Oil Co. of California. William Wrigley Jr. and John J. Raskob announced that they were buying stocks.

In Chicago Philanthropist Julius Rosenwald, board chairman of Sears Roebuck Co. guaranteed the margin accounts of all his employes. Two days later Chicago's public utility tycoon and opera promoter Samuel Insull announced that he would do the same thing. And so did Samuel W. Reyburn, president of Manhattan's department store Lord & Taylor. But the climax came when the wizened little man who lives in the fortressed home in Pocantico Hills, N. Y., said: "My son and I have for some days past been purchasing sound common stock." In memory of many a trader in Wall Street, John D. Rockefeller Sr. had never spoken of the market. Nor did he often speak on any subject.*

Thus did the men whose names are known strive mightily to alter a national psychology. Theirs in great part was the credit last week when on Thursday Oct. 31 U. S. Steel which the Tuesday before had closed at 174, closed at 193 1/2, and Radio which had plunged to 38 1/2 climbed to 50.

Monday, Nov. 4, when the Exchange re-opened there were more sellers than buyers but none were frenetic. Toward noon prices climbed, then dropped again. In general stocks closed lower than Thursday. U. S. Steel closed at 180, Radio at 43 1/4, General Motors at 45 1/4. The market except at the very opening was dull as though it were tired. But it seemed to rest securely. Stock Exchange Governors ordered the Exchange closed after 1 o'clock Wednesday, Thursday, Friday; all day Saturday. Tuesday was a legal holiday (election day). Thus was further rest insured.

Friday there were no quotations nor Saturday for the Exchange was closed. Clerks who had passed many a sleepless night, slept, then returned to clean up the greatest amount of work which brokerage houses have ever had in so short a time. In the hurly-burly many an error had been made. The clerks had to discover them, rectify them. But in the Stock Exchange Friday and Saturday there was quiet.

Thus did Confidence win its subtle race against Panic.

It was the intangible change in feeling which saved the U. S. from complete surrender to what could properly be called a Values Panic, but there was nothing intangible about the factors which had worked for the change. Behind the group of bankers who met day after day at No. 23 Wall Street there glittered the world's greatest single pool of liquid wealth. How wide, how deep it might be, none but they could tell, for no man outside the doors of No. 23 Wall Street knows the resources of the House of Morgan. Loosely, journalists spoke of a grand total of $10,000,000,000* Over such a mighty sea raged the winds of Panic.

Nor was there anything intangible about the man who steered the ship of U. S. prosperity through the storm, who at length felt the helm respond. More than most men, Thomas William Lament can be touched, appraised. In obvious and literal ways, this right hand of John Pierpont Morgan is freely extended among men. A cosmopolite, he knows, understands, and likes the thousands of people of all nations with whom he does business. Because he is patient and urban, he is the Morgan diplomat. In more subtle ways, Mr. Lament can be described as a tangible person. Tell him a joke and he will laugh. Offer him an idea and he will develop it. Put him in the middle of a problem and he will begin to solve it. The doors of his mind swing easily ajar. That is why he left Exeter (1888) and Harvard (1892), to become a good reporter (and later, a good copy reader) on the New York Tribune. And why in 1902, he could bring order out of the chaos of an importing and exporting house which became Lamont, Corliss & Co. (agents for Cream of Wheat, Rainbow Dye, Pond's Extract, O'Sullivan's, Peter's Chocolate), of which he is now chairman. It is why the late Henry P. Davison called him, in 1903, to be secretary-treasurer of the Bankers Trust (Lament: "All my business life I have been borrowing money. I don't know how to loan it." Davison: "That's why we want you. We want a man who knows how the borrower feels and looks."); why George F. Baker summoned him five years later, to be vice president and director of the First National Bank, succeeding the same Davison; why J. P. Morgan gave him the banking accolade of a Morgan partnership in 1911. All his life, he has been a known quantity; his assets have been realizable.

Liquidate Mr. Lamont tomorrow, and many an achievement of his 18 years with Morgan would have a historic value. To him came the financing of the New York Central Railroad and he is today the firm's chief railroad adviser. To him came most of the overseas muddles into which its vast foreign interests plunged the Morgan house. In China (the Consortium), Mexico (International Committee), France (Anglo-French $500,000,000 loan), Austria (1923 joint loan), he has been at one time or another the most important financial factor. When these and many another nation gather together, as at Versailles in 1919 and at Paris in 1929, Mr. Lamont is summoned to speak for U. S. finance. He himself considers his work at Paris last summer the most significant of his life.

Outstanding as a financier (and his chief is the only living banker who might conceivably be said to outrank him), he is scarcely less an intellectual. His friends include John Masefield, with whom he travels--H. G. Wells, who visits him-- Ramsay MacDonald, who dined with him last month. A liberal himself (he supported Cox and Davis because of the League issue, voted for Hoover last fall), he has in his immediate family almost every shade of liberal opinion. His eldest son (Thomas S.) is now, at 31, a Morgan partner, is far more conservative than Corliss, who voted for Smith and now teaches Philosophy at Columbia University. And while Mr. Lamont has received many an honorary degree, it was Mrs. Lamont who, after raising four children, earned a Ph.D. at Columbia.

Thus it was an intellectual husband of a Doctor of Philosophy as well as a keen and forceful financier who presided over the most nerve-wracking crisis in U. S. business history.

*His last previous public utterance: "I have every reason to be grateful on my ninetieth birthday. Everybody has been so kind and good to me all year."

* Divided thus:

First National $464,000,000 Chase National 1,539,000,000

National City Bank (including Corn Exchange and City Bank Farmers Trust) 2,343,000,000

Guaranty Trust Company 1,859,000,000

Bankers Trust Company 686,000,000

Equitable Trust Co. 932,000,000

J. P. Morgan & Co. and other private bankers 2,000,000,000