From White Knight to Thief

Wall Street crime, 1930s style: the astonishing downfall of the financier Richard Whitney, who helped shore up the market at the start of the ’29 crash.

Comments: 20

  1. Fascinating - on so many levels.

  2. Using language that sounds almost contemporary in 2014, he said the “forces of selfishness,” of “reckless banking” and “class antagonism” were “unanimous in their hate for me, and I welcome their hatred.”

    In contrast to Roosevelt, President Obama is on the golf course showing his true allegiance. The investor class have increased their wealth by about 50% during the Obama terms while the poorer half of the population have lost 70% of their family wealth since 1995. Optics matters.

  3. Optics trump audit trails of the genesis of what is seen but neigh heard until it finds itself on the front page or T.V. screen. Eventually, those with a respect for historic records and insider opinions will find comfort in knowing that truth may be timeless but it begins somewhere with someone. I am reminded of Oscar Wilde's play, "An Ideal Husband" (1894). When interrogated by the source of his wealth, Sir Robert Chiltern responds, " Every man of ambition has to fight his century with its own weapons. What this century worships is wealth. The God of this century is wealth. To succeed one must have wealth. At all costs one must have wealth."

  4. FDR had big majorities in Congress and very high approval ratings until the 1938 off-year election (in which the Democrats got creamed). Obama on the other hand has a Republican House and a slim majority in the Senate, while his support from the public is barely higher than that of George W. Bush in 2006.

    The world has changed and presidents no longer wield the power they had during the emergencies of the Depression, WWII, and the Cold War.

  5. Gee. President Roosevelt wasn't on the golf course?

  6. When I was getting my MBA at NYU back in the 70's, our Investments class instructor, a retired Salomon Bros. partner, assigned us "Once in Galconda", a fascinating, vivid account of the 1920's/30's boom and bust by John Brooks. One vivid memory I have was of Richard Whitney who, during his stay at Sing-Sing, was visited by his former Headmaster at Groton, the venerable Reverend Dr Endicott Peabody. When asked at the end of that visit if he needed anything, Whitney paused for a moment and replied "A left-handed 1st baseman's glove".

  7. "Once on Golconda" is a great read. Have you also read Brooks' "The Go-Go Years," about the 1960s on Wall Street? Just a great book.

  8. A pleasure to see Mr. Beschloss writing here; one of our best. I quite liked the way he referred to Joe Kennedy's bootlegging days without using the word bootlegging.

    Was Whitney's famous expedition to shore up the markets after the first crash of October 1929 really an act of bravery? My understanding is that he was merely fronting for Morgan and the other big Wall Street players, who put up the money.

    Much as I miss JFK, his remark about WASPs was issued from a glass house. His father was very lucky not to have shared Whitney's fate. And we know that Teddy went on commit even bigger lapses than cheating on a test.

  9. Joe Kennedy was not a bootlegger. During prohibition he was involved in the legal medicinal liquor business, which required government issued permits. Before prohibition was ended by the ratification of the 21st amendment, Kennedy contracted for bonded warehouse space and with Jimmy Roosevelt, the president's eldest son, negotiated a deal with The Distillers Company in Britain for exclusive U.S. distribution rights to three of their most popular brands, Dewar's and Haig & Haig scotch and Gordon's gin. There was absolutely no insider information involved. Newspapers where following the progress of the ratification closely. The day after the 36th state ratified and the Volstead act became unconstitutional, the contracts between The Distillers Company and Somerset Importers, Kennedy and Roosevelt's company, were finalized and legal alcoholic beverages began to flow to Americans through the business.

  10. " Private information is practically the source of every large modern fortune." Sir Robert Chiltern, An Ideal Husband, Oscar Wilde (1894).

  11. In fact Joe K was a bootlegger in the 1920s -- that's how he met his Mafia associates who later helped JFK become president. This came before his association with Jimmy Roosevelt, to which you and Mr. Beschloss refer. My father knew Joe Kennedy in the '20s. I can assure you that Joe made his fortune through bootlegging and stock "manipulation" during those days.

  12. Fascinating article. If the same standard were applied today, Sing Sing would be overrun with members of various brokerage houses and investment banks who purposefully hoped for people with subprime mortgages to fail. Others cut corners and used insider information because, as is common in Wall Street, greed excuses minor crimes and wealth is the chief end of man. We could use a Roosevelt in the White House today and a strict SEC to insure the rich man is held to the same accountability as the poor man.
    Sad to think that will never happen and the rich conspire to insure the status quo remains.

  13. The more things change the more they stay the same!

  14. Have we ever seen a grifter or con-man that showed remorse? The only remorse I've ever seen was the remorse that THEY got caught. More of them need to be rooted out of the ranks of brokers, bankers, hedge fund operators, and fined and jailed. Because they are criminals.

  15. Worse than the lack of remorse is the idea these people have that they did nothing wrong.

    We see natural and amplified extensions of this attitude today not just on Wall Street but in the fact, reporter here a few weeks ago, that 43% of sole proprietors under report their taxable income to the IRS and also in the Nevada desert where a rancher can refuse to pay his lease fees then draw down on law enforcement when they arrive to evict him.

    The idea that conservatives believe in the rule of law is one of those lies when repeated often enough are taken as truth.

  16. There also have been no scarcity of very Irish Catholic organized crime mobs and Wall Street and other assorted 1% minority business criminals who most notably use and abuse their own kind like slaves. How many ethnic immigrant businesses have been raided by ICE because they stunk so bad of abuse, wage theft and rape that even the party bosses could not keep it quiet? The tradition of allowed Protestant bashing has been as out dated as bigotry against our sacred voting block minorities for a half century. We need to remember that it was those terrible Northern Protestants who started the abolition movement, women's suffrage and supported the civil rights movement when Boston's Irish Catholics were throwing brick through the windows of school buses carrying black children. The NY Times editors apparently will do anything to support their mass immigration crusade replete with its all manner of "Natives are evil, lazy, will not do math and science, xenophobic, too nature loving ..." propaganda. I wonder if Native Americans and blacks whose families have lived in the USA for 2 centuries are also on the black list of the Old World criminal immigrants that rule over our Sanctuary Cities like medieval kingdoms?

  17. Here, in a nutshell, is the entire story about privileged characters who get caught. These people honestly believe that, thanks to their impeccable lineage and the fact that they went to the right schools, joined the right clubs, wore the right suits and have mastered the right mannerisms, that they honestly did no wrong. Rather like the aristocrat in 'A Tale of Two Cities' who bemoaned obstacles as his coach ran over a hapless peasant boy. Such people are in, to put it mildly, urgent need of a reality check, but these days you won't even find a Mme Defarge doing any knitting. We might have hoped we put one in the White House, but he's busy on the golf course with the aristocrats who financed his campaign. And all the rest of us can do is to try to stay out of the way. Pity.

  18. Michael Beschloss is a popular and widely read historian for good reason. He writes clearly and well from a sound foundation of research. He knows his stuff, as it is said on the street. This case is alarming in that while the thief went to jail his sentence was not much different from what a poor man would have gotten for robbing $75 from a liquor store. Board room crime will remain a major problem, like drugs, until it is severely dealt with.

  19. I love how White House Tommy comes up in this article. Thomas Corcoran was legendary

  20. While America discusses putting a woman on its currency, it might be worthwhile considering a similar honour for FDR?