Financial History Issue 112 (Winter 2015) | Page 15
Collection of the Museum of American Finance
AMERICA
on the
BARGAIN
COUNTER
By James Grant
Cartoon from the Crash of 1921:
“It’s All Going Out.”
By the Wall Street Journal’s telling,
it was no coincidence that so many titans
of business and finance took to making
public professions of optimism starting
in the middle of September 1921. “It is
known,” the paper reported on September
19, less than a month after the Dow Jones
industrials had put in their low, “that this
change in attitude followed conferences
between prominent bankers and men of
high standing in finance.” And what had
these great men decided? “It was agreed
that bottom for good securities, prices for
commodities and business had about been
reached, and that the situation warranted
the spreading of optimistic propaganda.”
The unsigned Journal dispatch imputed
mighty powers to the unnamed financiers.
It was they who were behind the recent
strength in stock and bond prices, the
story said. Nor had they had invested to
scalp a few quick dollars of profit, as the
professional traders on the floor of the
New York Stock Exchange were wont to
do. They rather bought for the long term
because securities were cheap and because
the country was on the upswing. Thus,
“the stock market passed the control of
professionals to what Wall Street terms
‘big constructive interests.’”
Stocks were commandingly cheap, the
Journal’s capitalist informants concluded.
“Scores” of companies were valued in the
market at less than their working capital — as if the business itself, apart from
the net cash, was worthless. The shares of
“large numbers” of industrial companies
were selling at “one-third of their respective intrinsic values.”
It was just as they said — America was
on the bargain counter. The lyricist of
the 1921 hit “Ain’t We Got Fun?” had
famously written, “the rich get richer.” A
more accurate, if less singable, formulation would have been, “the liquid and
financially flexible rich get richer.” The
depression had driven the over-encumbered rich, like Billy Durant, founder and
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