On January 6, 1929, Hitler appoints the schoolmasterish Himmler as head of his personal Protection Formation, the Schutzstaffel, known by its initials, the SS. Hitler needs guards who will give him, not Röhm or anyone else, unconditional loyalty.
Himmler is eager to create an elite force of men who will be slavishly loyal to Hitler. Starting with 290 men, he adds former army officers like Erich Von Dem Bach-Zelewski, a Pomeranian Junkers aristocrat professional soldier, and Freikorps veteran. By year’s end, the SS numbers 1,000 men.
By now, the Nazis are a highly visible player on Germany’s political scene, a well-organized outfit, with appeal to many sectors of the population. With Goebbels in charge, propaganda is sophisticated. Para-military Brownshirts bring uniformed discipline and rowdy violence to the party’s aura, impressing residents and frightening opponents. The Party’s ideology is crude and unoriginal, but strikes themes popular in Weimar Germany: opposition to Versailles, opposition to big businessmen, opposition to Communism, hatred of Jews, and “Lebensraum” in the East.
At the core of the movement is its cult of violence, which deifies street battles and barroom brawls. However, the Nazi leadership, Hitler, Goebbels, and others, all give their followers orders in violent but vague terms, which help foster the impression that neither Hitler nor his top dogs sanction the bloodshed in Germany’s streets, and are above all that gutter talk and behavior.
Even so, with Weimar enjoying prosperity and acceptance by its neighbors, the Nazis are still not a major force. They only have a handful of deputies in the Reichstag. The Weimar government has achieved some successes – cutting reparations, forcing the French to withdraw from the Ruhr, strengthening the economy. Ford and General Motors have invested in Germany, with Ford building factories in Berlin and Cologne, while GM buys the Opel factory in Russelsheim, near Frankfurt. While German banks are still in a precarious position, the recovery from 1923 inflation is continuing.
The Nazis are seen as a long way from taking part in even a coalition government of conservative parties. It will take a catastrophe to make Hitler anything but the leader of a hard-core para-military political party. Perhaps Germany will outlast or survive his rhetoric, and his followers will become weary, after endless street brawls and losing elections, and Nazism, like many other political movements, will fade away.
In early 1929, American banker Owen D. Young and his committee attempt to sort out the reparations question for once and for all. They try to figure out the final sum and its term. They lower the annual German payments and set them to run for another 59 years. In theory, Germany will be out of the reparations hole in 1989. In return, all Allied control over Germany’s economy is ended.
After negotiating this nifty deal, the exhausted Stresemann dies on October 3, 1929, weakening the Reich’s leadership. The same day, the New York Stock Exchange suffers its deepest plunge of the year, frightening investors. But stockbrokers and media are unconcerned: Hearst editorial writer Arthur Brisbane tells his 25 million readers: “prosperity, the real prosperity has just begun.” He adds, “Stock gamblers may be worried, but the people at large feel cheerful.” On October 5, Brisbane is right…stocks bounce back, with AT&T and General Electric leading the way. Everybody relaxes. Americans watch the Philadelphia Athletics defeat the Chicago Cubs in the World Series, while people with more highbrow tastes attend George M. Cohan’s new play, Gambling, at New York’s Fulton Theater. Reviewers hail Marion Davies’ new film, Marianne, as “MGM’s greatest of all talking, musical pictures.”
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North of the 49th Parallel, Many of Canada’s 10 million people are scattered in small prairie villages that still lack running water or electricity. In cities, horse-drawn wagons deliver ice, and children who catch diphtheria are quarantined for as long as a month.
Canadian schoolchildren learn the names of English Kings and Queens, in schools that fly Britain’s Union Jack. Higher institutions of learning apply their own discrimination, segregating classrooms by sex at University of British Columbia. Toronto’s History Club bars female members. And the dominant Anglo-Saxon and Protestant business and political leaders practice anti-Semitism openly.
Like in America, golf clubs and tourist resorts post “restricted” signs. Banks, insurance companies, department stores, even Procter and Gamble and Maclean Hunter bar Jews from employment. Jewish doctors can’t get hospital affiliation. Universities refuse to hire Jewish faculty and slap quotas on Jewish admissions. The Canadian Senate and Supreme Court are barred to Jews as well. The Royal Canadian Mounted Police, busy tracking subversives, lists their suspects as “foreigners” or “Jews.” And Toronto enforces an ordinance that bans any public address in any other language than English.
So when Philip Halpern, editor of the Jewish weekly Kampf, addresses a Communist rally in Yiddish, the Toronto police arrest him. The Toronto Globe dismisses protest of the arrest in an editorial entitled, “The Police Are Right,” calling complaints “Silly twaddle.”
Many developments don’t exist in 1929: sliced bread, frozen food, wall-to-wall broadloom, fluorescent lights, Teflon frying pans, credit cards, anti-biotics, and portable radios, which make 1929 streets quieter than their 2009 counterparts. Other marvels yet to come include parking meters, ballpoint pens, photocopiers, and jet aircraft. Television is an experimental device being tested in American and British labs. Color film is being developed by German firms. And despite the success of The Jazz Singer, filmmakers are only slowly adopting “talkies.”
Popular beach and summer reading in America and Britain are novels with pacifist themes…books that expose the horror of war and reinforce support for appeasement and disarmament. On the shores at Brighton, Blackpool, Coney Island, and Atlantic City, in summer resorts, on ocean liners, readers tackle over tea (bottled Coca-Cola for Americans) All Quiet on the Western Front, A Farewell To Arms, Journey’s End, and Goodbye To All That. The messages of Siegfried Sassoon, Ernest Hemingway, and Erich Maria Remarque are clear: anything is better than fighting another World War.
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Germany still faces an annual foreign debt of $7 billion. And the economy is heavily dependent on American loans and investments. But if the money keeps coming in, Germany can continue to prosper. It’s a delicate latticework, but so far, it’s a success. After all, on October 15, Yale political economist Irving Fisher announces for the ages, “Stock prices have reached what looks like a permanently high plateau.”
Reality smashes Germany and the rest of the world in the face on Thursday, October 24th, 1929. With Winston Churchill sitting in the visitors’ gallery on his American lecture tour, the New York Stock Exchange loses $6 billion in a single morning. Some 12.89 million shares change hands in 974 different stocks. Acting Stock Exchange President Richard Whitney, who will end up imprisoned for embezzlement, stems the tide by buying Steel not at the quoted 195 but at 205. Wild cheering ensues on the exchange floor.
At the end of the day, the largest wire houses in Wall Street issue a joint statement saying the market is “fundamentally sound” and “technically in better condition than it has been in months.” The statement concludes, “The worst has passed.” President Herbert Hoover echoes that statement by saying that “The fundamental business of the country – that is, the production and distribution of goods and services – is on a sound and prosperous basis.”
With that in hand, the market starts to recover, and financial experts and writers also proclaim the worst has passed.
The worst hits on Tuesday, October 29th. Shortly after John J. Raskob and Al Smith agree to top out the planned Empire State Building with a zeppelin mooring mast, the New York Stock Exchange opens amid a continuing drizzle, both outside and inside.
As rain pours down on Broad and Wall Streets, Exchange Superintendent William Crawford bangs the opening gong at 10 a.m. In three minutes 650,000 US Steel shares are dumped on the market, falling from $186 to $179. By 10:20 a.m., the ticker is six minutes late. By 10:30 a.m., 3.2 million shares have been traded. By noon, 8 million shares have changed hands.
Newspapers and newsreel agencies send their reporters to cover the chaos, which starts to hammer the United States, setting off numerous private tragedies. Husbands discover their wives have been playing the stock market with grocery money. Business owners find their bookkeepers have been embezzling funds for the same purpose. Bankers learn that their fellow directors have been using the institution’s deposits to play the market as well, defrauding and ruining the depositors.
Pandemonium rages on the New York Stock Exchange floor and many others as prices tumble. Men swear, scream, and claw each other. One broker, screaming that he has been ruined, won’t let a messenger boy go. The messenger breaks free, leaving tufts of hair behind, which never re-grow. Brokers, jammed together, lose shoes, glasses, and false teeth. Witnesses on the floor, which include 17-year-old coupon clerk Art Linkletter, report the sound as being like the roar of lions, tigers, and hyenas in a zoo.
By 1:30 p.m., the first afternoon papers are on the streets of New York, telling readers chewing on sandwiches in Automats that 12.6 million shares have been traded, with prices continuing to collapse. A group of Bowery bums, reading that stocks are selling for a nickel a share, pool their funds, descend on Wall Street, hoping to invest in long-term futures, and instead are shooed off by grim-faced cops. On the other hand, with White Sewing Machine stock having dropped from 48 to 11 and now to pennies, a messenger boy working at the exchange offers $1 a share, and is immediately given a chance to purchase 10,000 shares.
Allegheny Steel falls from 28 to 24 on a block sale of 50,000 shares. After steel collapses, so does radio. Then American Can. Anaconda Copper plummets…then General Motors…Timken Roller Bearing falls $19.75. Blue Ridge opens at $10 and falls to $3. The Stock Exchange’s governors consider closing the exchange, but decide that would only make things worse.
Instead, the reigning powers try to restore calm. Mayor Jimmy Walker, cummerbund as perfect as ever, tells a meeting of film exhibitors to “show pictures which will reinstate courage and hope in the hearts of people.” John J. Raskob, hot off his Empire State Building deal, buys stock at bargain prices. Acting Stock Exchange President Richard Whitney walks onto the exchange floor, smiling, and gets pushed aside by the roiling crowd. He doesn’t even try to buy stocks.
Warner Brothers…Safeway…Simmons Mattresses…Paramount…Fox, all the familiar names of American business crumble. In half an hour, 3.2 million shares are sold for a combined loss of more than $2 billion.
By 2:10 p.m., 13.8 million shares have been sold, and the traders on the floor can’t keep track of the situation. One customer is sold out twice. In the days before laptop computers, pocket calculators, personal data assistants, Palm Pilots, cell phones, and video conferencing, communications and calculations break down. Clerks are two hours behind in processing orders, with piles stacking up on desks. Stock brokerage houses hire boys off the Lower East Side’s streets to untangle phone cords. Some women workers faint and are sent home.
