On February 1, 1929, Thomas Lamont, senior partner at J.P. Morgan and Company, and his wife board the ocean liner Aquitania, bound for Paris. They are part of a US delegation addressing German war reparations. Lamont and other bankers are included to help structure and negotiate these reparations and their payment schedule. Lamont is officially second-in-command to Jack Morgan at J.P. Morgan but in practice he runs the bank. Lamont is proud his that his son, Thomas, and grandson, Henry, have just been made partners. Lamont has risen from being a newspaper reporter to one of Wall Street’s most powerful figures. He witnessed the “Panic of 1907”—a temporary fall in the market—and was headhunted by the bank’s founder J. Pierpont Morgan himself in 1910 to join the firm. Unlike the secretive Morgan family style, Lamont has maintained good relationships with journalists and is now the firm’s public face.

Before he boarded the ship, Lamont’s office offered shares in the Alleghany Corporation, a speculative holding company, to a “preferred list” of influential people. This list of invitees were offered shares at $20 each, well below the public market price. Recipients included former president Calvin Coolidge, Charles Lindbergh, General John Pershing, and Charles Mitchell.

Now aboard the ship, Lamont secretly works with Owen Young and David Sarnoff to merge ITT, RCA, and Western Union into a global telecommunications empire, though such a monopoly would likely violate antitrust law. The reparations delegation arrives in Paris on February 8.

On February 14, 1929, Charles Mitchell attends a meeting at the Federal Reserve Bank of New York, where he has recently been appointed to the board. His appointment has been orchestrated by the late governor, Benjamin Strong, to silence his public criticism of Fed policy. Mitchell has felt frustrated by the Federal Reserve Board in Washington after they had issued an advisory announcement discouraging margin loans for stock speculation, as Mitchell promotes margin buying through his National City Bank. At the meeting, Mitchell argues against raising interest rates, but the New York Fed board votes to request a rate increase from 5% to 6%. This request is denied by the Federal Reserve Board.

Mitchell has transformed National City Bank by marketing stocks and bonds to middle-class Americans, demystifying banking and treating securities as consumer products. Born in 1877, he has had an illustrious career, overcoming a childhood stutter, attending Amherst, and marrying Elizabeth Rend, the daughter of a wealthy industrialist. After witnessing the Panic of 1907, he joined National City’s securities affiliate in 1916 and became bank president in 1921, eventually rising to chairman. His compensation exceeds $1 million in 1928, making him one of the highest-paid executives in the world.

Mitchell and his wife live lavishly in a Fifth Avenue mansion with 16 servants, also maintaining a 72-acre Tuxedo Park estate. Elizabeth hosts society events; she is credited with advising composer George Gershwin to go to Paris, leading to his composition An American in Paris. Mitchell takes professional risks that traditional firms avoid, including promoting risky Brazilian bonds and delisting National City stock from the exchange in 1928 to sell it privately, driving the price higher.

On Saturday, February 16, the market plunges at the opening as call money rates spike. The establishment banker Charles Merrill of Merrill Lynch, who has been warning clients to exit the market, has written recently that many “new reputations” will not survive a downturn.

On Saturday afternoon, February 16, Mitchell calls William Crapo Durant, a General Motors founder who has become one of the nation’s most famous full-time speculators. Durant now has an estimated $100 million fortune. Durant uses controversial methods: He has organized “stock pools” with wealthy industrialists, using secret pre-agreed sales to artificially inflate prices before dumping shares on unsuspecting investors. Though deceptive, these pools are legal.

Mitchell tells Durant that the Fed’s “ignorance” will cause a crash and that they need to act. Durant, a longtime Fed critic, agrees. Previous presidents Harding and Coolidge left business alone but the upcoming Hoover inauguration is creating uncertainty. Mitchell has tried to influence Treasury Secretary Andrew Mellon, who was noncommittal, and Mitchell feels he has a lack of influence in Washington. He asks if Durant can speak to Hoover. Durant, invited to the inauguration, expresses confidence that he can reach the president.

On March 4, 1929, Herbert Hoover wakes early on his inauguration day, having defeated Democrat Al Smith in a landslide. Wall Street, is now celebrating a “Hoover Boom,” somewhat ironic given its earlier skepticism of the president known as “The Great Engineer.” Hoover reappoints Andrew Mellon as treasury secretary to reassure business leaders, despite Mellon facing Senate opposition. Mellon believes the government should not interfere in the stock market.

Hoover and his wife meet President Calvin Coolidge and his wife at the White House. Coolidge is late and moody, harboring resentment toward Hoover, whom he sees as an unsolicited advice-giver. During the campaign, Coolidge offered Hoover no help and privately joked about leaving problems for the “Great Engineer.” Grace Coolidge has told friends her husband “chose to retire” because he “says there’s a depression coming” (72).

In a cold rain, Chief Justice William Howard Taft administers the oath of office. Coolidge surprises everyone by warmly shaking Hoover’s hand. Hoover delivers his inaugural address to an estimated 63 million radio listeners, the first president to do so. He promises to enforce Prohibition but makes no mention of the stock market, closing with an optimistic message about the country’s future.

The day after Hoover’s inauguration, speculator Jesse Livermore calls reporters to his secret Midtown office. Livermore, the legendary “Boy Plunger” has become more private about his business after a career of boom and bust. Reporters are admitted to his opulent sanctuary, featuring 80 phone lines and 40 stock tickers (a display of real-time stock prices).

Livermore issues a public statement predicting rising cotton prices but refuses to discuss stocks. His background is remarkable: At age 14, he became a board boy at Paine Webber, learning his trade in illegal bucket shops where he became so successful he was banned. In 1906, on a hunch, he began shorting Union Pacific just before the San Francisco earthquake, which paid off massively during the Panic of 1907. When he made $1 million in a single day, an emissary of J. Pierpont Morgan asked him to stop shorting to stabilize the market. Despite his success, Livermore has missed the 1920s bull market by remaining bearish. His friend, fellow speculator Bernard Baruch, who made a fortune short selling before entering public service, has recently told him it was time to go grouse shooting—a metaphor for leaving the market.

On March 24, Livermore reads a Times article about novices making the most money, seeing it as a sign of a market top-out. On March 25, he launches a massive coordinated short sale of $150 million worth of shares. The next day, prices fall sharply. An hour before closing, his team buys everything back, netting $8 million in profit.

By late March, Mitchell has returned to New York from a holiday in Palm Beach. On Tuesday, March 26, as the Fed meets, the market experiences a violent sell-off with record volume. The ticker falls far behind (i.e., is unable to keep up with real-time prices) and call money interest rates leap to 20%, triggering frantic margin calls (calls for increased cash deposits to cover risk).

Mitchell watches the carnage, having flashbacks to 1907. In 1907, he decided National City must step in to prevent collapse. When Governor George Harrison of the New York Fed called for Mitchell’s assessment, Mitchell explained his plan to lend aggressively to stock investors. Harrison privately assured Mitchell the Fed would not act against him. Rumors of Mitchell’s plan spread, and the market reversed its fall. At 6:30 pm, Mitchell agreed to a Herald Tribune interview and made his plan public, saying National City’s duty to prevent a financial crisis was more important than any Federal Reserve warning. Following his statement and a $25 million injection from National City, the panic subsided and Mitchell was hailed as a hero. The Fed remained silent but, privately the Washington board was furious. Board member Adolph C. Miller reported that New York bankers believed Mitchell had acted for selfish prestige. Director George R. James demanded Mitchell be removed from the Fed board. Senator Carter Glass was also watching and would never forgive Mitchell’s actions.

On March 29, Thomas Lamont is in Florence when a telegram arrives: News of his secret RCA-Western Union-ITT merger has leaked. The Herald Tribune story has sent RCA stock higher, threatening to make the deal unaffordable. Lamont and his associate Owen Young plan to press Congress to overturn the White Act of 1927, an antitrust law, so the merger can proceed.

From Italy, Lamont is powerless to stop the stock’s rise. In early March, Michael Meehan, the official RCA specialist on the NYSE floor, organizes a manipulative pool with partners. He sends confidential proposals to favored customers, including William Durant. The pool uses favorable media plants and pre-planned “wash” trades to create artificial excitement. When RCA soars, the pool dumps shares, making nearly $5 million in profit. Durant’s investment nets over $145,000.

With the merger news public, Lamont remains stuck abroad. That morning’s New York Times reports that Glass is criticizing Mitchell for aiding the market. It also mentions that Lamont’s German reparations conference is in “deadlock.” Lamont writes to his partner Russell Cornell Leffingwell, saying that the market will “not decline until there is an adverse turn in business” (101).

Seventy-one-year-old Senator Carter Glass is in hospital at Johns Hopkins, dealing with multiple illnesses. The Virginia Democrat has two legislative passions: Defending segregation and overseeing the banking system. He openly boasts of circumventing the 15th Amendment to prevent Black people from voting.

Before becoming Senator, Glass used to be Congress’s foremost banking expert. Self-taught, he served on the Pujo Committee, becoming chairman of the House Banking and Currency Committee in 1913. He was instrumental in creating the Federal Reserve system, designed to prevent New York from weighting the economy. Wilson appointed him Treasury Secretary in 1918, and he entered the Senate in 1920.

Born in Lynchburg, Virginia, son of a Confederate Army major, Glass’s earliest memory is viewing the coffin of famous Confederate general Stonewall Jackson. Glass followed his father into the newspaper business, building a political following by denouncing Eastern bankers as “money devils.” He maintains a proprietary feeling toward the Fed. Impatient and sarcastic, Glass as grown alarmed as the Fed has become—in his view— a “servant” of Wall Street.

From his hospital bed, Glass writes to J.P. Morgan partner Leffingwell, condemning Mitchell’s market intervention as a violation of the law. He considers that Mitchell has defied the Federal Reserve Board and deserves to be “disciplined.” Glass has declared war on Mitchell.