If ego is a drug, Richard Whitney was Wall Street's Tony "Scarface" Montana. More than $27 million in debt and trying to conceal bald-faced embezzlement, the broke stockbroker and former New York Stock Exchange president still managed to carry himself with a smug hauteur as he drew up new IOUs. Approaching one broker with whom he was on a bad footing, Whitney "made no lame effort to ingratiate himself. Rather he announced brusquely that he 'wanted to get this over with quickly'...Then he said he wanted to borrow $250,000 'on my face.'" He was denied that time, at least, but Whitney's arrogance was rewarded in other instances. When you were one of Wall Street's aristocrats of the 1920s and 1930s, life was like that. Whitney is the central character in John Brooks' "Once In Golconda," an absorbing, picaresque account of the New York Stock Exchange's painful coming of age during the Jazz Age and Great Depression. Though there are some patterns watchers of today's stock markets may recognize in this account of the Great Crash of 1929 and its aftermath, some things are probably never to be repeated, probably for the best. Wall Street in 1929 was a plutocratic fiefdom where might meant right and no one was righter than J.P. Morgan & Co., known by many as "23" for its Wall Street address. But the crash brought anger as it took the rest of the national economy down with it, and in time, calls for reform that the stockbroking elite ignored at their peril. Leading the resistance to change was NYSE President Whitney, who showed great bravery on Black Thursday by placing some stabilizing bids but remained inflexible despite growing demands for needful change. "Once In Golconda" is a financial history anyone can pick up and enjoy. The terminology is not too technical, and Brooks writes with a real zest for the human equation. At the same time, you get a deeper appreciation for the market forces that dictated what happened on the Street; how the market was democratized, first by the influx of middle-class investors before the bubble burst, and then after, by the formation of the Securities And Exchange Commission; and how J.P. Morgan lost its supremacy to new-money upstarts like Merrill Lynch. Brooks, writing in the late 1960s, clearly favored a closely regulated market, but he avoids coming off shrill by presenting both sides of the argument at all times. Not completely in the New Deal camp, he describes the theory of an early FDR economic adviser as amounting to populist voodoo economics. "To reverse the roles by trying to make gold prices affect commodity prices was like a man in a building lobby trying to move an elevator from floor to floor by pushing the indicator dial from place to place: it wouldn't work, and it could easily end up ruining the whole mechanism." This is an excellent companion volume to Brooks' other classic, "The Go-Go Years," a contemporary account about the market's rise in the 1960s. It has the same elegant prose, the same attention to nuance and detail, perhaps an even larger-than-life cast of characters, and a wry wit that pierces through even the driest sensibility. Of one fabled stockbroker, he writes: "He published a book explaining his stock-market techniques - a tip-off that they were no longer working for him." |
