Black Monday 28th October 1929
On Monday 28th October Susan made it into the office by half five in the morning, but unlike last week the streets were already bustling. People were crowding towards Wall Street, not just the brokers and employees, but the investors large and small who wanted to know what was going on – or drop a last frantic order in with their own broker before work. Most would be selling.
She let herself into the building, beating the receptionist into work, and quickly went through the telegraph in-tray by the door. Grabbing the telegrams addressed to her that must have come in over the weekend, she went up to her office.
Canada and London were both concerned. Toronto reported massive falls on the Thursday, asking about rumours of panic on the New York Stock Exchange. They should know the truth by now. She wrote back to both, reconfirming that they were not to repurchase stocks in this market. Hopefully they had listened. Canada, if necessary, she could phone, but London was further out of reach.
The short note from Ferris must have arrived by runner mid-morning Saturday, and the short note was terse and uncompromising, “We had to close your Case position on Thursday. The bank recalled the shares. We have been unable to reopen it. There is no one willing to buy if we borrow more today.” She sighed, writing a quick reply to state that was understood, could they please not reopen the short, and requesting a final valuation on the closed position.
Dropping the three messages into the inbox downstairs, she picked up the first of the newspapers and went back to her desk. Phoning George did not reach him, merely getting the news that he had left for the exchange and a polite offer to send someone to the trading floor or take a message. She declined and hung up, but she was not really surprised he had already left. It was now, when second, minutes and even hours mattered, that the communications of the era really grated.
Remembering another job she jotted down a short piece for the newsletter, stating that Porter & Mason would be opening a branch on-site, and ran it down to the typing pool for the newsletter. As she dropped it in she went back via the breakroom for a tea, only to find it was occupied even this early.
” – my mam. The bank took everything and they’re asking for more money.” Susan heard a sob, and kept her composure with an effort. The two girls went quiet as she walked in, said a quick ‘hello’ – she could not bring herself to say good morning when it so obviously wasn’t – and ran herself a glass of water. She left as quickly as she could, leaving the girl with her friend. The last thing the girl wanted was a company owner taking an interest in her personal lives right now; she would just think her job was at risk as well. What the staff needed more than anything was stability as the bottom dropped out of the world. Sending them home when there was nothing they could do would just make it worse.
Folding out the newspapers in the office, Susan picked up her copy of the manufacturing schedule for the next six months. Slowly, in pencil, she began to draw lines through the clients likely to fail. When she had finished the results were depressing. Less than fifty percent of their orders remained. Whether they could get any more after that, was a complete unknown.
In the office down the hall Susan heard the ticker spring to life and hurried in. Taking her station by it, she watched the first of the paper tape print, running over her fingers as she tracked transactions and letter codes. She watched the prices slide with a mixture of relief and dismay. The time-line was correct, the future as she remembered it, and she actually stood a chance of getting home. And millions of people were going to lose everything.
After half-an-hour of watching the tape, Susan had given up and gone back to her office. There was no way to tell how accurate it was, and she suspected the ticker was already behind. If it had fallen behind the trading and actual prices this early, it was a worrying sign of how bad the market would get.
There was a knock at the door and, as Susan called ‘come in’, Mary put her head round.
“Susan, you said if I needed help -” she said, and Susan nodded immediately. It did not take a genius to guess the problem: wheat futures had fallen nearly ten cents on Thursday.
“Of course.” Mary came in, shutting the door, and put her bag on the desk. She opened it, and started lifting out pieces of jewellery.
“Can you keep these safe for me?”
“A margin call?” Susan guessed and Mary nodded, lips pursed as she finished laying the jewellery out. “Are you clear now?”
“No.” Mary’s voice broke. “Michael won’t sell.”
“Is he trying to meet the margin call?” Susan asked in horror.
“Yes. The one from Friday. And then there was another one on Saturday…he wants me to pawn these to cover it, but if I do there’s nothing left.” Susan shook her head. She would have suggested a wage advance, but if Mary’s husband would just throw the money down a hole there was no point. “He keeps saying the market has to change, we just need to ride this out.”
“It won’t. How much are you down?” Susan said without thinking, and Mary glared at her. “Look, I know it isn’t a lady-like question, but this is business. I need to know.”
“Everything. He mortgaged or borrowed for everything, and then the broker called it in on Friday morning. And they wanted more on Saturday and now they’ll want more tonight…” Mary stopped, forcing herself under control.
“I’ll look after these for you,” Susan said, pulling out a notebook and starting to write down details of the pieces. It gave Mary a few moments of privacy to collect herself. “But won’t your husband notice they’ve not been pawned?”
“He came home drunk and he went back on the smoke when he woke up. I don’t think he’ll even remember what I have.” Susan’s breath hissed between her teeth. “And he still hasn’t sold. He keeps saying he’s had enough of working on the docks…”
“What margin did he invest at?”
“I’m not familiar with shares. I think he put down five percent?”
“Mary, this is important. Did he borrow five percent, or get -”
“No, he put down five thousand, it was all he could borrow, and bought one hundred thousand dollars worth of stock.” Susan stared. At that margin she was amazed they had not been wiped out before. Borrowing to buy, and then borrowing more on that margin was insane.
“Phone his broker, and tell him to sell.” Wheat had dropped a few points, not a few hundred. If they sold now, the broker could probably cover most of the cost. They would only lose the car.
“I can’t. I don’t know who it is.” For a moment, Susan wondered about borrowing certain of Mr. Killgrace’s contacts and forcibly sobering Mr. Mary up, before having a quiet, emphasised, word about responsibilities. Even if Susan had the funds free to cover her own margin, it was far too late to open a short in the same stocks to cover the loss. No one was buying.
“Do you know anyone who might?”
“No. Maybe his friends at the docks.” Susan finished copying the receipt for the jewellery, signed both, and handed them to Mary to sign. She put the jewellery in her bottom drawer and locked it. It could go into the basement safe that night. Taking her copy of the receipt she filed it, and began talking before Mary could leave.
“Mary, two margin calls? What happened?” Susan could already guess, but it kept Mary talking.
“On Friday Michel said the broker would only keep the stock if we paid up another five percent. Michael–” she shook her head “–I don’t know where he got the money but he said he met it. Then on Saturday they wanted the same again, but it was too late to get to the bank, so Michael made them stretch it to today. The jewellery won’t cover it.”
“Is there a stop loss in place?”
“I don’t know.” Susan doubted it. If Michael was so sure the prices would rise, why should he take precautions in case they did not? She thought for a moment.
“Mary, if Michael won’t sell, and you can’t find the broker, you need to go home and make sure he does not meet that margin call.”
“If he doesn’t make the call, the broker sells the shares to make up the loss,” Susan said. “It will ruin your credit, but if that happens now, you’ll make a loss – probably not cover the loans he took to buy them – but the broker can’t ask for further money. If it doesn’t, they can keep coming after you until they have the entire value of the shares – at the price they bought them, not what they are worth now.” Mary was so still that for a moment Susan thought she had stopped breathing.
“So,” she said, finally, barely moving, “if we make this margin call, there will be more until we run out of…of ways to pay. If we don’t, we will only have to make up the difference between buy and sell?”
“Yes,” Susan said, and Mary’s face became a mask.
“And we could have done this on Friday, when they first asked.” There was no way to escape the truth, and Susan was not sure if she wanted to.
“And used the mortgage money to cover the difference?”
“Yes.” If she had wanted to hurt Mary, she could not have done worse. The money was gone now, lining the broker’s pockets or compensating for other losses. As gently as she could, knowing pity was unwanted, she asked. “Do you still have somewhere to stay?”
“For now. Foreclosures take time.”
“If I give you the rest of the day off, with pay, can you fix this?” It was the wrong thing to say as Mary broke down halfway between sobs and tears. Then as quickly as it had started, the outburst was back under control.
“Thank you, Miss Chapman, I will see what I can do.”
“And Mary?” Susan cringed slightly at wat she was about to suggest. “If you require assistance, please speak to Mr. Marcus, or take Henry and Geoff along. They can drive you there far more quickly.”
Mary stood up with a reserved, gracious, nod, and left. Susan hoped she would take the hint – and the company’s two largest drivers – along if she was going to speak to her husband.
She looked at her clock. It was not even ten o’clock yet.
Cet assessed its positions, monitoring the wireless and ticker feeds. Steel, purchased at 203, was falling. It would provide an adequate return. While the majority of its investment trusts were behaving as expected, one was bucking the market. Funding from external sources was pushing the price up, as buyers seemed to view it as a safe haven. Assessing the threat as significant, it accessed the telegraph system, sending the buy signal to its broker. It would not take much of a rise at this leverage to eliminate profits.
The reports from Porter were disturbing. The bank was now running smoothly, but the repair crew had reported the telephone wires had been cut, not broken. Indications were that an engineer with technical skill had been involved. There was a high probability the culprit worked for Williams. Porter stated that the banking system would be handling this. Cet still prefered to taken his own actions. Disconnecting from the bank, Cet contacted the reporter he used as a mouthpeace. He had an article to suggest, about a company in trouble, and Mr. Porter could be called to verify.