740 Park The Story of the World's Richest Apartment Building

1 At the end of the Roaring Twenties, small conspiracies of the powerful--many of them members of high society--formed investment pools to manipulate stock prices. Among them was Albert Wiggin, the chairman of the Chase National Bank. In 1927, business was booming when President Calvin Coolidge declared that America was "entering upon a new era of prosperity." That March, pool operations peaked, as did Cadillac sales in New York City. In May, trading volume hit a new high. Brokers' loans to speculators shot up to $4.4 billion at interest rates of between 10 and 12 percent. Then, on June 13, 1928, the stock market collapsed. It quickly recovered, but the plunge was a sign--one that few people read. The market cratered again on March 26, 1929, sending interest rates on loans to speculators soaring to 20 percent. But loans were still being made; it seemed that nothing could end the mad speculation. The Federal Reserve Board urged bankers to stop handing out money. Immediately, one bank announced a fresh $20 million available for loans--and the stock market recovered again. "In such circumstances, one might have expected bankers, at least the most important, prestige-laden, and supposedly conservative among them, to lie low, to accept quietly the profits that flowed to them so effortlessly," John Brooks wrote in Once in Golconda, his classic tale of Wall Street's ruination. Instead, men like Wiggin were anything but circumspect. Through holding companies formed to conceal trades and minimize taxes, he played the market, frolicked in pools, and even speculated in Chase stock to the tune of millions of dollars. Only in the summer of 1929 did he start to worry. Though the economy was showing signs of weakness, the stock market was still soaring, volume hitting records, new fortunes being made. On September 3, the market's averages hit all-time highs--highs that would stand for the next twenty-five years. Though he kept touting Chase stock, Wiggin also started selling it short--borrowing forty-two thousand shares and selling them, expecting to buy them back later for less--effectively, dishonorably, despicably, really, betting that his own company's market value as set by the price of those shares would drop! Which it did. Then he bought the shares back with a loan from Chase. That's when the house of cards fell in. Stock prices started dropping on Wednesday, October 23--and the next day, later known as Black Thursday, they collapsed. A third precipitous plunge followed on October 29--it would be known as Black Tuesday. Get the feeling things were black? John D. Rockefeller and his namesake son, who was called Junior, tried to brighten the outlook by announcing that they, at least, were buying stocks, but their virtuous stand had no effect on the economy. Within a few weeks, $30 billion worth of equity--more than a third of the market's value--had vanished. The Great Depression was on. A year later, apple sellers appeared on street corners for the first time. In December 1930, the Bank of the United States closed its doors--the most significant in a wave of failed financial institutions. By 1931, stock prices stood at less than half their 1929 highs. Unemployment rose in inverse proportion. In just two months in the fall of 1931, another eight hundred banks went belly-up. Building ceased. Life went on, if barely, for most. And what of Wiggin of the Chase? After the crash, he toted up winnings of just over $4 million for selling his company down the river--profits he hid offshore to avoid taxes. That said, his dealings were not only legal but perfectly respectable--at least according to the era's business mores. After Wiggin retired in 1933, the bank awarded him an annual pension of $100,000 for life. But that same year, when he was hauled before a Senate banking investigation, he "asked" the bank to stop the payments, a request with which it "Gross, Michael is the author of '740 Park The Story of the World's Richest Apartment Building', published 2006 under ISBN 9780767917445 and ISBN 0767917448.