HIS MASTER'S VOICE Joe Kennedy Gets Rich

I never believed old Joe Kennedy’s story about getting a stock tip from a shoe shine boy. Joe claimed that when a kid offered him insider info on a stock Joe knew that if the kid knew, then everybody knew. And that meant that the good times were over. So, Joe said, he sold most of his stocks just before the Black Friday crash of 29 October, 1929. And that was why, Joe said, when the market bottomed out he still had cash to pick up stocks for a song, That was how he made his fortune, he said. It's a good story. It makes him sound very smart. It was a load of Irish manure.

In October of  1929 Joe’s fortune was already estimated at $4 million. He had just sold most of his stock portfolio, not because of some tip from a shoe shine boy but as part of the game of stock manipulation that was standard practice on Wall Street during the 1920's. In fact Joe used to tell friends they all had to cash in on the game, because someday, soon, it would be made illegal. In fact Joe and most of the other insiders knew a crash was inevitable. All of them just figured they were smart enough to get out in time. But smart turned out to have nothing to do with it.

It was sheer blind luck that the market crashed just as Joe was heavily liquid (short on stocks and long on cash) . Still, like most successful moguls, in retrospect Joe’s luck became, in his self justification version of reality, a shrewd investment move.  And by 1935, feasting on the financial corpses of his unlucky competitors, the Kennedy fortune was said to be worth $180 million. Of course if his timing had been a little bit slower or faster Joe would have been wiped out like all those other shrewd Wall Street investors. The only time people truly get in trouble on Wall Street is when they start thinking their master's voice is their own genius and not the collective cacophony of fools.

The classic example of the games played in those days was the Radio Corporation of America stock pool, formed by the brokerage house M.J. Meehan and Company. Joe was part of this game. In the modern vernacular the process is called “a pump and dump”. In the slang of 1929 it was “painting the tape”, as in ticker tape which read out changing stock quotes before LED's light boards.  First the stock was quietly accumulated by the pool members, who also sold the stock “long”, meaning they made a behind the scenes bet that the price would go up. Then the reputation of the stock was made to look better than it actually was by well publicized sales between pool members at inflated prices, and by articles planted in newspapers and magazines promising inside info on the next hot stock - in this case, RCA.

This attracted buyers from outside the pool who were either fooled by the games or who suspected what was actually happening and gambled they could read the “smart money” and get out before the dump. Of course the pool members were already quietly selling the stock short, betting it would go down, which, of course, they were about to insure that it did. In the final act the pool members would suddenly dump all of their stock, making the insiders richer, and the outsiders poorer.

The RCA pool started pumping on Saturday 9 March, 1929, (the NYSE met for half day sessions on Saturdays at the time). Shares of RCA were selling at $93 each. Two weeks later, Saturday 30 March,  the stock was selling for $109.75 a share.  It was time to pull the dump. Almost overnight the stock fell to $80 a share. And for what was in essence two weeks work the pool members made $5 million ($60 million in today's value).

The only problem was that the $5 million the “smart money” had just squeezed out of the market had to come from someplace.  Lots of the “suckers” who had bought RCA on a standard 10% margin were suddenly caught short by the switch to the “dump” mode. They would now either have to pay the 90% they still owed for the stock at the pumped up price (which most could not afford to do) or come up with another 10% to maintain their margins. If they did that, they simply accumulated debt, which made them even more likely to go broke at the next pump and dump.  

The rush to raise cash to meet the margin calls did two things at once. First,  people sold other stocks to meet their short calls on RCA,. That drove down the price of lots of other stocks. The New York Daily News called it a “selling avalanche”. And two: those who either could not or chose not to sell other stocks to meet the “margin calls” on RCA, now looked for the cash to meet their raised margins. Their demand for cash drove the price of loans (the interest rates charged) higher and higher. It was an instant liquidity crises - sound familiar?

In a single day, Monday, 25 March, 1929, the market abruptly dropped 4% across the board. What stopped Monday, 25 March, 1929 from becoming Black Monday was that on Tuesday, 26 March, 1929 at about 1:30 in the afternoon, as the panic was still spreading across the floor of the stock exchange, Charles "Sunshine Charley" Mitchell, president of CitiBank and a member of the Federal Reserve Board, boldly walked onto the trading floor and placed a loud “buy” order for U.S. Steel at higher than the then depressed market price. He also announced that he had $25 million to stabilize the market ($300 million in today's value). Immediately the panic on Wall Street calmed, and conservative Democratic Senator Carter Glass called for Mitchell’s resignation because he had violated "purity" of the market. By saving it.

The famous “Sleeping Prophet” Edgar Cayce would write a letter in the first weeks of April 1929 famously predicting the October collapse of Wall Street. In fact the near collapse at the end of March was repeated again with another 4% drop in value on 22 May and again on 27 May and yet again on 9 August and yet a fifth 4% drop on 3 October, followed by a 6.3% plummet on 23 October. After every drop there was a recovery. And all of these drops preceded the infamous Black Monday collapse, when in a single day the market dropped 12% of its total value. You would have had to been deluded not to have seen the greater market collapse was just around the corner. But if you were looking for some genius to believe in, and the mystic attracts you, then you might choose to follow Edgar Cayce.  He's probably no more accurate than any other Wall Street master. 

Or, if you were of a mercenary mindset, you could choose to listen to the voice of Joe Kennedy and his fellows. Joe continued to believe that he was smart enough to avoid getting caught in the next market downturn. He wasn't, of course. But fortunately for Joe, Wall Street was filled with desperate, deluded people who for lots of reasons refused to see the approaching abyss any clearer than Joe did. Ever since the October 1929 collapse of Wall Street Edgar Cayce has been making converts, based on his mystical prediction that doesn’t seem so mystical when you know the full history. The same can be said of Joe Kennedy. And the list of the well connected and well informed experts who continued to predict in 1929 that all would be well on Wall Street was almost endless.  Like it is today.

On Friday, 18  October, the editor of the Wall Street Journal said in a speech that stock manipulations on Wall Street were “impossible”.  Yale Economics professor Irving Fisher observed that “Stock prices have reached what looks like a permanently high plateau”.  And every time one of these “experts” predicted that the dark skies were going to clear up, the market would bounce back from the brink of disaster, reaching its (then) all time peak index on 3  September, 1929 of 381.17. Then came the big crash.

After the 1929 crash the NYSE would not return to the 300 level until 1954.  In the immediate aftermath of the debacle  Senator Carter Glass helped fashion legislation (The Glass-Steagall Act) that divorced commercial banks from intimate ties with brokerage houses, the source of a lot of the cash used in speculation and one of the primary fuels in the collapse, and the reason it spread so far so fast. That was a major violation of the purity of the market, and it was designed by Carter Glass, the same Senator who had called for "Sunshine Charley's firing,  And it was Joe Kennedy who would soon help write new rules that banned “insider trading” and pump and dumps, such as the RCA pool he had profited from.

And "Sunshine Charley, the man who saved the market in March of 1929?  He died flat broke in 1955. His was just one more of the millions of lives ravaged and destroyed worldwide by the Great Depression; hunger, lost education opportunities, violence, even World War Two. It seems a very high price to pay to make Joe Kennedy a little richer.

The Glass-Steagall Act was largely repealed in 1999, because the mystics on Wall Street are still selling the idea that secret knowledge and mystical skill or now computer savy can trump luck on Wall Street.  Eight years later came proof, yet again, that the mystics, the experts and the "master of the Universe" are always ultimately wrong,  And yet there are always those who want to believe and are willing to pay for their faith, especially when they are using the public's money. 

And where ever he is at this moment, in heaven or hell, Old Joe Kennedy must be having a very good laugh about the “spike” in oil prices that the experts assured us was certainly not the product of speculation. They went on selling the load of manure , that the financial collapse of 2008 could never happen again, not if we just have faith in the purity of the market.

- 30 -

THE END OF THE WORLD - AGAIN.

I wonder if you are aware that the the world ended on 5 April, 1761. If you haven't heard of this tragic event, well, your ancestors were either not English or were just not paying attention. In a world where most people still believed in the literal history of a real Adam and Eve, a certain William Bell, trooper in the Life Guards Horse Cavalry, went about London telling everyone and anyone who would listen that doomsday was nigh. And on the date predicted thousands, perhaps tens of thousands of people listened and believed him. And what was amazing was that Corporal Bell was right. The world did end on that Sunday. But  Corporal Bell was right for the wrong reasons. And the reason made all the difference. 

The eighth day of February  1761 dawned cold, as was to be expected in a world still in the grip of “The Little Ice Age”. Most winters the Thames froze over allowing people to ignore London Bridge and cross on the ice.  And the great city was chocking on her own coal smoke to keep warm. This Sunday The “Picadilly Butchers”, as the members of the Life Guards Household Cavalry were called, were gathering for their parade, set then, as now, on every Sunday, for 11:30 A.M.Then, from Greenwich below London on the south bank, to Richmond, on the upstream north shore, the entire Thames valley shuddered. In Hampstead and Highgate houses shook. Among the ship construction ways in Limehouse the chandler’s tools were vibrated off their frames.In the tiny village of Poplar across from the Isle of Dogs in the great bend of the Thames River, chimneys were shaken apart, their bricks crashing to the ground. In ‘The City’ itself pewter keepsakes slipped off mantles and chairs were upended. It was over in a few seconds. The dust settled. Nerves calmed. Normality returned.

Then on Sunday, March 8, 1761, between five and six on in the morning, the Thames valley shuddered again. This time the shaking was stronger and lasted longer, roiling from north to south and back again.

In St. James Park a section of an abandoned canal in the private gardens behind Buckingham House (above) collapsed. In the churches of London, words of reassurance offered after the first quake, now fell on deaf ears.Reason and logic were forgotten. All that people could think of was their fear. Panicked, the richest and poorest citizens of central London ran from their beds at the slightest suggestion of another quake, convinced their homes were about to collapse around their heads, as some already had.But the most well known collapse caused by the twin London earthquakes of 1761 was the collapse of sanity in the person of William Bell. He was one of the “Tinned Fruit”, aka a “Picadilly Butcher", a corporal in the Household Cavalry. And he became convinced that the shaking of 8 February (the second Sunday in the month) and 8 March (the second Sunday in that month), would be followed by a truly catastrophic shaker on the second Sunday in April - the twelfth.

Bell, in his mind,  saw the earth split open. The mighty Thames River boiled and roiled. The bridges cracked and fell. The fires of damnation burst forth from the bowels of the earth. Sinners and Saints were cowed before the angels of the Lord. Spirits of the dead rose up. And the earth was laid bare, swept clean of the sins and works of man. Corporal Bell's visions became so intense and detailed, that he began to share them with any and all who would listen. He related them with such passion that Bell's visions took hold of the entire city like a fever.

Charles Mackay’s excellent book, “Memoirs of Extraordinary Popular Delusions and the Madness of Crowds” (Harmony Books – 1843) records that, “…all the villages within a circuit of twenty miles …(of London, were) crowded with panic-stricken fugitives, who paid exorbitant prices for accommodation to the housekeepers of these secure retreats. Such as could not afford to pay for lodgings at any of those places, remained in London until two or three days before the time, and then encamped in the surrounding fields......and hundreds who had laughed at the prediction a week before, packed up their goods, when they saw others doing so, and hastened away. The river was thought to be a place of great security, and all the merchant-vessels in the port were filled with people, who passed the night between the 4th and 5th on board, expecting every instant to see St. Paul’s totter, and the towers of Westminster Abby rock in the wind and fall amid a cloud of dust.”One enterprising chemist even advertised pills which he claimed to be “good against earthquakes”, although exactly how the pills proposed to save the swallower, was never fully explained.Needless to say, the world did not actually end on Sunday 12 April, 1761, at least not in the way Corporal Bell had anticipated. As Mackay recorded, “The greater part of the fugitives returned on the following day, convinced that the prophet was a false one; but many judged it more prudent to allow a week to elapse before they trusted their dear limbs in London.”Corporal Bell became a man scorned, a repository for all those angry with themselves for having believed his prediction. And although he tried his hand at other doomsday prognostications, Corporal Bell was confined for some months in an insane asylum, probably, in part, for his own protection. Edward W. Brayley recorded in his book “Londoninania” (Hurst, Chance and Company – 1829) that Bell “…afterward kept a hosier’s shop in Holborn Hill during many years, and …retired to the neighborhood of Edgeware where he died a few years ago”.Some things did change because of the twin quakes. His royal highness King George II picked up the damaged Buckingham House at a bargain price.He kept the gardens but filled in the collapsed canal behind the structure and turned it into the Parade for the Household Cavalry. He renamed the residence “The Queen’s House”, but over the years, as additional wings were added, the old name returned and it became known as “Buckingham Palace”.The channel between the Isle of Dogs and the hamlet of Poplar was bridged at two points and eventually the inside of the bend in the Themes became the East End of London (above). But something more fundamental had changed with the Earthquakes of 1761, and while the superstitions of William Bell were largely forgotten, another man was inspired, in part by the quakes  to a vision which indeed gave birth to a new world.His name was James Hutton. He was an ugly little man with a great big brain who was trained as a lawyer, a chemist, a doctor of Medicine, a businessman, and late in his life, a farmer. But the earthquakes of 1761 had awakened his curiosity as to what had caused them.He had already come to the observation that the forces of erosion he saw on his farm, (streams and rivers, wind and rain) must be have been working in the time of Adam and Eve. But how long ago was that? Hutton did not know - nobody did -  but Hutton was curious and sure enough of his God given brain to believe that he could understand the process. He allowed the idea to percolate in his mind until 1788, when he went sightseeing with the mathematician John Playfair. And while walking at the cliff edge at Siccar Point in Scotland, Hutton saw a single formation of rock that utterly lifted the veil of superstition from his eyes.There, in front of Hutton (above), was a bed of schistus, (to the right) thrusting up vertically from below. And sitting directly on top of this was a bed of sandstone, (left side of picture) lying in opposition to the schist. The junction point between the two kinds of rocks came to be called an “Angular Unconformity.” They were different kinds of rock and they could not have been formed in the same place or the same time, or even close to each other in time or place. Something between them must be missing; that something was the unconformity.Sandstone is produced by compressing desert or beach sand under tons of more dessert sand or other rocks. Any water present will chemically alter the rock, so we know this particular sandstone had to be formed when England was at the same latitude as the Sierra Desert is today, and looked very similar.The schist was created by lava cooling deep under water, then reheating the rock almost to the melting point and letting it to cool, still under pressure but without the presence of liquid water. Each of these processes takes millions of years by themselves. But the schist rock must form in the presence of water, and the sandstone in the absence of water. So the missing layers at the angular junction of the two beds were  like the missing pages in a book, missing pages that must tell a story of mountains perhaps rising and wearing down to nothing, of seas and river valleys  filling in and closing. Those millions of years whose record had been destroyed were what was missing between the crystals of the schist and the grains of the sandstone.The Angular Unconformity that Hutton stood over that day demanded an untold millions of years, and hinted at why earthquakes happen in England -  not because God is seeking to destroy a sinful humanity, but because that is how God made the world, with earthquakes, one after another, millions of them over the  last four billion years. 

And how she is remaking it every day, out of the remains of the day before, a single grain of sand and a single crystal of schist at a time - the same way our minds were formed, and out of the same stuff. It is a world without end, because everything in it is reused, time and time again, Even us. Even time.

- 30 -

POLITICS AS MURDER Chapter Three

I believe the best evidence is that Joseph Stalin did not actually kill his own father. But he ordered him murdered, and watched it done. The cobbler Besarion Vanovis was a known violent drunk who for years beat both his wife and son, before abandoning them. And when, in March of 1906, he was found dead on a back street in Tifil, Georgia, there were few tears shed for his demise, and police wrote it down to just another drunken brawl.  But his wound, a huge hole smashed into his skull, was just the sort of injury Stalin now insisted on inflicting upon his other old enemy, Leon Trotsky.  Stalin was very specific about the method.  In fact, contemplating such acts of terror were Stalin's favorite pastime, as the drunken ruler shared with comrades in 1923: “To choose the victim,” he told them, “to prepare the blow with care, to slake an implacable vengeance, and then to go to bed....there is nothing sweeter in life.”.

After the raid of 24 May, the American Socialist Workers Party tried to raise funds to improve the defenses at 19 Avenida Viena (above), but were only able collect $2,250. Trotsky had previously been approached by Harvard University to donate his papers. And he now had two reasons to close the deal quickly, to protect his own life, and to move his papers to where Stalin could not destroy them. In exchange for his communications and notes between 1917 and 1937, Trotsky was to be paid $6,000 cash.

The money already collected was used to make certain that all windows facing Morelos Street (above) were bricked up, as were the doors in the portico which opened on Viena Street. The windows that remained were now guarded by iron bars. Wooden interior doors, which had proved easily smashed, were replaced with steel.

On 18 June, 1940,  the Mexican Police charged two dozen members of the Mexican Communist Party with taking part in the raid. The leader, artist David Alaro Siqueiros (above), escaped at first, releasing editorials insisting he was innocent and being framed.  But as more and more members of the raid confessed and named him as the leader, the tone of his press releases changed. Now he claimed he was not trying to kill Trotsky, but just to get him expelled from Mexico. Four months later Sisqueiros was finally captured in Jalisco. A judge was bribed to release the painter on bail, unheard of in an attempted murder case. And within 24 hours Siqueiros was in first Ecuador, and then Cuba, and then disappeared into "central America".  Most of the other members of the raid were not so lucky, and ended up serving years in jail.

It was during the confusion and trauma immediately following the 24 May attack that a old friend appeared at the Viena Streeet villa, a young blond woman named Slyvia Ageloff (above).  Her sister, Ruth, had once worked for Trotsky as a typist, and both sisters had met the Old Man and Natalia during his Paris exile.  Trotsky had taken an interest in the young socialists because he was,   in the words of a close family friend,  an “experienced philanderer”.  But Natalia also found the girls a pleasant diversion, and now Slyvia was doubly so.

Sylvia  (above left) explained she had come to Mexico to visit her mysterious Canadian boyfriend, Frank Jackson (above right), who had recently started a new job in Mexico. She was welcomed to tea with the Trotskies,  Although Frank's schedule prevented him from joining them, his absence only added to his mystery.  At first the only time members of the household saw Frank was when his Buick sedan pulled to the curb to pick up Sylvia. Eventually Frank became familiar with the guards, and even agreeing to drive the house-bound Leon and Natalia on an outing to Vera Cruz.  That kindness, and a gift of chocolates for Natalia,  made it easier when Sylvia asked if Trotsky could offer some advice on a political article Frank was writing

The article which Jackson wanted Trotsky to read was titled “The Third Camp and the Popular Front”, referring to Trotsky's argument that workers must reject both capitalism and the gangster state Stalin had created.  But as he read Jackson's words in his study,  Trotsky grew uneasy.  Frank Jackson was sitting too close,  right behind him,  on the edge of his desk, with his coat folded across his lap.  Since the 24 May attack, Trotsky kept a .25 caliber pistol, always within reach on the desk top. But his reach to an alarm switch was blocked by Jackson. Besides, Trotsky found the article obvious and dull.  And after he had made comments and sent Jackson on his way, The Old Man told Natalia he did not want to see the Canadian again.

But Sylvia begged, and Trotsky agreed to read the rewrites Jackson had made.  So about 5:20, on Tuesday afternoon, 20 August, 1940,  Jackson pulled up again in front of the villa. It would be his 10th visit.  Getting out of his Buick he called up to the guard shack above the foray (above),  asking if Sylvia had arrived yet.  The guards answered no, but opened the front door without question.  Again they noted he carried a raincoat. Trotsky was in the garden, feeding his rabbits, so Jackson stepped back to the kitchen, to tell Natalia that he and Sylvia would be leaving Mexico the next day.  But Trotsky's wife had also grown suspicious of the Canadian, and asked him why he was wearing a hat and coat on such a hot day.  Jackson answered, “It might rain.”  Abruptly, Trotsky appeared and invited Jackson back to his study to read the rewrites. Natalia let them go, despite her uneasiness.

Once in the study Jackson waited only a few moments, before drawing a cut-down climbers pick ax hanging off the rear of his belt, hidden beneath his jacket.  Nervously, he wrapped his raincoat around it, and raising it over his head, drove it with all his might into the very top of Leon Trotsky's head. 

The steel point smashed through the top of the Old Man's skull, tore through the living soft layer beneath, and was driven three inches into his brain. 

Jackson said in his confession, “As long as I live I can never forget his cry ...he screamed very long, infinitely long,” Jackson had expected the man to die instantly. He carried a pistol, and a knife, but had used the axe because the NKVD said a sever blow to the head would bring instant death.  But the sound of the old man's cry terrorized the murderer, and everybody else in the villa.

As Jackson pulled the ax back out, to raise it again, Trotsky stood and turned on his assassin. They struggled over the ax, destroying much of the furniture, and throwing Trotsky's blood all around the room. (above)   The younger man managed to slice Trotsky's cheek, before the 60 year old Russian pulled the ax out of his hands. 

As Natalia and a bodyguard rushed into the room they discovered Trotsky standing over his attacker, the ax in his hand, blood pouring over his eyes. Trotsky said to his wife, “Look what they've done to me!” He told the guard he'd been shot. Then Natalia guided him out to the garden.

The guards fell upon Jackson (above),  beating him while he cried, “They made me do it. They're holding my mother. They have put my mother in jail”  When he tried to pull a pistol out of his pocket, they beat him again. Again he cried out, “They have imprisoned my mother”  Then he added, “Sylvia Ageloff had nothing to do with this.”   Then he insisted neither did the NKVD. No one ever believed him.

Trotsky was driven to two miles to Cruz Verde Hospital in Mexico City. A team of neurosurgeons operated to release pressure on his brain. His last words were, “I think Stalin has finished the job he started.” Suffering from shock and blood loss, and severe brain damage, Leon Trotsky never woke up from the surgery, and died half past seven the next evening.  He was buried on the villa's grounds, which have become a museum, dedicated to his memory.

Later, the police, led the bewildered and terrified Sylvia into a hotel room crowded with reporters, where she was surprised to confront Jackson (above). He began yelling, telling her to go away.  But she was under arrest.

Jackson (above, right)  later re-enacted his crime, and even admitted to being Jacques Mornard. And under that name he was convicted of murder, and sentenced to twenty years in prison. He served every day of it,  if under luxurious conditions, with female companionship, and servants, all paid for by Stalin's  NKVD.

We know now that Leonid Ettingon told Ramon Mercader just before his final meeting with Trotsky, that if he failed to murder the Old Man, his mother Caridad Mercader (above) , would be sent to a gulag in Siberia.  After Trotsky was dead, Caridad was ordered back to Moscow, where Stalin himself presented her with the Order of Lenin.  The honor was tainted when she realized she would never be free again. 

Twelve years after the murder, Mexican police finally pierced Ramon's disguises, and his true identity was finally revealed. But he kept his silence during his 20 years in jail.  Caridad knew that not only had she turned her own son into a murderer, she would have been arrested and likely executed by Soviet NKVD if he ever talked. She became a drug addict, her heroin supplied by the NKVD.

Joseph Stalin, perhaps the greatest thug of all time,  died in his own bed on 5 March, 1953,  likely poisoned by the head of his NKVD, Lavrentiy Beria.  Beria was arrested and executed on 23 December, 1953 -  just another gangster rubbed out.  That left only the flotsam floating behind to record the damage the gangster had done.

Ramon was released from prison in May of 1960, and traveled immediately to the Soviet Union where he was honored and rewarded for his loyalty and silence. He would never reconcile with his mother (above), who said she was “only good for destroying capitalism, but no good for building Communism.”   She hated living in the Soviet Union,  and left soon after her son returned, dying in Paris in 1975.   Her son, Ramon, died three years later, in Havana, Cuba.  His last words were reported as, “I hear it always. I hear the scream. I know he’s waiting for me on the other side.”  

And Seva, Trotsky's grandson, going by the name Esteban Volkov (above),  still lives in Mexico City,. He made his living as a chemist, but as of 2019, he was the custodian of the Trotsky Museum (the Museo Casa de Leon Trotsky)  in the villa in which the old man died.  Esteban still suffers from occasional nightmare of his grandfather's brutal murder. He told a British newspaper, “I still remember looking through the open door and seeing my grandfather lying on the floor with his head bathed in blood and hearing him tell somebody to ‘keep the boy away, he shouldn’t see this'.  I always thought that was a sign of his humanity. Even in a moment like that he was worried about me.”  And to a point, I'm sure that was true. However,  no one should doubt that given the opportunity, Trotsky would have been just as brutal as Stalin. It is the nature of the beast.

- 30 -