Three distingusihed Wahingtonians with first hand recollections of the stock market crash of 1929 and the depression that followed were interviewed by Washington Post Staff Writer Nancy L. Ross.
George M. Ferris, 85, is chairman of Ferris & Co., the firm he founded in 1932. W. Averell Harriman, 87, began his career on Wall Street and has served as government officila since 1934. Catherine Filene Shouse, 83, has been a leader in civic, cultural and political activities for many years, donating Wolf Trap Farm Park for the Performing Arts.
Q. What are your recollections of Oct. 29, 1929?
A. I was in my office during the entire day, although I did go out to see an important client. So I did not know at what time the market hit its low. It dropped very, very, severely. The crash took everyone by surprise. There was very little warning. There had been only one correction in the market before that (Oct. 24), and it was completely discounted.
Q. How did it affect you?
A. I was actively managing clients' portfolios at the time. Fortunately the majority of my clients were not heavily on margin. I myself had a margin account which I closed out immediately after the crash, losing a considerable amount of my personal capital. I might say that taught me a lesson; I have never suggested since that my friends and clients buy on margin.
I felt quite secure as manager of S.W. Straus' Washington office. But as the depression deepened, Straus like many other big investment banking houses, went into receivership in the spring of 1933. Within a year, three of its top executives had committed suicide.
Q. What did you do?
A. Even before the Strus bankruptcy, I decided to form my own firm (Ferris & Co., in 1932). I did it because I felt the country would survive the depression and that investment banking would be an important adjunct to the prosperity of the country. Our company was founded on $15,000. You could form a company in those days on very little money. Two other men from Straus came with me, but soon retired because they did not think the investment banking business would be anything in the future. They said we should liquidate our new firm or that I should buy them out, which I did in the spring of 1933. One went with the Reconstruction Finance Corp. and the other became the treasurer of a small insurance company in Richmond. We remained good friends, though, and they said later I was the smartest of the three. (Ferris & Co., now has 150 employes, $5 million sales.)
Q. What advice did you give clients?
A. I did not advise anyone to sell out. I had numerous clients who still had faith in me and went into the securities I suggested. And, I might say, did very well. At my suggestion they bought bonds at big discounts. You could have bought real estate bonds, like the first mortgage bonds on the building at 40 Wall Street which was in receivership, at $100 per $1,000 bond. Everybody who bought those bonds came out with a profit of 10 times what they paid for them within four or five years.
The depression created a market that people, unfortunately, did not take advantage of.General Motors went down to $7 a share. I tried to get a friend of mine to buy 1,000 shares at that price because he had the money in his safe deposit box. But he didn't buy it. He said he was going to buy real estate notes, which at that time were yielding 4.5 percent. If he had bought GM the investment would be worth close to $500,000 today. People who went through the depression and kept on buying securities are much better off than if they had bought fixed-income securities.
People who had a small amount of money became millionaires if they used their money wisely during that period. I know several men who had almost no estate in 1932 and who by the beginning of the 1940s were millionaires.