ZEITGEIST: THE MOVIE

(22) There was also a fairly new type of loan in the stock market - the broker call loan. Very simply, this loan allowed
an investor to put down only a fraction of the stock’s value with the rest being loaned from the broker. This
method was very popular in the roaring 1920’s as everyone seemed to be making money in the market. However,
there was a catch to this loan. It could be called in at any time and had to be paid within 24 hours. And the typical
result was the selling of the stock purchased with that loan.
[ Clarification: The narration makes a generalization with the phrase “Broker Call Loan” and the 24 hour time frame. The
more correct phrase would be - “24 Hour Broker Call Loan,” as the time distinction is not inherent. ]
Call Loan: “A loan which may be terminated or “called” at any time by the lender. The loan is then immediately payable,
with any accrued interest, by the borrower to the lender. These loans are used to finance purchases of securities and
exclude personal loans extended by banks to its customers.” 1
The Call Loan is a loan that is made which is repayable on demand. During the period in question “24 Hour Call Loans”
were in operation in the markets, which meant that any person holding this loan could be made to pay it back with 24
hours, on demand of the broker who loaned it out. (See further testimony by William Jennings Bryan below- #24)
(23) So, a few months before October in 1929, J.D. Rockefeller, Bernard Baruch and other insiders quietly exited
the market, knowing the bubble created was about to burst.
While this exit is well known via the biographies of these men and more (such as J.P. Morgan, Joseph P. Kennedy, Henry
Morganthau, Douglas Dillon), the reasoning is, of course, speculative. The traditional assumption is that such insiders
were simply “smart”. Also, a common refutation in regard to J.D. Rockefeller is that he came to “save the day” by buying
stocks after the crash occurred.
The New York Herald Tribune on October 31st 1929, wrote:
“Revived by spontaneous investment buying and declarations of large extra cash dividends by leading companies, and
free of the delirium that has recently gripped share owners, the stock market yesterday received a fresh start and scored
a record comeback. Volume on the Stock Exchange totaled 10,727,320 shares, the third largest day on record. The high
spot of the day from a stock market viewpoint was the statement by John D. Rockefeller that there was no need to destroy
values and that he and his son, John D. Rockefeller Jr., had been heavy buyers of stocks for investment in the last few
days, and would continue to buy at present prices.” 2
What isn’t often realized is that “bottom fishing” is a very common investment tactic for a falling market, especially if you
know the decline is temporary. It is not unreasonable to assume that such an action was indeed possible and anticipated,
with insider information. To say J.D Rockefeller was buying stock in an act of “goodwill” defies credulity and can only be
considered naive given the history of the Rockefeller’s business practices and intents.
In Gary Allen’s famous work “None Dare Call it Conspiracy”, he writes:
“The investing public, including most stock brokers and bankers, took a horrendous blow in the crash, but not the insiders.
They were either out of the market or had sold “short” so that they made enormous profits as the Dow Jones plummeted.
For those who knew the score, a comment by Paul Warburg had provided the warning to sell. That signal came on March
9, 1929, when the Financial Chronicle quoted Warburg as giving this sound advice: “If orgies of unrestricted speculation
are permitted to spread too far, the ultimate collapse is certain … to bring about a general depression involving the whole
country.” 3
As a final note on this point, it is worth denoting that in a letter written to ‘The Australian’, a newspaper in Sydney Australia,
W.C. Wentworth wrote about a chance meeting with Montagu Norman, Governor of the Bank of England from 1920 to
1944:
“In 1929 I was a member of the Oxford and Cambridge athletic team, visiting America...I, together with some other members,
boarded a smallish passenger vessel in New York. A fellow passenger was “Mr. Skinner,” and a member of our
team recognized him, He was Montagu Norman, returning to London, after a secret visit to the US central Bank, traveling
incognito...he asked us not to blow his cover, because if the details of his movement were made public, it could have serious
financial consequences...He said, “In the next few months there is going to be a shake-out. But don’t worry- it wont
last for long.” ” 4
1 http://www.globeinvestor.com/resources/glossary/glossaryc.html
2 New York Herald Tribune, October 31st 1929
3 Allen, Gary, None Dare Call it Conspiracy, 1971 p 35 |*Warburg Quote reprinted in the Commercial and Financial Chronicle ,
March 9 1929, p1444
4 Letters to the editor, “The Australian” ( GPO Box 4162, sydney, NSW. 2001), February 7, 1989