For weekend reading, senior writer from Navellier & Associates, Gary Alexander, offers the following commentary:
“The farther backward you can look, the farther forward you are likely to see.” – Winston Churchill
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You seldom hear about “May crashes,” but the two worst crashes of the 19th century began in early May:
- May 8-12 unleashed the Panic of 1837 with the failure of several major banks. It was the most devastating economic Depression in American history to that date, and it was caused mostly by departing President Andrew Jackson’s fetish for “balancing the budget.” Before leaving office two months earlier, in March, Jackson had wiped out the national debt and abolished the Second Bank of the United States, simply by not renewing its charter. The sudden lack of credit (or a central bank) triggered a “liquidity crisis” that closed hundreds of banks, and thousands of small businesses and farms, which had heavily relied on their local banks. At one point, the New York militia had to be mustered out to keep order on Wall Street. The Panic of 1837 lasted seven years, until 1844.
- May 1-5 was the opening week of the Panic of 1893, which lasted well into 1895 and was only fully relieved by Klondike Gold. Surpassing 1837, it became the new “worst economic crisis in U.S. history.” May 3 was Wall Street’s worst day in a decade. Call it “Black Wednesday” if you will. On Thursday, the Panic deepened, with the failure of the National Cordage Company, the so-called “rope trust.” Most of the other industrial stocks – the cutting-edge NASDAQ-type tech stocks of the day – also fell sharply, while most railroads barely held on, for a while. By the end of 1893, over 600 banks failed. Stocks plummeted, major railroads went into receivership, 15,000 businesses went bankrupt and 20% of the workforce was unemployed in 1894, causing labor strikes and mass national unrest.
A month earlier, on April 5, the New York Times printed one of those famously bad predictions: “It is too soon to say that a bull market is upon us, but figures show that the tendency is toward higher prices.”
Actually, that’s true: 1837 is just a “blip” and 1893-95 is hard to find in this long-term market chart:
The Dow Jones Industrial Index was not born until May of 1896, but it is up over 900-fold since then, rising from an opening value of 40.94 to its recent peak of 36,952.65.
Something else marked those 1837-44 and 1893-95 Depressions, and that was a massive inflow of new Americans to our shores, along with Westward expansion. European political unrest and the Irish famine brought an avalanche of immigrants after the Panic of 1837-44, and then the persecution of minorities, especially Jews, drove millions more through Ellis Island, beneath the Statue of Liberty, in 1895 to 1910.
You’d never know when our worst Depressions were happening from this chart. Our greatest waves of human arrivals came during our “Panic of 1837” (to 1850) and then from Eastern Europe in the 1890s. To put faces on those statistics, here’s a birthday tribute to four of those immigrants from the 1890s to the 1910s.
Two Austrian Americans and Two Russian Americans Make Great Music in the Movies
“A steppe is a steppe is a steppe…the steppes of Russia are much like the prairies of America.” – Film composer Dmitri Tiomkin (born in Ukraine, May 10, 1894)
Tuesday marks the birthday of two great film composers born in Austria and Ukraine, plus America’s premier tunesmith, born May 11 in Russia, and an Austrian American who sang most of his songs first. They were all born 1888 to 1899 and I’m profiling them on my weekly radio show on Friday. They exemplify why America has always been the #1 oasis for freedom. In birth order:
- Max Steiner (born May 10, 1888 in Vienna) was a child prodigy who allegedly studied piano under Brahms and conducting under Mahler, but he tired quickly of Europe’s anti-Semitism and favoritism, so he migrated first to London, then New York, and finally to Hollywood, where he virtually invented modern film scoring, starting with “King Kong,” then “Gone with the Wind” and 300+ films overall.
- Irving Berlin (born May 11, 1888, in Russia) came to America at age 5 after an arduous six-month journey by land and sea after Cossacks burned down his village. In his beloved America, he cornered the market on patriotic and holiday songs and had a long, successful working relationship with Fred Astaire (below). Berlin (and Astaire’s father) both entered the U.S. at the start of the Panic of 1893. He set the Statue of Liberty poem to music, and donated God Bless America royalties to the Scouts.
- Dmitri Tiomkin (born May 10, 1894, in central Ukraine) was also Jewish, therefore subject to the Cossacks’ swords, then Lenin’s censors, so he escaped to Berlin, where worse anti-Semitism drove him to Hollywood, where he began writing scores for all those Frank Capra films that glorify America, like “It’s a Wonderful Life” and “Mr. Smith Goes to Washington,” but his greatest scores came from the expanse of the West (like “High Noon” or “Giant”), which felt like Ukraine to him. One of his last songs, from “Alamo,” is reminiscent of the plight of Ukraine today: About crops not planted by farmers facing likely death defending their homeland: “The Green Leaves of Summer.”
A time just for plantin’, a time just for ploughin’.
A time just for livin’, a place for to die.
‘Twas so good to be young then, to be close to the earth,
Now the Green Leaves of Summer are callin’ me home.
- Fred Astaire (born Frederick Austerlitz, on May 10, 1899) brought more of the Great American Songbook to Americans than any other singer, although he was primarily a dancer. His life turned on key decisions by his father, also named Frederick, who was born in the suburb of Linz, Austria, where the Hitler family lived. His Jewish parents had converted to Roman Catholicism. The elder Frederick made his way to America, to Omaha. Otherwise, his children would have grown up near the Hitler clan. Fred brought the music of our greatest Jewish composers (like Irving Berlin, George & Ira Gershwin, Jerome Kern and Arthur Schwartz) to the world’s ears while Hitler was condemning them.Let us also honor the Prussian Lutheran (Aryan) Johanna (Anna) Geilus, who married Frederick Austerlitz (the elder) when she was just 16, in Omaha, and became the gentle, patient stage mother to young Fred and older sister Adele, taking them to New York when they were five and seven, working to put the kids into the best dance schools, then tutoring them at night.
A Time Capsule from 85 Years Ago, May 6-7, 1937: A Blimp Blows Up…Then a Black & White Boiler Room
“The world is in a mess. With politics and taxes, and people grinding axes, there’s no happiness… – Ira Gershwin, May 7, 1938
On Friday night, May 6, 1937, the 804-foot-long Swastika-bedecked dirigible, the Hindenburg, burst into flames over Lakehurst, NJ, killing 36. Suddenly, ocean liners seemed a lot safer way to cross the Atlantic.
The next day, Saturday, May 7, “Shall We Dance” opened in theaters across America, with Fred Astaire and Ginger Rogers aboard an ocean liner. One of the first Gershwin songs Fred sings is in the boiler room with a dozen black workers and singers: “Slap That Bass.”
Imagine this half-Jewish dancer from Hitler’s hometown singing a song by a pair of Jewish brothers with an integrated cast of a dozen black musicians.
The song starts: “The world is in a mess. With politics and taxes, and people grinding axes, there’s no happiness…. Fred responds: Dictators would be better off if they’d ‘zoom/zoom’ now and then.” – Lyrics by Ira Gershwin in “Slap That Bass,” from Shall We Dance, 1937
Yes, the world was a mess: The Dow was in a second terrible decline in the 1930s, falling 33% in 1937, and fully 49% from March 10, 1937 (Dow 194.4) to March 31, 1938 (Dow 98.95), but then it gained 10-fold in 30 years, to 985 in 1968. The world is always in a mess, but there’s always a morning, and music.
In context, that 1938 low was well above the 1932 low (Dow 41), and the long-term recovery quickly resumed.
A year earlier, on June 19, 1936, a young black U.S. heavyweight, Joe Louis, 22, lost to 30-year-old German former champ Max Schmeling in a 12th-round knockout in Yankee Stadium. Then, in August, the Olympics in Berlin were designed to show the superior German race, but Ohio’s Jesse Owens, also 22, won four Gold Medals.
George Gershwin and Fred Astaire first met when they were 15 and vowed to do shows together. Their first show opened on Broadway in December 1924: “Lady Be Good.” In the same week, Hitler emerged from Landsberg Prison with his “Mein Kampf” ready for the printers. America’s bright shores saved the lives of millions like Fred and George. If George and Fred’s parents hadn’t mustered the courage to leave Europe in the 1890s, despite a ‘Panic’ in our markets, their films and music would not exist, and they would likely be killed by Hitler. As it turned out, Gershwin died of a brain tumor in July 1937, but his music lives forever. America was their oasis.
As for Joe Louis, he trounced Max Schmeling in a much-touted 1938 rematch in Yankee Stadium, in Joe’s fourth heavyweight title defense, as white and black Americans cheered America’s “Brown Bomber” on their radios.
Only in America.