41 For most goods, when a shortage emerges and demand exceeds supply, the price rises. Because under the gold standard, the price of gold was fixed in dollar terms, the first symptom of a gold shortage was not a rise in its price—that by definition could not happen—but a fall in the price of all other commodities.
42 Livermore’s own career belied his own statement. Sensing that the boom in 1907 was going to turn into a spectacular bust, he made his first millions by shorting the market just before the panic of that year. He reputedly made another fortune the same way in 1929—he would make and lose several such fortunes in his lifetime. In 1940, he shot himself in the cloakroom of the Sherry Netherlands Hotel in New York City. He had $5 million in his bank account.
43 She went on a hunger strike in jail, became a national folk heroine when she escaped the prison hospital by climbing down a rope made of bedsheets, was recaptured, and at her trial revealed the names of politicians she had bribed. She committed suicide in prison in 1935.
44 He was the founder of no less than three business colleges: Babson College in Massachusetts, Webber College in Florida, and the now defunct Utopia College in Eureka, Kansas. In 1940, he ran for president of the United States as the Prohibition Party’s candidate, receiving 57,800 votes In 1948, he formed the Gravity Research Foundation, an organization dedicated to combating the effects of gravity, including the quest for antigravity matter.
45 Meyer remained a Washington figure of some repute. After he retired from the Fed in 1933, he bought the near bankrupt Washington Post, which he successfully turned around. He was the father of the late Katharine Graham.
46 Many popular accounts of the Great Depression attribute a large weight to the protectionist Smoot-Hawley Act as a cause of the economic collapse. Tariffs shift demand from imports to domestic goods, so if anything, it should have had an expansionary effect. Retaliation by foreigners did hurt the U.S. economy, but exports were a small percentage of GDP—less than 4 percent—so the total effect would have been small. Changes in capital flows dwarfed the impact of trade.
47 Schacht liked to tell the story of how when he came to New York in the mid-1920s, Strong had taken him down into the vaults of the New York Fed to show him where the Reichsbank’s gold was stored. Much to Strong’s embarrassment, Fed officials were unable to find the pallet of bullion that had been specifically earmarked for the Reichsbank. See Hjalmar Schacht, My First Seventy-six Years (London: Allan Wingate, 1955), page 264.
48 See page 5 above.
49 It was a turning point with especially tragic consequences for Laval himself. Following the defeat of France in 1940, he joined the Vichy government and became one of the most active French collaborators with the Nazis. He was tried for treason after the war, and following a botched suicide attempt with cyanide, he was executed by firing squad, half conscious and vomiting, in October 1945.
50 The accusations of tax dodging resurfaced in 1934 when the Justice Department indicted him for having falsified his 1931 tax returns and sought more than $3 million in back taxes and penalties. He was cleared on appeal, but his estate eventually paid some $600,000 as a settlement.
51 German GDP in the 1920s was $15 billion, one-sixth the size of the U.S. economy. By comparison, Mexico in 1994 had a GDP of $450 billion, a little more than one-eighteenth that of a U.S. economy then of $7.5 trillion.