Taming the Street

The Old Guard, the New Deal, and FDR's Fight to Regulate American Capitalism

About the Book

The “extraordinary” (New York Times Book Review, Editors’ Choice) story of FDR’s fight for the soul of American capitalism—from award-winning journalist Diana B. Henriques, author of The Wizard of Lies: Bernie Madoff and the Death of Trust

“I thought I was well versed in the New Deal, but it turns out I knew next to nothing. Diana Henriques’s chronicle is meticulous, illuminating, and riveting.”—Kurt Andersen, New York Times bestselling author of Evil Geniuses and Fantasyland

A BLOOMBERG BEST BOOK OF THE YEAR


Taming the Street describes how President Franklin D. Roosevelt battled to regulate Wall Street in the wake of the 1929 stock market crash and the ensuing Great Depression. With deep reporting and vivid storytelling, Diana B. Henriques takes readers back to a time when America’s financial landscape was a jungle ruled by the titans of vast wealth, largely unrestrained by government. Roosevelt ran for office in 1932 vowing to curb that ruthless capitalism and make the world of finance safer for ordinary savers and investors. His deeply personal campaign to tame the Street is one of the great untold dramas in American history. 

Success in this political struggle was far from certain for FDR and his New Deal allies, who included the political dynasty builder Joseph P. Kennedy and the future Supreme Court justice William O. Douglas. Wall Street’s old guard, led by New York Stock Exchange president Richard Whitney, fought every new rule to the “last legal ditch.” That clash—between two sharply different visions of financial power and federal responsibility—has shaped how “other people’s money” is managed in the United States to this day. 

As inequality once again reaches Jazz Age levels, Henriques brings to life a time when the system worked—an idealistic moment when ordinary Americans knew what had to be done and supported leaders who could do it. A vital history and a riveting true-life thriller, Taming the Street raises an urgent and troubling question: What does capitalism owe to the common good?
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Praise for Taming the Street

“I thought I was well versed in the New Deal, but it turns out I knew next to nothing. Diana Henriques’s chronicle is meticulous, illuminating, and riveting.”—Kurt Andersen, New York Times bestselling author of Evil Geniuses and Fantasyland

“Diana Henriques’s gripping narrative of unbridled capitalism in the Jazz Age and its consequences is beyond timely—it’s urgent.”—James B. Stewart, Pulitzer Prize–winning journalist and co-author of Unscripted: The Epic Battle for a Media Empire and the Redstone Family Legacy

“This compelling, brilliantly told story of the fierce battle to rein in Wall Street excesses in the FDR era couldn’t be more timely.”—James B. Steele, Pulitzer Prize–winning journalist and co-author of America: What Went Wrong?

“Diana Henriques takes us on the incredible—and rarely explored—journey of what led to the vital Wall Street regulations we take mostly for granted today.”—William D. Cohan, author of the New York Times bestselling Power Failure: The Rise and Fall of an American Icon

“Diana Henriques is one of our most astute writers about the world of finance, and with Taming the Street, she once again tells a thrilling and essential story.”—Bethany McLean, New York Times bestselling co-author of The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron

“This is historical storytelling at its best! With vivid characters, cinematic settings, and nonstop pacing, Diana Henriques brings to life a political battle from the 1930s that is still deeply relevant almost a century later.”—Joe Berlinger, award-winning documentary filmmaker and director of the Netflix series Madoff: The Monster of Wall Street

“Astute readers have long known that Diana Henriques is a fine writer and a powerful reporter. Here, though, she demonstrates a new skill: superb historian. . . . Simply outstanding.”—Daniel Okrent, New York Times bestselling author of Last Call and The Guarded Gate

Taming the Street is a most timely work of meticulously researched market history that echoes loudly today.”—Ron Insana, CNBC senior analyst

“Henriques makes the potentially dry subject of SEC regulation fascinating, and the vivid prose evokes the dynamic personalities involved. . . . It’s a skillful account of a pivotal era in America’s economic history.”Publishers Weekly
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Excerpt

Taming the Street

Chapter One

A Quartet for a Calamity


October 24—December 6, 1929

How many people does it take to change the world?

The world of the Roaring Twenties had embraced the idea that American business leaders, largely free of government constraint, could produce and sustain prosperity for the American people. Nowhere was this belief more deeply rooted than on Wall Street, whose leaders were the financial architects of corporate America.

What mere federal bureaucracy would dare question the decisions or restrict the power of such financial titans?

As the summer of 1929 swept into the fall, four men were moving along different paths—in the market, in business, in politics, and in academia—that would require each of them to weigh the power of Wall Street against the obligations of public service. Their paths would cross; their fates would diverge. But over the next decade, they would answer that question.

How many people does it take to change the world?

It can take just four—four people capable of inspiring others in the public arena; four people who, in the last autumn of the Roaring Twenties, were traveling into a new decade with no idea how important their journey would be to Wall Street, to their country, and to the world.


Thursday, October 24, 1929

On a chilly gray morning, Richard Whitney strode onto the floor of the New York Stock Exchange in lower Manhattan, listening to the nervous chatter before the opening bell.

Dick Whitney had turned forty-one in August, and this had been his world, his realm, for nearly half his life. He had been a governor of the exchange for a decade, its vice president for a year, and its acting president for three weeks as its official leader enjoyed an extended honeymoon.

He was an impressive figure. Tall, a bit beefy but impeccably dressed, he still moved with the grace of the Ivy League athlete he once was. He had the profile and hooded gaze of a hawk; his sleek dark hair was combed almost straight back from a sharply etched hairline. For nearly fifteen years, he had handled bond trades for the august J.P. Morgan firm, where his older brother, George, was a partner. When President Hoover had sought advice during some anxious trading days earlier in the year, it was Dick Whitney he summoned to the White House.

After years of robust gains, the market had shuddered back in the spring when the Federal Reserve Board, concerned that the market was flying too high and too fast, tried to curb the flow of bank credit to Wall Street speculators. New York bankers defied the Fed and continued to make speculative loans, but the resulting summer rally was erratic. In August and September, the financial seas had grown stormier as investors fretted over the Fed’s next steps and debated the economy’s direction. Contrary opinions generated a surge of buying and selling. Like the veteran yachtsman he was, Whitney had kept the exchange on course as its clerks grappled with the paperwork from that agitated trading. Some on the Street feared a calamity was coming, but the exchange’s board trusted Whitney to cope.

Yesterday, it seemed like that calamity had hit. And he had missed it.

Instead of spending Wednesday on the trading floor, Whitney had spent the day far from Wall Street’s telephones and stock tickers, in the New Jersey hunt country. It was the day of the elite Essex Fox Hounds race meeting. He was a steward for the event, assessing the condition of the course, debating whether a fallen mount’s rider had been fouled, and declaring a dramatic dead heat in one of the day’s biggest races.

Thus, he had not been at his post during the most alarming day of stock trading anyone on the NYSE could remember.

The trading floor on Wednesday had been hit by a tidal wave of selling in its final hour. Only the closing bell had halted the nearly perpendicular plunge. “Brokers who have passed all their lives in Wall Street said it was the most hysterical demonstration they ever witnessed,” a New York Daily News columnist reported. The men on the exchange floor could not know it, but this traumatic day was merely the prologue of the 1929 crash, an historic three-week siege of plunging prices that would scar Wall Street’s memories for nearly sixty years. Wednesday’s panic had brought “complete chaos” to the trading floor as the stock ticker fell so far behind it was “valueless as an indicator of prices,” the columnist complained. He was one of the market pundits who were still uneasy about Thursday’s mood, worried that “mob psychology” was not yet through shaking the Street.

If more shocks came today, Dick Whitney would be ready. In a dark brown double-breasted suit, he resembled a mighty tree trunk planted near the stairs to the raised podium where, each day, an exchange official pressed the button of an electric bell that opened and closed trading.

At that moment, the chief of the NYSE mechanical department, responsible for the tickers and the other modern machinery at the exchange, moved across the felt-tiled floor toward the podium steps. Whitney stopped him and briefly told him to stay near the bell throughout the day. He didn’t need to explain why. The previous day’s crash might have broken some small member firms, requiring their suspension from the exchange. The bell would be rung to halt trading so the acting president could report these insolvencies. The aide nodded and continued up the steps. At the exact point of 10 a.m., he pressed the button. The firehouse clanging of the opening bell overrode all other sounds for a few seconds.

And so another trading day began, the day that would make Dick Whitney famous.

For the keepers of the Manhattan society stud book, Dick and his brother, George, were not “the Whitneys,” the wealthy, sporty family whose art collections, Thoroughbred horses, and motor yachts defined class for Jazz Age society. George and Richard were “Boston Whitneys,” the grandsons of a shipmaster and merchant, the sons of a respected banker; their lifelong pride in their pedigree was obvious to all who knew them, according to one biographer close to the family.

Their father’s death in 1904, when they were teenagers, did not interrupt their athletic march through prep school at Groton and college at Harvard. Both were tapped for Harvard’s most coveted club, the Porcellian, earning the right to wear its golden pig mascot on their watch chains. Both gravitated to Wall Street after graduation.

George Whitney paved the way. A star squash player in Harvard’s Class of 1907, he moved to New York while his uncle, Edward F. Whitney, still had a partner’s desk in the offices of J.P. Morgan, the formidable private banking firm housed in a staid fortress at 23 Wall Street. In June 1914, George married the daughter of a former Morgan partner who had been ambassador to France. Dick was his brother’s best man at the lavish country wedding, covered by almost every society columnist between Boston and Washington. The following year, George Whitney was hired into the bond department at J.P. Morgan; he now sat at the right hand of Thomas W. Lamont, the decisive managing partner of the firm and one of the most powerful people in American finance. Thinner and more elegant than his brother, George Whitney was also vastly richer, easily commanding all the luxuries of life. Inevitably, George Whitney’s success sprinkled pixie dust on his brother’s prospects.

Fierce competition defined Dick Whitney’s early life. He had played football and baseball at Groton and had a splendid career on the Harvard crew, helping row the team to victory over Yale in 1909. He completed work for his Harvard degree in 1910, but returned to Cambridge to collect his diploma with his beloved Class of 1911. Years later, he could astound his friends by reciting from memory the full name of every one of his classmates. (This was no trivial feat; his list included American poet Harold Trowbridge Pulsifer, Hawaiian physician Alsoberry Kaumu Hanchett, and a dozen varieties of “Smith.”)

Like his brother, Dick relied on helpful Uncle Edward, who loaned him the money he used, on January 12, 1912, to buy a seat on the New York Stock Exchange. And also like his brother, he married into New York society—in a romantic match touched by tragedy. Gertrude Sheldon Sands was the young and strikingly beautiful widow of Samuel Stevens Sands III. Sands died in a car crash in 1913 and left his widow with a young son and namesake. Sands’s bereaved mother, born into the Harriman railroad dynasty, later married the fabulously wealthy William K. Vanderbilt. Mrs. Vanderbilt sat with her young grandson during the quiet at-home wedding at which Gertrude Sands married Dick Whitney on May 27, 1916. Two weeks later, he set up his own NYSE member firm, Richard Whitney & Company. The New York Stock Exchange became the cornerstone of Whitney’s professional life. There, he pitted his instincts against other bond traders in a clubby culture as steeped in tradition and camaraderie as Harvard had been.

About the Author

Diana B. Henriques
Diana B. Henriques is the author of five previous books, including the New York Times bestseller The Wizard of Lies: Bernie Madoff and the Death of Trust, which was adapted as an HBO film starring Robert De Niro and was cited in the widely watched Netflix documentary series Madoff: The Monster of Wall Street. A staff writer for The New York Times from 1989 to 2012, she is a George Polk Award winner and a Pulitzer Prize finalist, and she has received Harvard’s Goldsmith Prize for Investigative Reporting, among other honors. Henriques lives in Hoboken, New Jersey. More by Diana B. Henriques
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