Charles E. Mitchell and the 1929 Stock Market Crash: How Hubris and Easy Money Led to Black Thursday

It was October 1929, and Charles E. Mitchell felt splendid. Why wouldn’t he be? He was the head of National City Bank (now Citigroup), one of the richest men in New York, and he lived in a mansion with 16 servants. This false sense of security led to the devastating Stock Market Crash that shocked the nation.

The infamous “Black Thursday” lives on in the collective consciousness of many Americans today. The collapse still impacts those born in its wake – the memory of not having enough and saving random items remains visible. But what prompted this tragedy and how can we learn from it as we approach the 100th anniversary of October 1929?

Days Leading Up to the Stock Market Crash

Every morning, Charles Mitchell walked five miles to his office on Wall Street—a habit born of discipline and, perhaps, the swagger of a man who believed he held the American economy in the palm of his hand

Mitchell wasn’t just a banker; he was a celebrity. He had convinced the average American that the stock market wasn’t just for the Rockefellers. It was for the plumber, the baker, and the schoolteacher. And for a while, it seemed like the party would never end. But as we know, the higher the summit, the greater the fall. The stock market crash loomed on the horizon.

The Era of Easy Money

To understand the 1929 stock market crash, you have to look at the vibe of the Roaring Twenties. It was a time of jazz, flappers, and unprecedented optimism. The economy was booming, fueled by new inventions like radios and cars. But underneath the glitz, the foundation was rotting. A stock market crash now seemed inevitable.

Decadence and leaning heavily upon loans did not create long-term stability after World War One. US leaders believed the triumphal nation would continue leading the way into a “Golden Age” of commerce, culture, and fashion.

According to the Holocaust Encyclopedia, “Many investors, comfortable with debt, bought stocks ‘on the margin,’ using a small personal investment to pay a portion of the actual share value while borrowing the rest from a bank or other lender.”

Essentially, you could buy $100 worth of stock with only $10 of your own money. The bank loaned you the rest. It worked great as long as stocks went up.

Thanks to men like Mitchell, everyone assumed they always would. He turned bank branches into “department stores” for securities, using aggressive salesmen to push stocks on a susceptible individuals.

How else could the story end but with a stock market crash?

The Warning Signs No One Read

While Mitchell was preaching the gospel of eternal prosperity, the gears were grinding to a halt elsewhere. In Washington, politicians were cooking up the “Smoot-Hawley Tariff.” Originally meant to protect farmers, it ballooned into a massive tax on imports. Over 1,000 economists begged President Hoover vetoed it, predicting it would strangle trade. He signed the bill anyway.

Foreign nations and criminal gangs retaliated against the strict measures. Trade dried up, and the global economy started to wobble. By September 1929, before the stock market crash, the market was jittery.

Prices slipped. But Mitchell, ever the optimist told the press, “I still see nothing to worry about.” He even went on a European vacation as concerns rose on the home-front.

Black Thursday and the Panic

The explosion finally happened on October 24, 1929—Black Thursday.

Panic didn’t just set in; it took over. Investors who had bought on margin were suddenly hit with “margin calls,” meaning they had to pay back their loans immediately. They could not.

The chaos was so intense that the ticker tape—the machine that printed stock prices—couldn’t keep up. It ran hours behind, meaning no one actually knew what their money was worth.

Some blamed wealthy Jews who held positions of power in the banking and finance industries, leading to feelings of discontent felt no only in New York but also in distant Germany.

Meanwhile, Mitchell and a few other bankers tried to play the hero. They marched across the street to the House of Morgan and pooled their money to buy stocks, trying to prop up the market. Yet the bottom fell out completely, and the stock market crash became a reality that would define a generation.

The Aftermath: Villains and Victims

The crash didn’t just wipe out portfolios; it crippled lives. Edgar Brown, a theater owner who testified later, lost $100,000 because bank salesmen pressured him not to sell when he saw the dip. He was left with “not a cent.”

And Mitchell? He became the face of the disaster. A Senate investigation revealed he had sold stock to his wife to dodge taxes and admitted to unethical trading practices. He was arrested, disgraced, and owed millions to the government.

Yet, in a twist that might feel familiar to modern readers, Mitchell eventually settled his debts and landed a rather comfortable job at another firm. He died wealthy. The average American, however, spent the next decade in breadlines and soup kitchens.

The 1929 stock market crash wasn’t just about numbers on a ticker tape. It was a story of hubris, bad politics, and the painful lessons of borrowing without thought of tomorrow.