Suicide Myths

There have been quite a few unfortunate, high profile suicides lately. Several were directly a result of the Madoff scandal- investors who lost everything or were disgraced by participation. Another just this week, German billionaire Adolf Merckle ,threw himself in front of a train.



Merckle had an estimated net worth of over $9 billion, but was recently struggling to hold his empire together after the crisis hit him hard. He also lost over $400 million betting Volkswagen would fall in value when Porche announced it would raise its stake in the company, quadrupling the shares in a few days. Ultimately, Merckle decided to end it.

All of these suicides reminds me of the old myths surrounding the Great Crash of 1929 which heralded in the Great Depression. You may even have vague images or anecdotes of stock brokers jumping from Wall Street windows. In fact, several people jokingly commented to me last fall during the gut wrenching market moves "you aren't ready to jump are you?" I'd have to find a higher office, since my second floor window overlooks an awning and then the drop is only about ten feet. But I digress.

Yet after almost seven decades, imagery of jumping Wall Streeters persists. It is part of the lore and legend of the Crash. To be sure, there were several high profile suicides such as J.J. Riordan, a director of the County Trust Company. And there was a fellow who jumped into the Schuylkill River, but changed his mind and was pulled out once in the water. To my knowledge, there are no stories of high-window jumpers on Wall Street.

In fact, the supposed wave of suicides by embezzlers, debtors and ruined businessmen seeking escape from their predicaments never really happened. The Crash began in last days September 1929. Suicides in October and November were lower than all months that year except for January, February and September. In the summer, the market was strong and speculators happy, when suicides were highest.

Why did the myth take hold? Economist John Kenneth Galbraith theorized in 1954:

"One can only guess how the suicide myth became established. Like alcoholics and gamblers, broken speculators are supposed to have a propensity for self-destruction. At a time when broken speculators were plentiful, the newspapers and the public may have simply supplied the corollary. Alternatively, suicides that in other times would have evoked the question, "Why do you suppose he did it?" now had the motive assigned automatically: "the poor fellow was caught in the crash." Finally, it must be noted that, although suicides did not increate sharply either in the months of the crash or in 1929 as a whole, the rate did rise in the later depression years. In memory some of these tragedies may have been moved back a year or two to the time of the stock market crash."