The gyrations of the stock market this week over the sub-prime mortgage panic and the American credit crisis, would have come as no surprise to Scott Joplin, the great African-American composer of ragtime music.
One hundred years ago this year, after having observed the furor of the 1907 Panic on American stocks and the banking and railroad industries, Joplin composed one of the most remarkable pieces of his career. It was Wall Street Rag, a piano instrumental that captured the delirium, the dismay, the hope, and the smug satisfaction of bankers and stock brokers living with the recurring cycle of boom and bust in financial markets.
Joplin, a young black man who had grown up in the small towns of Texas and Missouri before moving to New York in 1907, was keenly aware of happenings around him.
In New York, he frequented the watering holes of the new Tin Pan Alley district and the burgeoning Black Bohemia of Lower Broadway. But he did not confine his curiosity to just the goings-on in musical circles. While playing piano at the historic Fraunces’ Tavern, the inn where George Washington had given his farewell address to his officers, Joplin often encountered stock brokers who would come in for drinks after a day spent hustling stocks.
The panic of 1907, like those that came before and have followed it since, cost many investors their life savings and thousands of workers their jobs. In a matter of weeks, the stock market fell 50 per cent and brought on to the failure of banks and trust companies. Its biggest victims were the Knickerbocker Trust Company, New York’s third largest, and the big brokerage house of Gross & Kleeburg. They had over-invested in copper stocks and when prices collapsed both institutions were caught in a liquidity crisis. But for the intervention of J.P. Morgan, who extracted $35 million from the U.S. government for a rescue fund to help other banks, the entire financial system could have collapsed. Just like what George Bush and the mavens of Wall Street (to say nothing of an innocent public) are going through today!
It is unlikely that Joplin, whose main source of income was royalties from his 1899 hit, Maple Leaf Rag, had much, if any, money in the market. Joplin was perceptive enough to recognize that financial markets pass through distinct cycles which constantly repeat themselves.
He identified four stages of the cycle:
1) Panic and collapse;
2) Confidence that good times will return;
3) Fulfillment of that hope with a return to higher stock prices;
4) And finally, the carefree days of a bull market before another(inevitable) panic.
Inspired by the 1907 crisis, Joplin translated these episodes into music to create one of his most memorable compositions, Wall Street Rag. Its four sections carried titles that evoked the atmosphere of each phase of the financial cycle. He began with a section entitled Panic in Wall Street, Brokers Feeling Melancholy , and followed it with Good Times Coming, a segment chorded in a happier tone. Its successor, Good Times Have Come, is filled with a merry lift in its trademark syncopation, the key component of ragtime music.
The closing section of Wall Street Rag, called Listening to the Strains of Genuine Negro Ragtime, Brokers Forget Their Cares, reflects the complacency of the market once prosperity has returned. The rhythm harkens back to the traditional folk patterns of an earlier time.
Scott Joplin’s perceptive insights into the stock market’s behaviour were remarkable for someone with so little education in financial matters. Ninety years later the Museum of American Financial History would argue that “this rag can be used to introduce a principle that has long been known on Wall Street: panics are generally followed by periods of recovery and stability.”
The 1907 Panic led to demands for reform of the financial system (just like today!) and led to the establishment of a central bank. Congress formed a National Monetary Commission to carry out an investigation. Its report resulted in creation of the Federal Reserve System in 1913 that has functioned as the U.S. central bank ever since.
Joplin went on to write a much-lauded but financially unsuccessful ragtime opera, Treemonisha. He died on April 1, 1917 at the age of 49, a victim of syphilis.
The music of Joplin’s ragtime era languished in obscurity during the rise of the blues, jazz, swing and rock and roll. His composition The Entertainer was used for the theme music in the film The Sting in 1973, leading to a renaissance of interest in ragtime that continues to this day.
Today, many musical authorities regard ragtime, of which Joplin was such a brilliant creator, as “the trunk of the tree” of modern music.
(My book The Ragtime Chronicles, a bio of Scott Joplin and a look at the times in which he lived, will be published in 2009 by McFarland Publishing, Jefferson, NC).