In The Great Crash 1929,
world-renowned economist John Kenneth Galbraith takes us through the events that precipitated the stock market crash of October 1929, identifies the key players and examines the aftermath the speculative bubble’s inevitable end. Galbraith authored dozens of books and hundreds of articles, creating a body of work that had a huge impact on post-war economics and propelled him to political and academic stardom. But 90 years later, The Great Crash 1929 remains surprisingly
relevant. As a millennial and new participant in capital markets I had always viewed the Great Crash and ensuing Depression as the result of factors we’d outgrown – and from which we had undoubtedly learned important lessons. Turns out I was wrong. We don’t need to look any further than the 2008 financial crisis to find the same toxic behaviors and “financial
innovations” that brought the world economy to a screeching halt in 1929. In fact, the Dot Com Bubble of the early 00s and Black Monday in 1987 seem to indicate a trend which, according to Galbraith, shows speculative bubbles are not a matter of if but when. First published in 1955, The Great Crash 1929 highlights several factors warning signs that today sound eerily
familiar. The parallels are abundant, but a few stand out, such as the availability of credit in the lead up to 1929, which encouraged trading on margin and introduced the average investor to the benefits (and pitfalls) of leverage. In 2019, historically low
interest rates – due in part to an unhealthy relationship between government and central bankers – are encouraging similar risk-taking behaviors and magnifying inevitable market corrections. In the 1920s, new
financial innovations, like the trust company and access to information via the ticker, made investing more accessible and popularized the practice. Wall Street gurus were heralded as geniuses and became as popular and wealthy as movie stars. Today, we check our ETF prices on our phones and listen attentively to the
self-interested talking heads on the local business network tell us about the next big thing. Galbraith makes clear the speculative frenzy of the roaring 20s and the precipitous collapse of Wall Street are as much a study in market behavior as in human behavior, and notes: “This is a
world inhabited not by people who have to be persuaded to believe, but by people who want an excuse to believe.” I enjoyed this book very much and appreciated the succinct but detailed style in which it was written, because it made the normally mundane business of economic analysis relatable. Considering investors’ short memory and bearing in mind that our blind spots are as cyclical as markets themselves, it would behoove us all to take an afternoon to learn and re-learn the lessons
of Galbraith in The Great Crash 1929. Recommended Follow Up: A Short History of Financial Euphoria, John K Galbraith John Kenneth Galbraith who was born in 1908, is the Paul M. Warburg Professor of Economics Emeritus at Harvard University and a past president of the American Academy of Arts and Letters. He is the distinguished author of thirty-one books spanning three decades, including The Affluent Society, The Good Society, and The Great Crash. He has been awarded honorary degrees from Harvard, Oxford, the University of Paris, and Moscow University, and in 1997 he was inducted into the Order of Canada and received the Robert F. Kennedy Book Award for Lifetime Achievement. In 2000, at a White House ceremony, he was given the Presidential Medal of Freedom. He lives in Cambridge, Massachusetts.
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Manish Sinha This answer contains spoilers… (view spoiler)[Just having tremendous sovereign debt in itself is not enough for the
doomsday you just described. While the US has tremendous amounts of debt, the number in itself can be quite misleading unless you break it down. Most of the debt is held by US citizens themselves. Additionally, the absolute size of the debt, while scary does not tell the whole story (again). The dangers are when a country is in such a shape that it is not able to pay back its debts or ends up defaulting. It's then when things start going downhill. Germany had a lot of war debt, which it had to
pay to France, for which it did not get anything of substance in return. That payment was a kind of punishment. The US debt is not a punishment imposed by another country but taken upon by the government to fund its programs. (hide spoiler)] Community Reviews· 5,330 ratings · 414 reviews Start your review of The Great Crash, 1929
The strength of this book is its sharp focus. I read Lords of Finance which covers, broadly speaking, the same topic, but that was one of those fashionably long books that shows the reader plenty of
trees, but leaves no sense of the shape of the forest. How different Galbraith's book. The very narrowness and interest in precise detai The strength of this book is its sharp focus. I read
Lords of Finance which covers, broadly speaking, the same topic, but that was one of those fashionably long books that shows the reader plenty of trees, but leaves no sense of the shape of the forest. How different Galbraith's book. The very narrowness and interest in
precise details of Galbraith's book allows the reader to draw their own comparisons with our own times and develop a sense of general patterns and tendencies whether of regulatory bodies to become over time branches of the industries they are meant to regulate or how unequal income distribution makes the whole economy weak and vulnerable. Galbraith starts with the enormous optimism of the 1920s in the USA and runs through the excitement in investment opportunities from Florida land
speculation to leverage investment trusts and loans to support investment by margin purchase in the stock market. The sense that Galbraith describes in those times that growth was inevitable and the that the rollercoaster could only ever climb higher, despite a structure built of insolvent companies, an inadequate customer base and a certain amount of sharp if not technically illegal practice, which seemed for some odd reason curiously familiar. In the droll discussion of the business meeting to do no-business, or of the rites of leading figures making theatrical interventions to support the market there is a sense of the author as anthropologist, all economic activity is above all human interaction and as such about confidence, hopes and fears. If the dream of wealth drove the market upwards, the nightmare fear of insolvency drove it down. Once the crash came, the intensity of trading left investors at the mercy of their fears as the stock market ticker couldn't keep up and had clerks working near continuously as they failed to keep up with recording the trades. Short, precise and very readable and as Galbraith points out in his introduction this is not the kind of book to be sold at airports - so make sure you buy your copy before you go to fly. ...more
Even though he said that he would eventually get to talk about the causes of the great depression I have to admit
that for much of this book I thought we would be just getting a series of increasingly horrible stories about the crash. But this turned out to be an infinitely better book than I anticipated. There are quotable quotes – “If there must be madness something may be said for having it on a heroic scale”. Or “This is the rite of the meeting which is called not to do business but to do no There are quotable quotes – “If there must be madness something may be said for having it on a heroic scale”. Or “This is the rite of the meeting which is called not to do business but to do no business.” And haven’t we all been in one of those. There is the dismantling of myths, particularly the myth of the streets of New York piled high with the crumpled corpses of financiers who had thrown themselves from the still gaping windows of the twentieth floor. In fact, Galbraith has a table of suicides and shows that there was virtually no change in the suicide rate in the US or in New York in particular in this year at all and even that the suicide rate was higher in some of the months before the crash than in October. He speculates
that the myth started as people assumed that investors broken by the crash ought to have been so depressed as to have thrown themselves from windows and “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.” I found this idea fascinating – as I did in learning that of
the few people who did suicide very few actually jumped out of windows. Urban myths like this always amaze me – but we have been raised to believe that these stories – like the Greek Myths – have somehow grown from a kernel of truth. It is nice to have confirmed once again that the human imagination is not so limited. I only know bits and pieces about the Stock Market, but I did find his explanation for why, in times of a crash, bad stocks chaise out of the market good stocks very
interesting. Say you are a prudent investor and have borrowed a thousand dollars to buy stocks. You decide that you are going to be clever and rather than spend all of your thousand on risky stocks, (because that would be just like gambolling) you will instead buy five hundred dollars worth of first rate, blue ribbon stocks and with the other five hundred dollars you will buy high risk stocks which you expect to provide huge returns. But all of a sudden things turn bad. The most likely thing to
happen when things turn bad is that the price of the high risk stock you bought to fall through the floor – so much so that you won’t be able to sell this stock, even though this is precisely the rubbish you would like to off-load. Everyone knows the problem with this stock and will assiduously keep away from it. But now your creditors smell blood in the water and start circling to try to get their money back. You have to sell some shares except you can’t sell your rubbish shares, as these have
suddenly lost all value – so you are forced to sell your blue ribbon stock at any price to repay your loans. This then forces down the value of blue ribbon stock. So, bad stock, in a round about way, forces good stock to lose value. The truly frightening thing about this book is the number of times ‘experts’, such as Hoover and others, are quoted as saying the same sorts of phrases we are a bit sick of hearing today. Things like, “the fundamentals of the economy are all essentially
sound” or “this is just a minor correction from which the economy will bounce back stronger than ever.” There is a belief that the stock market and the economy generally is held together by faith and that if we do not make the correct incantations the entire thing will fall around our ears. Perhaps economics is the last bastion of mysticism. Galbraith repeatedly makes the point that those in the know had already guessed early in the year that the bubble was set to burst. Those in
government and acting as financial regulators had two (much less than optimum) choices to make – they could put a pin in the bubble and burst it immediately, or they could wait around for it to burst of its own accord. The point is that bursting the bubble might well have been the best thing to do, saving the market from further overheating. The problem with doing this, even if your intention was to stop further hardship, is that it will be clear to everyone that you were the person that caused
the bubble to burst. And these bubbles aren’t any old bubble, but bubbles of prosperity are inflated by the hopes and dreams of people who will never forgive you for destroying their lives. So, the temptation is to allow the bubble to burst of its own accord, even if this makes matters a thousand times worse. That way it can seem like an act of God, rather than of the regulating bodies and therefore they might just get re-elected. It is a sobering idea. Galbraith also goes through some of
the ‘causes’ of the crash that are clearly rubbish – such as some sort of ‘divine retribution’ or cycle repaying ten good years with ten bad years. Or my favourite, that the market needed a bit of a rest after working so hard in the twenties that it needed to have the thirties off altogether. It is clear that for capitalism to continue to grow it needs ever expanding markets. But the US at the time was actually doing everything in its power to contract its markets. It had become a creditor
nation to Europe after the first world war, it increased tariffs and thereby denied other countries a means of repaying debt owed to the US in a way that might encourage them to buy more US goods and most interesting, despite a 40 odd per cent increase in productivity of labour, wages barely increased at all. If people can’t buy back what they produce and you can't sell the stuff elsewhere, there’s not much point producing it in the first place. As Marx pointed out nearly a century before
Galbraith, under capitalism, and for the first time in human history, we have crisis due to producing too much, rather than too little. The wholesale destruction of capital due to the depression that followed the crash was necessary not because there was no one who wanted what could have been produced by this capital, but because there was no profit to be made from producing it. And greed was the key determining feature that decided there would be no market – stopping pay increases for workers
through a decade of growth and thereby directing the wealth of society disproportionately towards the rich only meant they would use it to further speculate on the stock market – which only made the situation worse for everyone. As Galbraith says – we do not know enough about the workings of the economy to say when a crash will happen, but as he also says, “Here, at least equally with communism, lies the threat to capitalism. It is what causes men who know that things are going quite wrong to
say that things are fundamentally sound." And you know what, there are echoes today that make this book chilling to read. This is an important book to read now and always.
The 1920s prior to September and October of 1929 were marked The 1920s prior to September and October of 1929 were marked by wild speculation in the stock market. Many people saw
the stock market as a way to get rich. As more people began investing, prices went up attracting more people producing even higher prices. As the decade advanced traders become ever more sophisticated in their methods to enhance their profits, using such things as short sales, margin trading, leverage, investment trusts and other manipulations of the market and a stock. For example, the author describes that the summer of 1929 marked a period of manipulative operations where a pool of traders
would take a position in a stock attracting the interest of other investors which then would also increase the price attracting more attention, and then sell their position reaping a profit. These were all available due to the lack of regulation. This speculation was being encouraged by the advice and views of reputable economic advisors and experts. Anyone casting doubt on the market during this period was deemed a “prophet of doom”. The many people referred to does not include the
many more people who were trying to pay the rent and buy food on their $25 a week paycheck. Only the more well-to-do with some disposable income participated in this speculation. By the late summer of 1929 after a few years of increasing speculation the stock market was poised for a crash. The author here gives the date of September 3 as the end of the great bull market. At that point there was a clear trend downwards. In hindsight it can be seen that the economy had turned down. Until
September and October of 1929 the decline in economic activity had been very modest. Then on October 29, 1929, the bottom fell out. Even as this was happening people continued to say all was well. The author notes that “perhaps never before or since have so many people taken the measure of economic prospects and found them so favorable …”. People of prominence suffered a damage to their reputation and honesty. But this was not the end of the decline for stocks. The market continued
to drop until June of 1932. At which time it is said “No one any longer suggested that business was sound.” The analysis by the author at this point on becomes the real valuable history of this book. His main point is that the stock market crash was not the primary cause of the Great Depression as so many have thought. The market did not crash because it all of a sudden became aware of any weakness in the economy. The author states that the stock market crash is more readily
explained than the Great Depression. Unlike other downturns in the economy the recession following 1929 continued on for 10 years and became increasingly worse. That the economy in 1929 was fundamentally unsound is of importance, but there were five other weaknesses that contributed to the severity of the Great Depression. Anyone thinking of reading this book should
know that it is heavy on the economics. However, the concepts are explained in practical, non-theoretical language that makes it easy to understand. I am planning on reading a book in the near future that takes issue with FDR’s New Deal. I think this book will help me square the criticisms by that author with the laissez-faire capitalist system of which she is a proponent. I read this book over 50 years ago and remember the author’s wry wit. He frequently ends paragraphs with some snappy
sentence that occasionally takes a second reading to catch his meaning. His writing style made it easy to understand what he is reporting and enjoyable to read. This book made a valuable contribution to my understanding of American History.
For a book on economic issues this is entertaining! It has sardonic wit. Mr. Galbraith (Canadian born by the way) explores the before, then the dark
days of October 1929, and the devastating aftermath. What is interesting throughout, is the constant flow of reassurances, from those who should (I suppose) have known better, that the “economy was solid” along with a multitude of similar buoyant phrases. Doomsayers, and there were not many, were dismissed as charlatans. The eternal optimists, even af Mr. Galbraith
(Canadian born by the way) explores the before, then the dark days of October 1929, and the devastating aftermath. What is interesting throughout, is the constant flow of reassurances, from those who should (I suppose) have known better, that the “economy was solid” along with a multitude of similar buoyant phrases. Doomsayers, and there were not many, were dismissed as charlatans. The eternal optimists, even after the crash, were wildly so, intent on perpetuating that good times were
still ahead. Mr. Galbraith also discusses how times became particularly bad by 1932. The stock exchange plunged in October 1929 – and never recovered with stock prices descending further and further – and the entire economy followed. Unemployment rose to 25% and production dropped. We have not, so far, had a similar depression. It has been almost ten years since the economic downslide of 2008. With the current U.S. government emphasizing deregulation, one of the causes of 1929, there are
causes for concern. This book, at less than 200 pages, was almost readable. Some of the passages utilizing economic terminology were beyond me! But overall it provided many insights – more so on human behavior and its capacity to pretend that all is “oh so rosy!”
This has been on my radar for years and years and after watching Ken Burns excellent documentary on the Dust Bowl I felt compelled to dive
in.
While this does describe the Great Depression it is mainly limited to the specific details of the stock market crash in 1929, revealing what led to that economic catastrophe that would be a part of such a wide ranging calamity for our nation and the world. I had always believed that the stock market collapse had been the cause of the depression, but Galbra While this does describe the Great Depression it is mainly limited to the specific details of the stock market crash in 1929, revealing what led to that economic catastrophe that would be a part of such a wide ranging calamity for our nation and the world. I had always believed that the stock market collapse had been the cause of the depression, but Galbraith showed how the symptoms of the diseased bubble bursting was just a part of the
wider problem. First published in 1954, sadly much of what he describes is still true today and much of the conversation about this event from 90 years ago is still relevant today. Government regulation and safety net legislation will prevent much of the harsh results when this happens again, but over speculation and greed will always be around. A sobering, cautionary tale whose lessons are timeless.
I read half of this book before taking it back to the library. It has some good observations, but I found A Nation in Torment by Edward Ellis to be a better book. I suspect the reason why most
talk-up this book and Galbraith in general is that he served in the FDR administration, was educated at Harvard, and takes a Keynsian approach to economics. He'd later serve in the Truman, Kennedy, and Johnson administrations. The book is short and slanted too much toward the bankers, in my mind. Galbraith The book is short and slanted too much toward the bankers, in my mind. Galbraith isn't hard enough on a group of scoundrels that nearly ruined the country. The actions of those men led to the deaths of thousands,
if not hundreds of thousands. None were ever punished for it, and I don't feel Galbraith does enough to discuss how people like National City Bank president Mitchell wasn't given any jail time.
One of those great books by liberals that can't but reaffirm one's belief in the obvious rightness of Marxism (only jokingly nodded to here, but at least respected as a threat). It's genuinely *hilarious* and read in conjunction with any book about 2008 would be bound to forcibly march someone a few steps left. One of those great books by liberals that can't but reaffirm one's belief in the obvious rightness of Marxism (only jokingly nodded to here, but at least respected as a threat). It's genuinely *hilarious* and read in conjunction with any book about 2008 would be bound to forcibly march someone a few steps left. ...more
Dull and hard to read. Not recommended for anyone that isn’t native in English. What a disappointment!
J. K. Galbraith produced his short book on the Great Stock Market Crash of 1929 in late 1954 in an atmosphere that still recalled recent witch hunts over communism (a fact that
will help an early twenty-first century reader with some of the few obscure political references). The current Penguin edition adds the short Foreword to the 1975 edition that urged 'memory' as a necessary corrective to over-enthusiasm within the financial system. One can only guess what this grand old man of liberal econ J. K. Galbraith produced his short book on the Great Stock Market Crash of 1929 in late 1954 in an atmosphere that still recalled
recent witch hunts over communism (a fact that will help an early twenty-first century reader with some of the few obscure political references). The current Penguin edition adds the short Foreword to the 1975 edition that urged 'memory' as a necessary corrective to over-enthusiasm within the financial system. One can only guess what this grand old man of liberal economics would have written in 2008. Galbraith's book is not the last word on the subject of the causes and consequences of 1929 -
how could it be: it was written over 50 years ago within only 25 years of the events in question and largely from contemporary newspaper reports and available official documentation? But it is succinct on the facts, very witty (albeit in that dry professorial way affected by an older generation of intellectuals) but oddly conservative in its overall message. Galbraith does not judge capitalism - he could scarcely do so in the middle of the most conservative phase of the Cold War. He is
also far more sympathetic to the bankers of the late 1920s than we might feel minded to be of our bankers in 2008/2009. His model is of a crisis in the equity markets built on the greedy and deluded behaviour of a surprisingly small number of Americans, exploited and managed by a yet-smaller group in positions of financial power and influence. A stand-offish government allowed a burst bubble to hit a downturn in the wider business cycle and so triggered something that was much worse than it need
have been. Whether he is right or not is not for me to judge. This book is interesting not because of its ability to tell us the 'truth' but because it helps us to understand our own predicament through contrasts as much as similarities. I do not accept the implicit moralism of either Galbraith or today's commentators - people do bad or silly things but it is our responsibility as much as theirs if we have not constructed the political or regulatory framework that will set limits to
political or economic collective hysteria. His defence of bankers has to be seen in the context of his dislike of William Jennings Bryan's country populism with its roots in creationist Christianity and its ascription of all the nation's ills to East Coast elites. He clearly enjoys pointing out that Bryan was complicit in the promotion of inflated land values in Florida that, in retrospect, should have indicated that American popular interest in a 'fast buck' was getting out of hand. The
Florida land speculation of the mid-twenties brought us the original Ponzi scheme. Perhaps a million or so Americans out of a population many, many times as large were speculators on the stock market - either with enough money to burn or enough credit to burn other people's money. In some ways, the consequent economic crisis is the story of the loss of an upper middle class surplus available to purchases the good and services that would have kept the rest of America working. And this
is where we see the similarities and differences from today. Our crisis also starts in the US but it does not derive from the upper middle classes getting over-excited by speculation in industrial growth. It starts with bankers getting over-excited by what can be done in packaging or securitising massive debt both for wealthier investors and themselves. The collusion between bankers and investors in 'sure thing' economics is what marks out the latest crisis as similar to the collusion between
trust promoters and investors in the earlier case. The first crisis involved a disconnect from the fundamentals of American industrial strength and the international trading economy. Our current crisis derives from a lack of due diligence on the returns that could reasonably be expected from a whole range of instruments. The ultimate recipients and intermediate sponsors understood less about these instruments than Wall Street brokers understood their own investment trusts in 1928/1929. Similarly, the 1929 crisis was a domestic national crisis which spread around the world because of other instabilities in the trading system. Our crisis is a global one arising to the degree that financial activity is integrated into Wall Street and the City of London. The UK, for example, is being hit as hard and probably harder than the US not because of a collapse of trade (yet) but because its entire polity is based on the privileging of a financial sector that is now going into as sharp a
decline as any inter-war steelmaker. There are coincidences in the tale - some amusing. Goldman Sachs is the broker behind two of the most egregiously speculative (and ultimately failed) investment trusts - Shenandoah Corporation and Blue Ridge. Its humiliation was to turn it into one of the most conservative broking houses by the time Galbraith was putting pen to paper. The rest is history. Lehmann Corporation, meanwhile, gets rare praise as a rarely well managed investment trust
appearing in 1929 - another neat little historical irony. Just as conventional property-based retailing today is the first line of collapse (evidenced by the closure of the British Woolworths) so, in a neat mirroring of history, the belief that industrial expansion would go on forever was based, in part, on vigorous programmes of retail consolidation and expansion that created the Montgomery Ward and Woolworths' chains in the US. Investors could see new stores with lots of stock in most
major towns by the late 1920s and wanted a slice of the action. The similarities do not lie in the causes or incidents of the crisis - although investment trusts built on sand perhaps have their parallel in today's hedge funds and private equity groups - as in the attitudes of those caught up in it. Galbraith has a great deal of fun at the expense of the 'boosters' of the stock market which seemed to have included just about everyone - including the almost comically wrong Harvard Economic
Society. Galbraith was Paul M. Warburg Emeritus Professor of Economics at Harvard but this does not stop him from detailing proof positive that a group of experts engaged in group-think are more than likely to persist in their errors long after the rest of us are staring the facts in the face. The Harvard Economic Society should be remembered whenever any school of public intellectuals and experts purports to tell us what is right and proper in any area of public policy. Those who were
seduced by the neo-conservatives before the recent round of incompetent foreign policies, take note. On the other hand, Galbraith points out that the specialist financial Press saw through the house of cards and warned investors of the risks in 1929. Unfortunately, professional investors on Wall Street who would read this material were making serious money out of the speculation, while the people providing cash on margin were not interested in research and analysis - only in profiting
from the 'sure thing'. This is in marked contrast to the role of the media in the current crisis - see http://asithappens.tppr.info/journal/... Sadly, the financial press, pace the important reporting of Robert Peston of the BBC and the critiques of a few individuals like Larry Elliott of The Guardian in London, signally
failed to advise the public of the trajectory of bank lending and of the 'toxicity' within the financial system. The media in 1929 at least tried to educate the public and policymakers ... the twenty-first century media merely parroted the news releases and briefings of the market players. The very differences between the two crises show, paradoxically, what is wrong with the system as a whole. The common denominators are weak laissez-faire governments, the fact that the wealthiest are not
necessarily the brightest and the existence of a cadre of insiders within the financial system who are expert at relieving the relatively rich of their funds in mutually profitable (in the short to medium term) adventures. If the super-rich and their middle class hangers-on are relieved of their funds by cleverer and more devious professionals, then why should the rest of us worry. But, of course, the nature of capitalism in the 1920s and at the beginning of the Twenty-First Century means that
nothing is so simple or so morally satisfying. The pleasure of watching a Darwinian struggle amongst the top 5% is mitigated by the fact that the capitalist system operates on the assumption that the wealthiest re-invest their funds in productive capacity. If the wealthy are cutting back because their assets have halved in value and continue to fall or they have lost everything to some over-clever fraudster, then innovative businesses or businesses employing thousands do not get the cash
they need. The ordinary Joe's money also, aggregated, fails to go back into the system to sustain the wider economy. The whole bloody thing starts to wind down and even go into reverse. Banks and the wealthy have now lost a great deal of money and want to make the rest safe and claw it back. Galbraith will not criticise the system because he cannot. But there are fundamental questions to ask about how it is that innovation and employment are allowed to depend so much on hysterical
decision-making by a tiny minority of the population in a collusive herd relationship with an even smaller group of 'technical experts'. More, how can they be allowed to continue to set the agenda after they have almost brought the system to its knees? It may be time for Americans to ask a few questions about whether free markets and the American system of capitalism created by the likes of J P Morgan, centred on Wall Street, actually works for America. They won't, of course. Even Prof.
Galbraith seemed unable to ask such questions.
First published in the U.S.A. 1954. The Great Crash 1929 is clearly explained. Fascinating. The question that I keep asking throughout is, how could this be allowed t The Great Crash 1929 is clearly explained. Fascinating. The question that I keep asking throughout is, how could this be allowed to happen? There are sound explanations in the last chapter of the cause of the 1929 crash and the consequent Great Depression which lasted for a
decade up to World War II, and also in the brilliant last paragraph why it can't be prevented from happening again in the future. Chapter X Cause and Consequence. The brilliant last paragraph shows how regardless of subsequent safeguards put in place after a financial collapse won't prevent it happening in future. I would have thought that the economy is supposed to be important in a capitalist system. "As noted, all this might logically be expected. It will not come to pass. This is not because the instinct for self-preservation in Wall Street is poorly developed. On the contrary, it is probably normal and may be above. But
now, as throughout history, financial capacity and political perspicacity are inversely correlated. Long-run salvation by men of business has never been highly regarded if it means disturbance of orderly life and convenience in the present. So inaction will be advocated in the present even though it means deep trouble in the future. Here, at least equally with communism, lies the threat to capitalism. It is what causes men who know that things are going quite wrong to say that things are
fundamentally sound."
Saw this at Foyle's in London and thought it would be a nice continuation of Lefevre's "Reminiscences of a Stock Operator" and Krugman's "Return of Depression Economics", which I was in the process of
finishing. Galbraith's account of the Great Crash is gripping, and reads more like the work of a slightly-removed journalist than an economic historian. Discussions about discount rates and public pronouncements are interwoven with samples of other news of the day-- Lindbergh's flight across the Atl Galbraith's account of the Great Crash is gripping, and reads more like the work of a slightly-removed journalist than an economic historian. Discussions about discount rates and public pronouncements are interwoven with samples of other news of the day-- Lindbergh's flight across the Atlantic, the skylarking of stock clerks in Central Park, etc. The effect is to place the reader inside the world of 1929 just as the rug was
being pulled out from under him. No one who has been paying attention to the events of the past three years can fail to see disturbing similarities between the market crash of 2008 and 1929. Why, therefore, was the same dynamic allowed to play out? Galbraith explains from 1954 with an eerie prescience: "The market will not go on a speculative rampage without some rationalization. But during any future boom some newly rediscovered virtuosity of the free enterprise system will be
cited. It will be pointed out that people are justified in paying the present prices-- indeed, almost any price-- to have an equity position in the system. Among the first to accept these rationalizations will be some of those responsible for invoking the controls. They will say firmly that controls are not needed. The newspapers, some of them, will agree and speak harshly of those who think action might be in order. They will be called men of little faith." (p.190) The sheer succession of
parallels between 1929 and 2008 are mind-numbing: * a dangerous amount of financial leverage propping up asset prices * A pyramid effect in which each actor along the economic chain benefited by cooperating in the fraudulent scheme * Endless 'preventive incantations' from public officials and bankers that the worse was over, when the worse was still to come * The unearthing of shocking frauds like Bernie Madoff and Allen Stanford-- the modern descendants of Richard
Whitney and Charles E. Mitchell * A barely-concealed hostility for Washington by Wall Street, the latter taking the former to task for its apparent idiocy in not being able to follow the subtle machinations of the high finance * The destructive knee-jerk tendency of politicians to rush to exactly the wrong solution: espousing the immediate need for a balanced budget, despite the fact that taking this to its logical conclusion would prevent government from doing the very things
necessary to get the economy moving again (ie. cutting taxes and increasing spending) * The merciless chain-reaction of margin calls and stop-loss orders which, together, greatly accelerated the downward plunging of stock prices * The role of academics in providing a veneer of legitimacy to various ill-conceived schemes (one immediately calls Long-Term Capital Management to mind) * The seduction of traditional watchdogs, mentioned in Galbraith's words above. While today we look
to credit ratings agencies like Moody's, Fitch's, and Standard and Poor, in 1929, the public looked to the banks, which abandoned their role as financial gatekeepers and worked around the clock to convince ordinary Americans why they should place all of their money in the stock market * The haughty dismissal by the financial press-- especially The Wall Street Journal-- of anyone who would challenge its rosy financial outlook ("Why is it that any ignoramus can talk about Wall Street?", it opined in response to market naysayers in pre-crash 1929) One is justified in asking how Alan Greenspan's Federal Reserve Bank and George W. Bush's White House could proceed along so destructive a path with so rich history before them. Galbraith offers at least this hope for the future, however: the unlikelihood of another asset bubble in the immediate future: "...a speculative outbreak has a greater or less immunizing effect. The ensuing collapse automatically destroys the very mood speculation requires. It follows that an outbreak of speculation provides a reasonable assurance that another outbreak will not immediately occur. With time and the dimming of memory, the immunity wears off. A recurrence becomes possible." One must wonder, however, whether this pronouncement remains valid in an age of compressed historical timelines in which the lessons of one generation are only partially-learned before being inadequately passed down to the next. "The Great Crash 1929" is an immensely engaging book which will cause the reader to shake his head in disbelief as passage after passage finds resonance with the events of recent years. ...more
A few pages of Galbraith's writing reveals the man as a genius. In my fairly limited experience, the only (modern native English) writer with a comparable voice for non-fiction prose was Bertrand Russell. The book is a reply to
the canonical history of the crash, and its relation to the succeeding Depression. Galbraith shows in a handsome variety of ways, how that history contradicts many easily observed facts. A better history is set out in parallel. Most satisfying is the way in which Galbraith The book is a reply to the canonical history of the crash, and its relation to the succeeding Depression. Galbraith shows in a handsome variety of ways, how that history contradicts many easily observed facts. A better history is set out in parallel. Most satisfying is the way in which Galbraith assures the reader that the stupidity of policymakers of the twenties won't be repeated, since too much was learned from what happened. He insists that, in
the face of high unemployment, they will not demand a freeze in spending, call for budget cuts, or advocate for a balanced budget; he claims that there will not be near-unanimous insistence on measures that will make matters worse. Of course, had he lived to see 2008-2011, he would have found that today's fiscal hawks are the professional charlatans of the twenties come back to life. May heaven help us.
Very readable, easy to understand, it flows quite nicely. I'd say it's a good introduction and overall it offered a great general view on the period/phenomenon.
I first read John Kenneth Galbraith's The Great Crash of 1929 in college (or was it high school- so many years ago) and rereading it now, it retains its crisp narration and wittiness. It is not a long book, reflecting that Galbraith concisely covers the build-up to the crash and its aftermath. I first read John Kenneth Galbraith's The Great Crash of 1929 in college (or was it high school- so many years ago) and rereading it now, it retains its crisp narration and wittiness. It is not a long book, reflecting that Galbraith concisely covers the build-up to the crash and its aftermath. ...more
A must read for anyone investing in Financial Markets. But we do love bubbles, don’t we?
I don't know any economics, but I enjoyed this book a lot (and I think understood most of it) and want to learn macroeconomics now. The writing is great, I was laughing every couple pages. I don't know any economics, but I enjoyed this book a lot (and I think understood most of it) and want to learn macroeconomics now. The writing is great, I was laughing every couple pages. ...more
Masterpiece! Will never forget the following idea related to whether the federal reserve should step on the brakes to curtail excessive speculation. I am paraphrasing here - when
faced with the choice of immediate or eventual death, policy makers always choose the latter because the problem with immediate death, besides being immediate, is identification of the executioner. So much of this is relevant today. Out of fear of a taper tantrum the fed is still doing QE in Feb of 2022 with arguably bo I am paraphrasing here - when faced with the choice of immediate or eventual death, policy makers always choose the latter because the problem with immediate death, besides being immediate, is identification of the executioner. So much of this is relevant today. Out of fear of a taper tantrum the fed is still doing QE in Feb of 2022 with arguably both its inflation and employment mandates already met.
Distinct and profound. Ample political and economic background, therefore I have no objections. If you are reading this book for academic work, just go straight to the chapter “Causes and Consequences”.
"Al Smith was notified, and his sorrow over the death of his friend was not diminished by the
knowledge that the news might start a serious run on their bank." Galbraith's a good writer, and a witty one: this was a good read. There's a lot of schadenfreude to be had, as one Wall Street malefactor after another gets his comeuppance. And a lot of information, as well. Of course my aim in reading this was to see what similarities there were between the '29 crash and our very own. Turns out there wer Galbraith's a good writer, and a witty one: this was a good read. There's a lot of schadenfreude to be had, as one Wall Street malefactor after another gets his comeuppance. And a lot of information, as well. Of course my aim in reading this was to see what similarities there were between the '29 crash and our very own. Turns out there were hella similarities.
What Galbraith gets across, without ever really saying it explicitly, is that speculative bubbles are, in the end, more a result of people's attitudes and beliefs than of factors we would consider "economic" (interest rates and the like). As people benefit from the rising prices of things they own, they fall prey to the fantasy that such rises will continue into eternity, that the rules of the past no longer apply, that a new epoch of capitalism has dawned in which prosperity is available to
anyone, and so they buy more and bid up the price further. This enthusiasm is infectious, as other people want just as much to make money, and so speculation begets speculation, which begets still-higher price increases, which begets further speculation. What is annoying about this is the one irrational step that allows all the others to proceed, which seems so obvious after the fact, but which I remember being so pervasive and even compelling in the late 90s and the mid-naughties: "there's no
limit to how high the market can go: computer technology has given us 'the new economy,' and the old rules don't apply"; "housing prices will continue to go up forever, because people will always need houses, and there's only so much land, so housing is the one surefire investment." The one problem I had with this book is that throughout the detailed, day-by-day narrative of the stock market in 1929, I kept wanting to know about why the depression it triggered was so severe -- after all,
that's why we remember the '29 crash so frequently, and with such trepedation. Galbraith waits until the very end to address this issue, and does so with a surprising degree of humility. The answers he gives are fairly satisfying. But I would have liked more than this short, short account. Also, he really doesn't give any attention to the effect of the various New Deal programs, aside from the FDIC and unemployment insurance. He writes as if the governing FDR actually followed through on his
campaign promises to cut spending and balance the budget, which is a bit disingenuous. The implication is that (as per the usual Keynesian critique), the deficit spending of '33-'37 was simply insufficient to make up for the collapse in demand, but it would be nice if Galbraith met the question head-on. (He also spends awhile addressing the utterly uninteresting question of whether a similar bust is likely in the near future). A good book. Four stars.
When I was in college at Harvard many years ago, Galbraith, who was one of our professors, was a revered elder statesman, famous to most of us a popularizer of economics with books such as The
Affluent Society and The New Industrial State. He was also seen as a bit of a fossil, someone from the old generation who had been superseded by the newer breed of mathematical economists, like Ken Arrow, also then a Harvard professor who had just won the Nobel Prize. Now a lot of the mathematical stuff se When I was in college at Harvard many years ago, Galbraith, who was one of our professors, was a revered elder statesman, famous to most of us a
popularizer of economics with books such as The Affluent Society and The New Industrial State. He was also seen as a bit of a fossil, someone from the old generation who had been superseded by the newer breed of mathematical economists, like Ken Arrow, also then a Harvard professor who had just won the Nobel Prize. Now a lot of the mathematical stuff seems like pseudoscience, so maybe it's time to give Galbraith a fresh reading. This book is a pretty standard history of the events and causes
of the Great Depression. There are a lot of details that I didn't know, but not much of the bigger picture stuff that was new to me. To be fair to Galbraith, that may be because much of his version of this history has become canonical. There was, of course, a huge speculative bubble, which was made bigger and longer by the then unregulated structure of the American financial system. There were the huge amounts of securities bought on margin with insufficient collateral to support margin calls in
a crash, and there were unregulated banks who aided and abetted the speculation and who didn't have deposit insurance or the assets to back their speculations when nervous depositors decided that it was time to get their money out. And of course there was the do nothing Coolidge administration that let the speculation go on too long and the do nothing Hoover administration that sat idly by as the problems compounded and the country sank deeper and deeper into depression. Galbraith is optimistic
that a risk of repetition of the Great Depression is reduced substantially by the post crash regulations and safety valves that are now built into the system, though I wonder if he would still see those things as being effective today. And of course there is now general acceptance of massive spending as a way to cushion economic shocks. But Galbraith also points out that we will always have speculative bubbles and that there is always danger when the bubbles burst. The edition of this book that
I read came on the heels of the 1987 market crash so Galbraith was able to comment on how the lessons of the Great Depression played out in 1987. I would have loved to see what he would have said about 2008 and about the blows that COVID is currently delivering to the economy.
I was going to give this a 4 star review until I got to the final chapter where Galbraith enumerates his
ideas on the cause of the Great Crash and subsequent Great Depression. Galbraith: "... the economy was fundamentally unsound. Many things were wrong, but five weaknesses seem to have had an especially intimate bearing on the ensuing disaster. They are: Galbraith: "... the economy was fundamentally unsound. Many things were wrong, but five weaknesses seem to have had an especially intimate bearing on the ensuing disaster. They are: The 1st edition was printed in 1954, and it has been in print ever since. Given that our current stock market is now the highest ever (as I write this in early 2017), yet fundamentals are
terrible, and getting worse, it seems that we are way overdue for a correction. Batten down the hatches folks.
An account of the stock market crash of 1929, with some very interesting observations about the relationships between finance, government and the media. He also compares that crash with the one in 1987, and the parallels he draws
could very easily be applied to the current financial crisis. Galbraith goes into detail on the financial structure of the investment trusts, the mechanics of financial bubbles and how those bubbles are fated to burst. Although he gets into some technical financial speak Galbraith goes into detail on the financial structure of the investment trusts, the mechanics of financial bubbles and how those bubbles are fated to burst. Although he gets into some technical financial speak that is hard to follow, his explanations of financial phenomena help one understand the mechanics of the market pretty well. Throughout the story, he takes quotes from many different sources at the time to give us an understanding of how leaders in finance, business and government attempt to calm people in difficult times and give the appearance that they are solving problems even though they are powerless to affect the course of events. I have seen Galbraith quoted by many people on both sides of the current debate about government spending and it's impact on stimulating the economy. This book provides a much more balanced view than many would suggest. Galbraith specifically notes that this controversy exists admits that it is impossible to solve the issue completely, and looks further at observations that can be proved. ...more
J.K. Galbraith writes with much gusto, cynicism and humor. You don't expect those kinds of things from a world-class economist, the more so in a book almost 60 years old! But, there you have it. It's a joy
to read and each page, filled with indictment against the stupidity, lust and greed of those riding the wave in '28 and '29, flows easily and naturally. Mind you, this is probably not a book for those who do not have any understanding of the financial principles involved, but it may well be wor Mind you, this is probably not a book for those who do not have any understanding of the financial principles involved, but it may well be worth a try. That said, having read quite a few books on financial, economic and business disasters, I find that it hasn't aged all too well. I
missed the sense of foreboding and climaxing that modern authors have been able to communicate - Galbraith's book is much more calm than a huge crash like this deserves. Also, I found it strange and a bit disappointing that he didn't try too much to link the financial bubble and crash to the real economy - both in the background of the story as well as the aftermath. He does have a chapter, but it's not really good and left me with quite a few questions. Still --recommended.
With dry wit and intelligence, this book explains the bubble and burst that caused the stock market to crash in 1929. Pools were formed to buy stocks, then other companies were created to invest in those
pools. Stocks were bought on margin and when the calls were made, many people couldn't meet their debt. Reminder of the 2008 crash when mortgages were sold and resold so that all the companies that invested in them were hit financially when the defaults began. And a reminder of the tulip bubble With dry wit and intelligence, this book explains the bubble and burst that caused the stock market to crash in 1929. Pools were formed to buy stocks, then
other companies were created to invest in those pools. Stocks were bought on margin and when the calls were made, many people couldn't meet their debt. Reminder of the 2008 crash when mortgages were sold and resold so that all the companies that invested in them were hit financially when the defaults began. And a reminder of the tulip bubble and crash in Holland in another century. Galbraith taught at Harvard, and in reading the book, it's clear that he is familiar with the mechanics that
caused the crash, but I got a bit lost sometimes as he moved from name to name and concept to concept. So, I may read the book again. If the book leaned "left" as some other reviewers have stated, I was not aware of that. Galbraith did not postulate solutions to the crash or any reforms. He simply stated what he believed were the causes- mainly greed and how easy it is to get caught up in it.
Galbraith's The Great Crash 1929 is an easy read and gives historical context to the current financial mess in the U.S. It was first published in 1955 and never manages to get out of print because another financial bubble bursts and people like me look for explanations. Turns out people today are like people from yesterday - they want to make easy money and when banks and the government encourage spendthrift behaviour and reckless speculation, people start to believe that they deserve to be rich Galbraith's The Great Crash 1929 is an easy read and gives historical context to the current financial mess in the U.S. It was first published in 1955 and never manages to get out of print because another financial bubble bursts and people like me look for explanations. Turns out people today are like people from yesterday - they want to make easy money and when banks and the government encourage spendthrift behaviour and reckless speculation, people start to believe that they deserve to be rich and maybe even God wants them to be rich. Property bubbles, speculation, lack of regulation, irrational exuberance and a belief that free people are entitled to the freest market possible - it all sounds very familiar. ...more
Galbraith is a Keynesian economist writing in the 1950s when they dominated economics departments in the US. His work on the 1929 crash is more qualitative and conceptual and historical
before economists became neoliberal apologists covering their horrible economic ideas with fancy math to look legit (my opinionated take). Keynesian were of course also defenders of the order but at least capitalism in the Fordist era had some restraints and cushions from the brutality people in charge then unli Galbraith is a Keynesian economist writing in the 1950s when they dominated economics departments in the US. His work on the 1929 crash is
more qualitative and conceptual and historical before economists became neoliberal apologists covering their horrible economic ideas with fancy math to look legit (my opinionated take). Keynesian were of course also defenders of the order but at least capitalism in the Fordist era had some restraints and cushions from the brutality people in charge then unlike under the current overclass. Anyway, Gailbraith explains rather well the 1929 Wall street crash rather well and in down to earth terms
that an ordinary person can understand. It is a short book but gives a flavor of animal spirits that lead to bubbles and crashes endemic to Wall Street.
Prof. Galbraith's analysis of the 1929 Crash is thoroughly applicable to the 2008 Crash, at least to my own analysis of the current event. This is truly a gem of institutional economic history. My one quibble is that at the end of the book, where he tends more to prescription, that he places more emphasis on the "speculative mood" than the very real and problematic structures of leverage which make such a "mood" economically reasonable and profitable until the crash. Prof. Galbraith's analysis of the 1929 Crash is thoroughly applicable to the 2008 Crash, at least to my own analysis of the current event. This is truly a gem of institutional economic history. My one quibble is that at the end of the book, where he tends more to prescription, that he places more emphasis on the "speculative mood" than the very real and problematic structures of leverage which make such a "mood" economically reasonable and profitable until the crash. ...more
One of the few books that Galbraith failed to make money on. But it's well worth reading because as I write this today on the 10th of December 2007, it looks like this housing bubble is going to be But it's well worth
reading because as I write this today on the 10th of December 2007, it looks like this housing bubble is going to be
What a cool funny informative book. This book was written back in the 1950's and, while it's been revised over the years, this info is totally relevant and the they way the author has written this is quirky, funny, and not dry at all. What a cool funny informative book. This book was written back in the 1950's and, while it's been revised over the years, this info is totally relevant and the they way the author has written this is quirky, funny, and not dry at all. ...more John Kenneth Galbraith was a Canadian-American economist. He was a Keynesian and an institutionalist, a leading proponent of 20th-century American liberalism and democratic
socialism. His books on economic topics were bestsellers in the 1950s and 1960s. A prolific author, he produced four dozen books & over a 1000 articles on many subjects. Among his most famous works was his economics trilogy: Am John Kenneth Galbraith was a Canadian-American economist. He was a Keynesian and an institutionalist, a leading proponent of 20th-century American liberalism and democratic socialism. His books on economic topics
were bestsellers in the 1950s and 1960s. A prolific author, he produced four dozen books & over a 1000 articles on many subjects. Among his most famous works was his economics trilogy: American Capitalism (1952), The Affluent Society (1958) & The New Industrial State (1967). He taught at Harvard University for many years. He was active in politics, serving in the administrations of Franklin Roosevelt, Harry Truman, John Kennedy, and Lyndon Johnson. He served as US
Ambassador to India under John F. Kennedy. He received the Presidential Medal of Freedom twice: one in 1946 from President Truman, and another in 2000 from President Clinton. He was also awarded the Order of Canada in 1997, and in 2001, the Padma Vibhushan, India's second highest civilian award, for strengthening ties between India and the USA. Related ArticlesHere at Goodreads World Headquarters, we are—rather predictably—in the habit of giving books as gifts. To family. To friends.... “The sense of responsibility in the financial community for the community as a whole is not small. It is nearly nil.” — 24 likes
“In many ways the effect of the crash on embezzlement was more significant than on suicide. To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months, or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.) At any
given time there exists an inventory of undiscovered embezzlement in — or more precisely not in — the country’s businesses and banks. This inventory — it should perhaps be called the bezzle — amounts at any moment to many millions of dollars. It also varies in size with the business cycle. In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under these circumstances the rate of embezzlement grows, the
rate of discovery falls off, and the bezzle increases rapidly. In depression all this is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks. … Just as the boom accelerated the rate of growth, so the crash enormously advanced the rate of discovery. Within a few days, something close to a universal
trust turned into something akin to universal suspicion. Audits were ordered. Strained or preoccupied behavior was noticed. Most important, the collapse in stock values made irredeemable the position of the employee who had embezzled to play the market. He now confessed.” Welcome back. Just a moment while we sign you in to your Goodreads account. What did John Kenneth Galbraith argue?Galbraith's main argument is that as society becomes relatively more affluent, private business must create consumer demand through advertising, and while this generates artificial affluence through the production of commercial goods and services, the public sector becomes neglected.
How many pages is the Great Crash 1929?Product information. How many pages is the great crash?The great crash, 1929. (Book). Why did the 1929 crash happen?The main cause of the Wall Street crash of 1929 was the long period of speculation that preceded it, during which millions of people invested their savings or borrowed money to buy stocks, pushing prices to unsustainable levels.
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The great crash 1929 john kenneth galbraith
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