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206 pages, Paperback
First published January 1, 1954
To regard the people of any time as particularly obtuse seems vaguely improper, and it also establishes a precedent which members of this generation might regret.
An angry god may have endowed capitalism with inherent contradictions. But at least as an afterthought he was kind enough to make social reform surprisingly consistent with improved operation of the system.
John Kenneth Galbraith in The Great Crash 1929 (Page 192)
-The bad distribution of income. The rich cannot spend their money buying more bread and butter. Investments depended on the discretionary income of the well-to-do and this discretionary income was more susceptible to the collapse of the stock market.
-The bad corporate structure. American enterprises were being controlled by promoters, grafters, swindlers and impostors. The most important weakness was the new structure of holding companies that controlled large segments of the utility and railroad business.
-The bad banking structure. The reputation of banks suffered after the crash. Loans that the banks had made looked foolish given the loss of value in the borrowers collateral. Bankers like others had yielded to the optimistic and immoral mood of the times. There was a weakness in the large number of independent banks. If one failed it gave warning that the deposits elsewhere might also be in danger.
-The dubious state of the foreign balance. It seems that the United States had a surplus of exports over imports, in part due to the high tariffs at the time. This made it difficult for foreign countries to have the money to pay back the loans they owed the United States. This meant that they had to either reduce their imports or increase their exports to the United States or default on their loans. President Hoover and Congress made this more difficult by sharply increasing the tariff.
-The poor state of economic intelligence. Here I’ll quote the author:
To regard the people of any time as particularly obtuse seems vaguely improper, and it also establishes a precedent which members of this generation might regret. Yet it seems certain that the economists and those who offered economic counsel in the late twenties and early thirties were almost uniquely perverse. In the months and years following the stock market crash, the burden of reputable economic advice was invariably on the side of measures that would make things worse.