The Great Crash 1929

by John Kenneth Galbraith

Of Galbraith's classic examination of the 1929 financial collapse, the Atlantic Monthly said:"Economic writings are seldom notable for their entertainment value, but this book is. Galbraith's prose has grace and wit, and he distills a good deal of sardonic fun from the whopping errors of the nation's oracles and the wondrous antics of the financial community." Now, with the stock market riding historic highs, the celebrated economist returns with new insights on the legacy of our past and the consequences of blind optimism and power plays within the financial community.

Genres: Economics, History, Nonfiction, Finance, Business, American History, Politics

206 pages, Paperback

First published January 1, 1954

About the author

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.

Reviews

[Jan-Maat]

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.

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.

[KSS · Rating 3 out of 5]

أعتقد أنه كتاب يهم المتخصصين أكثر من القراء الغير متخصصين .. يركز الكتاب على أسباب الانهيار الاقتصادى والكساد الكبير الذى ساد أوروبا وأمريكا فى العام 1929 ولكن ��ن وجهة نظر وتحليل خبراء سوق البورصة الأمريكية أو ما يعرف بالوول ستريت .. وعليه فأنا كقارئ يضع دائماً التوقعات العظيمة ويعول على الكتاب من مجرد الاسم .. لم يستهوينى الكتاب ووجدت أكثر فقراته مكرر وغير مهمة لموضوع الكتاب وحشو بالمعلومات والبيانات والأرقام.
نعود إلى موضوع المراجعة هو الكتاب الذى يؤرخ لحالة ركود اقتصادى وكساد لم يسبق له مثيل فى تاريخ الاقتصاد الحديث وذلك فى العام 1929 وهو العام الذى لم يعد الاقتصاد فيما بعده كسابقه فتغيرت المفاهيم الاقتصادية وانتهت حقبة الاقتصاد الليبرالى الذى اعتمد على يد العرض والطلب الخفية التى كانت تضبط السوق من وجهة نظر خبراء الاقتصاد الليبرالى لينتقل السوق فيما بعدها إلى اقتصاد تدخلت فيه يد الدولة لترعى كبار السن وغير القادرين على الكسب وتنتقل من أبو الاقتصاد الليبرالى أدم سميث إلى مرحلة أقل حدة وهى المرحلة الكينزية نسبة لجون كينز خبير الاقتصاد والذى دعى لتدخل الدولة لرعاية البسطاء والمحتاجين وإقامة المشروعات الكبرى وتوفير فرص العمل.
أهم أسباب انهيار الاقتصاد العالمى فى 1929:
مضاربات البورصة : بعيداً عن شرعية هذه المضاربات أو المراهنات فأحد أهم أسباب انهيار الاقتصاد العالمى فى 1929 هى تلك المراهنات / المضاربات الملعونة التى لا تعنى بحال من الأحوال زيادة الإنتاج أو زيادة قيمة المنتج فهى مجموعة من المقامرين الذين يبيعون ويشترون أسهم أو سندات على الورق ثم ما تلبث أن تعلو وتنخفض قيمة تلك الأسهم ليس بسبب زيادة أهمية المنتج أو زيادة قيمته لدى المستهلكين وبذلك يربح المشترى أموال أكثر من دون تعب أو مجهود يذكر كل ما فى الأمر أن يتوفر لدى ذلك المشترى مبلغ من المال كرأس مال يقوم باستخدامه فى عمليات الشراء والبيع سابقة الذكر.
رفع قيمة الفائدة: أحد أهم أسباب انهيار أى سوق تجارى هو عجز المقترضين عن تأدية واجباتهم وسداد ديونهم وعليه فزيادة قيمة الفائدة على القروض وبذلك تتكدس الأموال فى البنوك فى ظل عجز المقترضين عن الوفاء بالتزاماتهم فتكون النتيجة مزيداً من الركود والكساد فى الأسواق وتوقف حتمى لحركة البيع والشراء.
أسباب كلها اجتمعت فى معظم حالات انهيار الاقتصاد وليس عنا ببعيد أزمة الرهن العقارى التى أدت إلى انهيار اقتصادى عالمى فى ظل النظام الرأسمالى الذى حول العالم إلى قرية صغيرة وجعل حركة التجارة أكثر سلاسة وانسيابية فأصبحت المشاكل والأزمات أيضاً أكثر سلاسة وانسيابية فى الانتقال من دولة لأخرى مما أدى لانهيار عالمى فى 2008
وربنا يستر علينا من انهيار قريب إذا استمرت الأحوال الاقتصادية فى العالم على نفس الشاكلة

[Trevor · Rating 4 out of 5]

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 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.

[CoachJim · Rating 4 out of 5]

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)

This book can be seen as an example of cause and effect. The first half of the book deals with the causes of the stock market crash and the second half deals with the effects.

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.

-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.
(Page 182)

This book was first published in 1955. Galbraith himself, in a new introduction written in 1997, says that its enduring popularity is not because of its excellence, but because of the continuing reoccurrence of economic recessions. This leads people to want to read about the Granddaddy of all recessions—The Great Depression. This begs the question as to whether we might be susceptible to another such depression. Galbraith notes that measures taken by FDR in the New Deal, such as Social Security and Banking Insurance, have addressed some of the consequences of the Great Depression. However, if we look at the weaknesses that he says contributed to the Great Depression, there are some things that might keep you awake at night. For instance, income inequality is certainly, I believe, worse now than it was in the 1920s. Furthermore the recession of 2008 revealed major faults in our banking system. More recently we watched Trump try to implement economic sanctions for personal, political reasons, rather than sound economic reasons.

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.

[Mikey B. · Rating 4 out of 5]

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 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!”

[Lyn · Rating 3 out of 5]

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 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.

[Mohamed Elashri · Rating 2 out of 5]

الكتاب يلف ويدور ويكرر نفسه ولا يعطي تحليل دقيق لأحداث ما قبل الانهيار واثناءه ولا يمل من تكرار ما يقوله قي كل الفصول
يمكن حشر كل المئتي صفحة في خمسون وستكون أكثر من كافية ليقول كل ما يريده.
يمكن القول بأنك ستخرج بعد قراءته مع معرفة دقيقة بما كان يحد�� قبل وأثناء الانهيار
ولكنك لن تعرف لماذا حدث أبداً وما الذي يريد الكاتب ايصاله لك

[Greg Strandberg · Rating 3 out of 5]

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 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.

[Nathan Fisher · Rating 5 out of 5]

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.

[Pinja Eriksson · Rating 1 out of 5]

Dull and hard to read. Not recommended for anyone that isn’t native in English. What a disappointment!

[Tim Pendry · Rating 4 out of 5]

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.

[Greg · Rating 5 out of 5]

First published in the U.S.A. 1954.
I found a 1984 Pelican paperback edition in Vinnies for $2. as well as a Donald Fagen CD The Nightfly in mint condition for $2.
A favourite song of mine is Black Friday on Steely Dan's Katy Lied album. The first and last lines of Black Friday are 'When Black Friday comes', 'I'll guess I'll change my name.' Released in 1975 by the way.

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.
"Many things were wrong, but five weaknesses seem to have had an especially intimate bearing on the ensuing disaster. They are:
(1) The bad distribution of income.
(2) The bad corporate structure.
(3) The bad banking structure.
(4) The dubious state of the foreign balance.
(5) The poor state of economic intelligence."

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."

[Ahmed Sallam · Rating 3 out of 5]

كتاب مفيد للمتخصص وغير المتخصص
بالرغم ان فيه تفاصيل كتيرة محتاجة قارئ على دراية أكتر بالموضوع، إلا إن في المجمل الكتاب مبسط بشكل كبير وكافي لوصف الفترة والمرحلة اللي بيتكلم عنها حتى لقارئ بعيد عن الموضوع.

الغريب واللي مقدرتش افهمه اني طول الكتاب منتظر شرح لاسباب الكساد والإنهيار الإقتصادي اللي أسهب ف وصف تفاصيله، ولكن ده محصلش، يعني أنا عرفت كل حاجة تقريبا تتعلق بالفترة دي وما بعدها، والشخصيات المؤثرة ف البورصة وقتها، وتفاصيل الأسهم والشركات بالتفصيل والبنوك والتكتلات الإستثمارية وتدخل الحكومة لحل الأزمة، وغيرها من تفاصيل تانية كتير يمكن أنا مش مهتم أعرفها، ولكن ف النهاية الكاتب مقدمش تفسير واضح ومنطقي للكساد واكتفى بذكر ان كل الأسباب اللي ممكن تتقال كانت منطبقة على فترات تانية كتير ولكن محصلش كارثة بالحجم والشكل ده.

في المجمل كتاب مفيد وجذاب وشوقني اقرأ أكتر ف الموضوع وأدور على تفاصيله بشكل أكبر.

[Sagar Jethani · Rating 5 out of 5]

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 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.

[Richard Thompson · Rating 4 out of 5]

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.

[Jeff · Rating 4 out of 5]

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 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.

[Dorotea · Rating 3 out of 5]

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.
But if you are really wondering what caused the Great Depression, I would highly recommend Eichengreen's article"The Origins and Nature of the Great Slump Revisited". It's not as entertaining as this book, and quite frankly I greatly dislike Eichengreen's writing style, but that is the real deal.

[John Gurney · Rating 4 out of 5]

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.

[Tamim · Rating 4 out of 5]

A must read for anyone investing in Financial Markets.
While bubbles are euphoric, they are unhealthy.

But we do love bubbles, don’t we?

[Gleb Posobin · Rating 5 out of 5]

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.

[Holly Lê · Rating 2 out of 5]

- Cuốn sách "Ác mộng đại khủng hoảng 1929" được tác giả trình bày theo phong cách Sử kiện, nghĩa là Giờ này Phút ấy, Ngày tháng năm đó đã xảy ra chuyện abc xyz nọ, đi kèm với các tác động tương hỗ của sự kiện đó.

Mà theo mình, cách trình bày này khiến việc tiếp cận nội dung sách rất mệt mỏi. Tác giả quá lan man dông dài.

Trong khi đó, với từng ấy nội dung, nếu được diễn dịch bằng chuỗi thời gian + điểm tin + hình ảnh & số liệu minh họa, đặc biệt là với hình thức mind map thì chắc sẽ bớt vật vã đi nhiều.

- Nếu phải dùng hình ảnh gì để ví von với Đại khủng hoảng 1929 thì mình chọn Sóng Thần.
Như cái cách làm nên sóng thần: nước được kéo lùi và rút tối đa về lòng đại dương, hình thành 1 cột nước khổng lồ với áp lực cực đại, cuộc khủng hoảng 1929 năm ấy cũng có những cơ chế tương tự.
Đó là các điều kiện kinh tế thuận lợi cho đầu tư tài chính, các phát biểu lạc quan thái quá, vấn nạn đầu cơ, sự gian manh từ các quỹ tín thác.v.v.
Không có gì sánh được sức phá của sóng thần, khi đại khủng hoảng ập đến, mọi thứ tan hoang, và mình chỉ có thể nói: "Đáng đời!".

- Quyển này nói chi tiết về khủng hoảng 1929 và chỉ có thế, đặc biệt thích hợp với độc giả Mỹ.

- Hai số phận và Chùm nho phẫn nộ là 2 trong số nhiều tác phẩm văn học có liên đới trực tiếp tới đại khủng hoảng 1929.

[Arup · Rating 5 out of 5]

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 both its inflation and employment mandates already met.

[Agata Baczewska · Rating 4 out of 5]

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”.

[Will · Rating 4 out of 5]

"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 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.

[gigi_booksworld · Rating 2 out of 5]

Δεν έχω ιδέα από οικονομικά και χρηματιστήριο, κατάλαβα όμως κάποια πράγματα, ειχε δυστυχώς υπερβολικά πολλά ονόματα και κάπου έχανα το νόημα. Ήθελα περισσότερο να διαβάσω για τις συνέπειες των ανθρώπων γενικά, όχι μόνο όσοι είχαν μετοχές.

[Mark Hartzer · Rating 5 out of 5]

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:
1.) The bad distribution of income." Uh oh, that sounds familiar.
2.) The bad corporate structure. The fact was that American enterprise in the twenties had opened its hospitable arms to an exceptional number of promoters, grafters,swindlers, imposters, and frauds." Uh oh. Another red flag.
3.) The bad banking structure." Glass-Steagall has been repealed, and we now have 'Too Big to Fail'. Uh oh.
4.) The dubious state of foreign balance." Galbraith was referring to the US being the largest creditor nation and then imposing tariffs restricting trade. We now face the opposite situation. We are the largest debtor nation and once again are talking about tariffs and restrictions on trade. &
5.) The poor state of economic intelligence." Can you say 'Kardashian'? Actually, that is unfair. Millions of Americans know all too well the precarious state of the economy. Witness the attempted election of a real populist, instead we get another fraud.

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.

[Mark · Rating 4 out of 5]

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 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.

[Themistocles · Rating 3 out of 5]

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 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.

[Alana Cash · Rating 5 out of 5]

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.

[elisabeth · Rating 4 out of 5]

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.