The Great Crash 1929

We are told over and over that history repeats itself.
Apparently, are so called leaders haven't learned very much.
This book is a real window into what is coming.
The parallels are eerily simular to what is happening today

Gailbraith's book is an insightful and witty history of the Great Crash of 1929. Though written years ago it seems as if it could have been written yestereday and there are many parallels of course with the economic "meltdown" that is going on around us. I can't really fault the book as it is about the Great Crash, but I wish there were more about the long depression that followed and the path to recovery.

The narrative is hard to follow. The analysis does not age well. Galbraith follows the "new channel analysis" approach, where market swings are due to some news event or meeting or public announcement. It is like, "today the market went up on the banker's announcement of support," then later, "the market went down in spite of the banker's later announcement of support." Basically, his analysis of market dynamics does not hold up to our current understanding. I would pass this by.

The _book_ by Galbraith is fine, but the Kindle version is almost unreadable. If you popped the book onto a copy machine then spilled coffee all over it you'd get a better copy than this. It's FILLED with typos that were not in the printed version. Would it have been so difficult Houghton Mifflin Mariner to have proofread this thing? I can sometimes figure out what the garbled number or word is supposed to be, but not all the time.

I was very disapointed by this book. After just finishing the 400+ pages book "Bull! from Maggie Mahar" which is an absolute ecxellent book about market cycles (although the more recent boom of 1982-1999), "The great Crash" was really hard to read. It totally shows its age (it was written more than 50 years ago). The language is hard to understand and some words seem weird in todays time.

But its not just the language which makes this book not enjoyable. It is not written with much entertainment value, and the book I mentioned earlier shows clearly that it is quite possible to write an very entertaining book about the stock market. It also is very superficial, it doesn't go into much detail at all. It doesn't tell any examples of real people or anything which would make the book more readable.

It lists names and companies without doing a good part of explaning why it lists them. Sometimes I was thinking to myself "Please get to your point."

That book was probably a good read in 1955 while people still could relate to most of the names he lists. But now (2004) there must be better books out there about the Crash of 1929.

I give it two stars and not one (you can't give zero stars) because it has some interesting facts. Overall I would NOT recommend this book. Try another one about this subject.

This book does a poor job of explaining what caused the depression. It gives a sarcastic narrative of some of the bad practices leading up until 1929, and the sarcasm is amusing. After the sarcasm, in about february of 1930, it stops and draws unjustified and unsupported conclusions. The narrative comes mainly from reading the New York newspapers. A description of what happened in rural areas and at small banks is not included. You will not understand what a run on a bank is, and how small banks were leveraged and destroyed by the depression. You will hear nothing about the propensity of the federal reserve to keep interest rates too high from 1929 - 1933, and will not know how much they should have been lowered, or if lowering them would have been ineffective. You will not learn how to draw your own economic conclusions by reading this book. Because the book is 100% text, a large opportunity is missed to explain some of the economic history through pictures.
I think the book is popular because it was written by a Harvard Professor. I have read several books on the depression and this one, because of the hype, was the greatest disappointment.

Well-written chronicle of the 1929 Wall Street crash; and the key figures and investments that contributed to the market's collapse. JKG's laconic humor makes the book a delightful read.

A negative is that the Kindle version is very poorly copyedited. The electronic version is rife with misspellings, missing words, and other copy errors. Buy the print copy.

Excelent product, quick delivery, very good price...although I must admit that the printing was somewhat less than I expected, it was totaly according to the low price.
I would totaly buy from them again or recomend it to a friend.

J K Galbraith’s book appeared in the mid-1950s. After 2008 it attracted new readers who may well have discovered a posthumous “told you so” from the author.

His analysis of the cause of the collapse of the New York Stock Exchange is succinctly told. 1927 and 1928 had born witness to speculative fever that became frenzied in the summer of 1929. No other ending was possible that the spectacular losses and ruination of investors that eventually came in the Fall. He treats only very briefly of the Great Depression that ensued, but lists the fundamental weaknesses in the real economy exposed by events on Wall St.

Many have written about the Crash since, usually at greater length, dense with statistics and mostly not sharing his views.

But there are two good reasons for still recommending this. Firstly, he sets out a chronicle of the affair, upon which every explanation of its nature and causes must be built. The principal practices of stockbrokers and bankers that underlay the disaster - and were subsequently banned - are explained. There could not be a better introduction to the matter.

Secondly, it is simply a wonderful piece of writing. Ideas are expressed logically with clarity. He describes dishonesty and larceny, but this is not about evil deeds or evildoers. It is ultimately about human folly taking wing and flying off into the blue yonder of the impossible. He writes with the mind and in the manner of Mark Twain.

No praise too high.

Economist John Kenneth Galbraith had a distinguished career at Harvard. He was active in Democratic politics. He was Ambassador to India. He wrote many books, including two novels. He hobnobbed with the Kennedys, and he skied with William F. Buckley. He had a long, full life. However, he will be remembered mainly as a satirist of 20th century capitalism and America's business culture. He was the Veblen of his era. Could there be higher praise?

His keen eye for cant and self-serving ideology is on virtuoso display in "The Great Crash," a retelling of the stock market boom and crash of 1928-30. The book is fabulously written: Galbraith was as good at penning artful sketches of fraud and mania as he was at explaining the technicalities of investment trusts, margin buying, and leverage. No one comes off well, especially not the icons of business and economics who swore that stock values were in line with "fundamentals" even while prices were soaring into orbit in an orgy of debt-fueled speculation.

Anyone who lived through the internet boom of the 1990s or the housing bubble of the 2000s will immediately see the eerie parallels with the 1920s. "The Great Crash" was written in 1954, but it remains more relevant than ever in 2012. It's a model of popular economic history. Six stars.

John Kenneth Galbraith, a famous 20th century economist serving in the administrations of Franklin D. Roosevelt, Harry S. Truman, John F. Kennedy, and Lyndon B. Johnson, studied "The Great Crash, 1929, and published his book in 1955. It has been continuously in print ever since.

The financial crisis 2007/2008 is one of many reasons to read Galbraith's book, edition 1997, with a new introduction by the author, to identify differences between and communalities of these two crises; it could also induce to compare the findings in this book with those of Liaquat Ahamed in his book "Lords of Finance - 1929, the great depression, and the bankers who broke the world, edition 2010".

The following excerpts from Galbraith's book could motivate to read this very interesting book:

"One thing in the twenties should have been visible even to Coolidge [30th U.S. President 1923-1929]: the great Florida real estate boom 1925. It contained all of the elements of the classic speculative bubble. (Page 3)

Hoover was elected [1928] in a landslide [31st U.S. President 1929-1933]. (16)
Over the whole year of 1928 the Times industrial average gained 86 points, or from 245 to 331. (17)
But there was still another and even more significant index of what was happening in the market. That was the phenomenal increase in trading on margin. (18)
In principle, New York banks could borrow money from the Federal Reserve Bank for 5 per cent and re-lend it in the call market for 12. This was, possibly, the most profitable arbitrage operation of all time.
Never had there been a better time to get rich, and people knew it. (22)
As Walter Bagehot once observed: `All people are most credulous when they are most happy.' Footnote: Lombard Street, 1922 ed. P. 151. [Bagehot wrote his excellent book in 1873 and it is still today considered the bible of central banking - see Timothy Geithner's outstanding book "Stress Test", edition 2014, Page 118) (23)

No one, wise or unwise, knew or now knows when depressions are due or overdue.
One of the oldest puzzles of politics is who is to regulate the regulators. But an equally baffling problem, which has never received the attention it deserves, is who is to make wise those who are required to have wisdom. (24)

The Federal Reserve Board in those times was a body of startling incompetence. (27)

By early 1929, loans from these non-banking sources were approximately equal to those from the banks. (31)

The Federal Reserve authorities took for granted that they had no influence whatever over this supply of funds. ... In fact, the Federal Reserve was helpless only because it wanted to be. (32)

In the early months of 1929, there was worry that the country might running out of common stocks. (42)
It was a golden age for professors. (55)

That autumn [1929] Professor Irving Fisher of Yale made his immortal estimate: `Stock prices have reached what looks like a permanently high plateau.' Irving Fisher was the most original of American economists. (70)

The Harvard Economic Society remained persuaded that no serious depression was in prospect. In November it said firmly that `a severe depression like that of 1920-21 is outside the range of probability. We are not facing protracted liquidation.' This view the Society reiterated until it was liquidated. (71)
However, there were exceptions. One was Paul M. Warburg of the International Acceptance Bank, whose predictions must be accorded the same prominence as the forecasts of Irving Fisher. They were remarkably prescient. In March of 1929, he called for a stronger Federal Reserve policy and argued that if the present orgy of `unrestrained speculation' were not brought promptly to a halt there would ultimately be a disastrous collapse. It would `bring about a general depression involving the entire country.' (72)

On September 3, by common consent, the great bull market of the nineteen-twenties came to an end.
On September 4, the tone of the market was still good, and then on September 5 came a break.
The immediate cause of the break was clear - and interesting. Speaking before his Annual National Business Conference on September 5, Roger Babson observed, `Sooner or later a crash is coming, and it may be terrific.'(84)

The end had come, but it was not yet in sight. (87)

From the foregoing it follows that the crash did not come - as some have suggested - because the market suddenly became aware that a serious depression was in the offing. A depression, serious or otherwise, could not be foreseen when the market fell. (90)

In England on September 20, 1929, the enterprises of Clarence Hatry suddenly collapsed. (91)

On October 15, 1929, Professor Irving Fisher made his historic announcement about the permanently high plateau and added, `I expect to see the stock market a good deal higher than it is today within a few months.' Indeed, the only disturbing thing, in these October days, was the fairly downward drift in the market. (94)

Monday, October 21, was a very poor day. There was no way of telling what was happening. (96)
Professor Fisher said that the decline had represented only a `shaking out of the lunatic fringe.' (97)

Thursday, October 24, is the first of the days which history - such as it is on the subject - identifies with the panic of 1929. (98) The panic did not last all day. It was a phenomenon of the morning hours. (99)

Representatives of thirty-five of the largest wire houses assembled at the offices of Hornblower and Weeks and told the press on departing that the market was `fundamentally sound' and `technically in better condition that is has been in months.' (104)

On Monday, October 28, 1929, the real disaster began. (107)
The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. (108)

On the evening of the 28th no one any longer could feel "secure in the knowledge that the most powerful banks stood ready to prevent a recurrence' of panic.
Tuesday, October 29, was the most devastating day in the history of the New York stock market, and it may have been the most devastating day in the history of markets. Selling began as soon as the market opened and in huge volume. (111)

On the evening of the 29th, Dr. Julius Klein, Assistant Secretary of Commerce, friend of President Hoover, and the senior apostle of the official economic view, took to the radio to remind the country that President Hoover had said that the `fundamental business of the country' was sound. (118)

In these three days, November 11, 12, and 13, the Times industrials lost another 50 points. Of all the days of the crash, these without doubt were the dreariest.
Clerks in downtown hotels were said to be asking guests whether they wished the room for sleeping or jumping. Two men jumped hand-in-hand from a high window in the Ritz. (126)

In mid-November 1929, at long, long last, the market stopped falling - at least, for a while. The low was on Wednesday, November 13. On that day the Times industrials closed at 224 down from 452, or by almost exactly one half since September 3. (135)

On July 8, 1932, they were 58. (141)

Things were far worse with the investment trusts.
The fears of November 1929 that the investment trusts might go to nothing had been largely realized.
No one any longer suggested that business was sound. (142)

November 15, 1930: `We are now near the end of the declining phase of the depression.'
A year later, on October 31, 1931: `Stabilization at [present] depression levels is clearly possible.' Even these last forecasts were wildly optimistic. Somewhat later, its reputation for infallibility rather dimmed, the Harvard Economic Society was dissolved. (145)
Professor Irving Fisher tried hard to explain why he had been wrong. (146)

With the advent of the New Deal the sins of Wall Street became the sins of the political enemy. What was bad for Wall Street was bad for the Republican Party. (155)

After the Great Crash came the Great Depression which lasted, with varying severity, for ten years.
In 1933, Gross National Product was nearly a third less than in 1929. Not until 1937 did the physical volume of production recover to the levels of 1929, and then it promptly slipped back again.
Until 1941 the dollar value of production remained below 1929.
In 1933 nearly thirteen million were out of work, or about one in every four in the labor force.
In 1938 one person in five was still out of work.
On the whole, the great stock market crash can be much more readily explained than the depression that followed it. (168)

The causes of the Great Depression are still far from certain.
When people are least sure they are often most dogmatic. (171)

There seems little question that in 1929, modifying a famous cliché, the economy was fundamentally unsound. This is a circumstance of first-rate importance. 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. In 1929 the rich were indubitably rich.
2) The bad corporate structure. The most important corporate weakness was inherent in the vast
new structure of holding companies and investment trusts.
3) The bad banking structure.
However, although the bankers were not unusually foolish in 1929, the banking structure was inherently
weak.
4) The dubious state of the foreign balance. This is a familiar story. During the First World War, the United
States became a creditor on international account.
5) The poor state of economic intelligence. Mass employment in particular had altered the rules.
Events had played a very bad trick on people, but almost no one tried to think out the problem anew.
The balanced budget was not the only strait jacket on policy. There was also the bogey of "going off"
the gold standard and, most surprisingly, of risking inflation. The fear of inflation reinforced the demand
for the balanced budget. (177ff)

The avoidance of depression and the prevention of unemployment have become for the politician the most critical of all questions of public policy. Action to break up a boom must always be weighed against the chance that it will cause unemployment at a politically inopportune moment. (190)

My conclusion which I want to share with you: policy makers, bankers, investors, entrepreneurs, business managers, employees, workers, students etc. should make themselves familiar with the phenomena, intricacies and effects of financial crises.

In 1954, John Galbraith wrote the book on 1929. There was enough distance from the crash that he was able to avoid the short-term certainty that he warned of in the book (174). This work is concise, and clear, and objective. All other histories of the time that follow are indebted to this work.

He chronicles, in detail but not too distractingly, the history of the build up and the crash and a little of the aftermath. It is clear enough for a lay reader to follow but not too elementary for an experienced reader of financial prose to too easily gloss over. For that experienced reader, it is important to note that his prose is lively and readable and feels like an organic outgrowth of the author's mind -- an ordered thought-process.

This is not to say that the book is perfect. There are some elements that date the text, some humorously. For example, in reference to Goldman Sachs and its role in the crash and the aftermath, "It became known for its business in the most austere of securities" (147).

Yet there are echos that resonate down the ages. Especially haunting is the coverage of all the responsible people who would assure the American public that the "fundamentals of the economy are sound" (177). These public figures sound like they are mixing uncertainty with wishful thinking, as much as former candidate McCain did in the 2008 election.

In reflection of that, Galbraith warns of the same run-up of equity bubbles that can happen again (and again, and again) missing the lessons of 1929. Unfortunately, we didn't learn those lessons.

From a different angle, I recommend my book Profit from 2017 Market Crash, which has 240 pages (6*9).
It explains why we may have a market crash in 2017 and how to prepare for it. It also includes simple techniques (no subscription and no tool to buy) to detect market plunges that have worked in the last two major market plunges. Our simple chart tells us to exit and reenter only two times from 2000 to 2010 and only one false signal that tells us to exit but return shortly. Recently it told us to return in 09/2009 and stay in the market most of the time.

The author noted that his book has remained in print because the boom and bust movement of the economy continues to be a fact of life. The twenties in America were a good time. Unfortunately many people were in pursuit of effortless riches. For example, Charles Ponzi was interested in Florida land.

In 1927, the Federal Reserve, yielding to the request of England, France, and Germany, adopted an easy monetary policy, cutting the rediscount rate from 4 to 3.5 percent. 1928 saw the development of a boom. The amount of speculation in the stock market was rising very fast.

It is now 1929 and a roaring boom is in progress and it has to end. In 1929 it was permitted to list an investment trust on the stock exchange. Investment trusts had reputations of omniscience. Contrarily, Paul M. Warburg spoke of an orgy of unrestrained speculation leading ultimately to a disastrous collapse bringing about a general depression involving the entire country.

On September 3, 1929 the bull market ended. Confidence did not disintegrate immediately. (Ivar Krueger's silence masked the great fraud he committed.) Beginning in October 24th there was panic. The panic on the exchange did not last that entire day because the financiers pooled their resources to support the market. October 28th was another terrible day and losses were severe. October 29th was the most devastating day. In many instances there were selling orders and no buyers.

The bankers had failed to stem the losses. They lost authority and became fair game for the barbs of congressional committees. Investment trusts were a source of weakness. The stock of leveraged trusts became nearly worthless. The slump extended to commodity markets.

Galbraith quotes Bagehot, "Every crisis reveals the excessive speculations of many houses which no one before suspected." In the end, fortunes and reputations were blighted. The government opted for more rigor in the matter of stock trading, enacting the Securities Act of 1933 and the Securities Exchange Act of 1934. The Federal Reserve Board was authorized to fix margin requirements.

The Great Crash was followed by the Great Depression. It lasted for ten years. In 1929 there was unsoundness including highly unequal distribution of income, a bad corporate structure of holding companies and trusts, a poor banking structure, a dubious state of foreign balance, and a poor state of economic intelligence.

Weaknesses in the economy identified in the thirties have been remedied by governmental measures such as unemployment insurance, federal deposit insurance, farm subsidies, social security and public assistance.

This history is simultaneously substantial and graceful. The author was a witty writer. His prose has charm and sparkle creating a lively experience for readers

Given the recent turmoil in world financial markets, it is hardly surprising that, from the rubble, an army of economic pundits has arisen, replete with historical parallels and a cookbook of remedies for the mess. Being of a cynical disposition, I favor those pundits who reinforce my own certainties that perfidy, greed, speculation, lack of regulatory oversight and failed government policies are at fault for the current debacle. I found validation in "The Great Crash, 1929".

John Kenneth Galbraith, is a "giant" in the field. In this book, he identified five salient weaknesses of the 1920s economy that appear to me to be strangely evocative of the current financial crises. These are: 1). Gross inequalities in income distribution, with a tiny fraction of the
population owning the vast majority of the wealth. The level of CEO compensation nicely illustrates this point (it's nearly 350 times that of the average "prole"), 2). Flawed corporate structure, one in which, "American enterprise in the twenties had opened its hospitable arms to an exceptional number of promoters, grafters, swindlers, impostors and frauds". The analogy to the present is perhaps to hedge fund managers, short-sellers, leveraged traders, purveyors of derivatives and "sub-prime" mortgages and real estate speculators, some of whom appear to share these characteristics, 3). Bad banking structure, enabled, in part, by Congress rescinding Depression-era legislation separating commercial from investment banks and by allowing unregulated investment activity on a large scale. Other components extend to failure of the SEC to regulate mortgage instruments, "naked" short selling, government-mandated requirements for the use of "fair value accounting". I'm sure there are others., 4). "Dubious" state of foreign balance. Now (in a reverse of the situation in the 1920s), the US is the chief borrower nation, with the preponderance of debt held by foreign governments (chiefly Asian and increasingly Middle Eastern) and, 5). The poor state of economic intelligence. In the present crisis, I take "intelligence" to mean "smarts", rather than access to accurate and timely data. It might also be taken to mean "responsibility". An example of lack of "smarts" might be E. Stan O'Neal of Merrill Lynch who blandly asserted his lack of understanding of "derivatives" as an excuse for his firm's demise, while allowing their purchase and sale. Dick Fuld of Lehman is a nice illustration of lack of responsibility. His activities destroyed a perfectly goodfirm, yet, he still serves as Lehman CEO (note: the current Lehman is a 14 year-old company, spun off from American Express, so don't wax too nostalgic about the demise of a "150 year-old firm").

Yes, it seems obvious that regulation will be required as, left to their own devices, the "masters of the universe" will continue to refine and evolve their penchant for making lots of money by devising new financial instruments, which will lie outside the latest regulatory umbrella. Yes, people will live beyond their means, if given the option and easy credit is an enabler. This all seems to be part of human nature. Yes, it's a mess. However, it is unlikely to be "a national disaster for the United States". It's just business. However, you never know...

Truly Galbraith at his best. A great read, and simple to understand. Yes, for some time there have been 'Bubbles' and 'Crashes' - start with the Tulip Bubble and the South Sea Bubble of the early 1700s. The method and motive in each case seems to be the same. Those that came through the implosion of the entire financial system of 2008 will nod in agreement with Galbraith's pervasive arguments.

In micro-scopic detail, Galbraith outlines the slow, determined collapse of the Market system as it existed in the late 1920s. The failure of the Federal Reserve (as is pointed out likewise by an adversary in Milton Friedman in his "Monetary History of the United States). The determined efforts of Wall Street practioners to leverage assets and margins to unsustainable levels. The constant whisper of the narrater to hold the past up to the practices of the present, as he mirrors the past collapse in light of present understanding.

Hind Sight is 20/20 vision it is said. But it is also said that 'he that does not learn the lessons of history is doomed to repeat them." And still after the total collapse of our faith in the nations banking system after 2008 - or certainly should be - we turn around almost immediately to try an prop up the inadequate failures of the Federal Reserve that have plagued the history of 'Crashes' in this country since the Civil War, if not as far back as Andrew Jackson. The warning voice of the informed observer like Galbraith, brushed aside again, and again in the boom to bust market cycle we have ham-strung ourselves with since Hamilton first issued his report on Manufacture and Report on Banking for Washington in his first term as President.

Galbraith at his best. And still no one is minding the store.

Tim K Fitzgerald

John Kenneth Galbraith (1908-2006) was a Canadian-American economist, who taught at Harvard University, served as U.S. Ambassador to India (1961-1963), and wrote a number of bestselling books, such as American Capitalism,The Affluent Society (A Mentor Book),The New Industrial State (James Madison Library in American Politics),Economics & The Public Purpose,The Age of Uncertainty (which was a TV series on the BBC), etc.

The Great Crash of 1929 and the later Great Depression has been reviewed by many economists; nevertheless, Galbraith's observations are often of interest: e.g., "We do not know why a great speculative orgy occurred in 1928 and 1929. The long accepted explanation ... is obviously nonsense. On numerous occasions before and since credit has been easy and there has been no speculation whatsoever." (Pg. 150) He refers to the Federal Reserve Board of 1929 as "a body of startling incompetence." (Pg. 24) He refers to the alleged "suicide wave" that followed the Crash as "part of the legend of 1929." (Pg. 113)

One will have to turn elsewhere for a detailed economic analysis of the Great Crash. But this early book of Galbraith's provides some interesting social background, to supplement other reading.

One clear advantage of reading a book such as this, so many years after publication, is that time has separated truth from theory. If I had read this thin volume ten years ago, I am sure I would have approached investing and the advice from the investment community with greater caution.

The similarities between the events described in this book and the recent crash is 2008 are astounding. I found myself rereading passages to check dates, names, and investment instruments. Some of the companies listed by Mr. Galbraith who were deeply involved in the most improper investment schemes of the twenties survived and evolved to perpetrate a new type of fraud on yet another generation.

Mr. Galbraith carefully lays out the building blocks that paved the way of financial destruction that exploded in 1929. The lack of government oversight, the "irrational exuberance," the willingness of the public to throw their money at hollow investments is documented with precision. This documentation has to stir one's imagination as the similarities of our current financial market continue to bump up against past misdeeds.

Although 1929 has characterized the crash, it was only the starting point of a decline that would continue its steady slide over the next several years. Then, the depression set in and the country's economic woes persisted into the next decade as battered investors chose caution rather than speculation.

The Great Crash 1929 would be an interesting read just in terms of exploring a turning point in American history. But, given our present economic slump and future uncertainties, this book might well be like looking into a crystal ball. I highly recommend it.

She Came from Heaven

The Great Crash 1929
By John Kenneth Galbraith
The writing is surprisingly charming and readable; one senses that the author would be a gracious person. His 200-page description of the Wall Street crash is clear and as interesting as a story about financial history can be; much of it is necessarily a simple chronicle of the rise and fall of the various big stocks in that period. He describes the principal actors of the time--recognizable names like Mellon and Astor and JP Morgan--and goes into the human motives, mainly greed, that led to the crash.
Not until the final chapters does he begin to sum up the reasons for the Depression, claiming that the crash by itself would not have been enough to cause it. Had we had sound banking policies, more honest (i.e., less greedy) investors and better laws, a more equitable income distribution, and a better balance of trade, it could have been avoided.
The book is instructive and easy to read--although occasionally tedious--even for one not versed in finance and economics. One interesting aspect of the crash is the way the market would plummet one day, causing widespread panic, and then go back up the next day, forestalling the conclusion that all was lost, even though, in fact, it was. There were many dives and recoveries during the crash; even the worst day saw a later recovery. This seemed to lead to a state of suspended disbelief; even though some people committed suicide or otherwise acknowledged ruin, others kept investing. We learn that prominent bankers bought their own stock and manipulated the market in order to bolster public confidence, then covertly got out of the market. The most common theme--and the one on which the author ends the book--is that people seem to be unable to learn, long-term, by past mistakes, and that we continue to hear that the "fundamentals of the economy are strong." Americans seem to believe the illusion that everyone can get rich, and that a boom, in spite of all past experience to the contrary, will be permanent.

There was a time when leading Democrats were well-versed in literature like this. They should be able to articulate the need for government oversight of the Stock Market as though they have actually studied economics and history. Instead, they make their points in the form of sound bites. They regurgitate arguments that have been fed to them.

I began to read this book as a skeptic. I knew that Galbraith was a poster child for the Left. No, that's not fair. He was a thoughtful progressive thinker of the New Deal Era. His theories and thoughts informed every administration from Eisenhower to Carter. And since Reagan, no President has been able to avoid Galbraith's impact.

I am persuaded that government intervention is based on a sound economic model. But modern liberals seem only to know ideology and spin. I was surprised to find a fair treatment of Herbert Hoover and most people caught up in the euphoria and panic of the late 1920s. Modern Democrats still demonize Hoover.

Galbraith allows for the cyclical nature of the Stock Market. Modern liberals love a crisis that gives them cover for more government intrusions into our lives.

Galbraith sets his sights squarely where they belong - on the truly evil people and institutions that, in fact, caused the Panic and Depression.

We may disagree as to the amount of government oversight required in our economy. We have have different levels of tolerance for predictable cyclical variations in our economy.

But this classic work by John Kenneth Galbraith needs to be read, and discussed, by both Left and Right alike, respecting one another, and appreciating his monumental understanding of the subject.

This book was written 50 years ago, focuses on an event from 30 years before that, but still manages to read like the headlines. Change some names and dates, and you would be left with minor discrepancies from the news and views of today. It explains the irrational exuberance of the boom, what brings on the crash and everything that happens after.

It can't be stressed enough how this lesson from the past is so similar to the struggles of the day, and this applies to both what has happened and what may. One example....The analysis of why we are better able to avoid Depression 'now' points to the lack of income disparity. This was something that was true in 1955, when the book was written, but income disparity has never looked more like 1929 than it does today. We bail out the same banks that have gambled with our future repeatedly, while quality jobs at GM are replaced by Walmart, while the last bastions of manufacturing in the USA are raided.

I can't help but think that history is repeating itself, and there could be a long way to the end of this new chapter.

I keep this book around to read occasionally. My edition has a printing history going back to 1954. The stock market crash is a point in history that I've tried to understand. mmm...the bankers kept pumping money into the system...until they couldn't do it anymore. Who were these people and how did this happen? Well, today I picked it up again.

According to Galbraith, the US economy was already in a Depression by October 1929 as the stock market reacts to the economy and never the reverse. It became fashionable for working people to get into the stock market. Before the crash, there were some signs of economic downturn, but no one expected the disaster it became. It was a bubble that had to be pricked. This sounds so familiar now.

In John Kenneth Galbraith's able hands, the story is revealed. Galbraith was, along with other talents, an excellent writer and storyteller. Not a huge book full of dry details but a story brought to life. Recommended reading.

In the introduction to this book Mr. Galbraith states: "But it was plain that an increasing number of persons were coming to the conclusion - the conclusion that is the common denominator of all speculative episodes - that they were predestined by luck, an unbeatable system, divine favor, access to inside information or exceptional financial acumen to become rich without work."
And then a few pages later he says: "I am a conservative and thus disposed to find antidotes for the suicidal tendencies of the economic system ... The causes of the crash were all in the speculative orgy that preceded it. These speculative episodes have occurred at intervals throughout history, and the length of the interval is perhaps roughly related to the time that it takes for men to forget what happened before. The useful task of the historian is to keep the memory green ... The years following the stock market crash produced a notable outpouring of books, articles, congressional documents, and reports, all exposing Wall Street for what it was ... Moreover, implicit in this hue and cry was the notion that somewhere on Wall Street - possibly at number 23 and possibly on an obscure corridor in one of the high buildings - there was a deus ex machina who somehow engineered the boom and bust. No one was responsible for the Wall Street crash. No one engineered the speculation that preceded it. Both were the product of the free choice and decision of hundreds of thousands of individuals. The latter were not led to the slaughter. They were impelled to it by the seminal lunacy which has always seized people who are seized in turn with the notion that they can become very rich. There were many Wall Streeters who helped to foster this insanity, and some of them will appear among the heroes of these pages. There was none who caused it."

Well, first of all, just as I find the statement made by Mr. Galbraith that he is a conservative a rather large stretch or maybe oversimplification of the term conservative, I have similar doubts about the overall disclaimer in the above paragraphs.

I will accept the defense that no "one" man was responsible for the stock market crash, which was then followed by a series of catastrophic events culminating in the Great Depression. But at this point in my investigation I will not accept that this economic tragedy was more or less a random act of (human) nature somewhat comparable to a stamped of a herd of ignorant buffalo.

The second point would be in relation to the notion of an organized conspiracy.
I feel that this is more or less a "straw man" argument, an argument that is set up for the sole purpose of being simple enough to be destroyed, understood and accepted by even a grade school mentality. I am surprised to hear such a sophisticated author and economist in Mr. Galbraith's category use such an obvious misinterpretation of the historical facts. I feel very confident that he knew better in his heart - even at the time that this book was written.

I also realize that the "class" that one associates himself with or was born into will also have an undue bias and prejudice. For example in reading Winston Churchill one is made clearly aware that Winston was not a blue collar worker who got his education via a government subsidy. In all of Winston's writing no one is left in any anticipation of hearing a tale of how his daddy came home from work one afternoon with coal dust embedded into the pours of his face and coughing up blood from his lungs and spitting into his handkerchief due to a difficult day at the mine. The reader understands clearly who Winston was and where he was coming from. I would guess that Mr. Galbraith had a similar background and was from some branch of the upper class. I have read several books by Mr. Galbraith and though I have enjoyed them and learned considerable, I find his writing easily distinguishable from that of Tom Paine, Emma Goldman, William Z. Foster or Elizabeth Gurley Flynn - or even Jimmy Breslin.

The notion that the stock market was ever filled with a preponderance of cab drivers and third floor tenement dwellers from the Bronx is ludicrous. Even in its heyday of "common" popularity the vast majority of the money being invested (wagered) came from the class of the "Best and Brightest."

Even granting that there were "hundreds of thousands" who had invested in the 1929 stock market this is not suggesting that the stock market is or was egalitarian or of a class-less sort. Ninety-nine percent of the money invested in the stock market of 1929 came from the top 20% of the nations populous - or even less.

Just a few short years before this calamity during the Wilson administration the Pujo committee had investigated the web of American wealth and had come to the conclusion that the vast majority of this country's wealth was in the hands or under the direct control of possibly a dozen people.

So to give one the impression that the stock market collapsed because of the general greed and avarice of the American people at large is not only a warped view of what was but I think could be considered an obvious falsification - certainly obfuscation.

I am not contending that the stock market was bankrupted intentionally - but it was the typical greed and avarice of the wealthy class that was responsible. The collapse of the stock market was the selfishness of the wealthy exploding in their own faces. And contrary to the historical legacy, most of the high-rollers received only minor bruises and abrasions - many of the biggest and the brightest actually profited from the experience. Mr. Galbraith tells us of this fact in this book.

The bank failure that followed might be construed as being precipitated by the general public - but this failure was due to the nature of the banking system itself and certainly not the "greed and avarice" of the common people - it had more to do with their fear, trepidation and security. Mr. Galbraith attributes this to the lack of public understanding and education and a general lack of knowledge on how banking and money work in a capitalist system and, of course, to a lack of federal safeguards which were later incorporated by the FDIC.

The industrial collapse that then followed can certainly be laid at the feet of the rich and famous - and here one may be able to find the roots of a legitimate class conspiracy.

Milton Freidman places the blame on the Federal Reserve System. He claims that they neglected to fulfill their mandate by refusing to pump more money into the system. Galbraith claims that it was because of the conservative money attitudes of the times and a lack of understanding of the System even by the experts who were running it. But I would say that this lack of the proper action was all a part of the collective intent of the rich and famous. Why would they (the super-wealthy) pump money into a system that they had purposely drained in order to undermine the revolution of the wage-earner class. Whether they knew or they didn't know the "right" thing to do was not the question. Their intent and purpose was to do the "wrong" thing - and that is exactly what they did. And when Franklin Roosevelt tried to do the "right" thing - they tried everything they knew to undermine his effort - including assassination and armed revolution.

Here once again the word "conspiracy" presents the problem. Did the twelve wealthiest individuals in the U.S. get together in a room or out on a deserted island and devise a plan to bankrupt America? Maybe not - but they certainly could have. And from what I have read so far there is no reason to believe that they wouldn't have - if it had been necessary.

A case can definitely be made to establish the fact that the moneyed people of America did remove their capital from the United States and invest it elsewhere. As the old saying goes with regards to great minds thinking similarly - the super-wealthy of that era did not need a meeting to make them aware of what was happening around them.

Mr. Galbraith touches on the problem once again in the introduction to this analysis: "The praise of communism had been extracted from a pamphlet of the National Planning Association dealing with problems of postwar Europe. It noted that the Communists had a better reputation for sincerity and determination in attacking old social grievances and that they also had a solution to the problem of petty nationalism by asserting the loyalty to the worker's state."

For the last several years I have been making my own personal study of the Labor movement here in the United States and, as a consequence of that inquiry, that same epidemic about the world. I now realize that without an understanding of the Labor movement any individual is at a serious loss in trying to make any sense of the 20th century.

In Chapter 10, "Cause and Consequence" Galbraith says:
"On the whole, the great stock market crash can be much more readily explained than the depression that followed it."

I certainly agree with this statement.
Mr. Galbraith, like most economist, seems to believe in the god of economics who controls all via a natural (or unnatural) system of inevitable cycles and principles. He is probably considered a liberal because he believes that governments and societies can prepare for these inevitabilities and even take actions to counteract the obvious.

Conservatives on the other hand believe that what is inevitable is inevitable - it can not be avoided; it will not be avoided. Their answer is that it all simply must be endured. The only problem with this philosophy is that it is always the poor that do the enduring while the rich only have to wait. There is a big difference.

My personal feeling is that the Great Depression didn't just happen but was caused. It was more a matter of politics and class conflict than economic happenstance. The details and consequences were, of course, not thought out - which is the usual and historical case - with economics as well as war.

Overall, I feel that this is the best book that I have read so far about the Crash. I intend to read it again and give it more thought. Although Mr. Galbraith denies my contention right in the introduction, I found page after page of support for my point of view in his explanations on the pages that followed.

Read it for yourself. It is a good book and Mr. Galbraith has the common touch in his writing - unlike a good many other economists. I find it inspiring and encouraging reading an economist and coming away from the experience feeling that I have understood him well enough to disagree with something. That is clearly a step in the right direction - for him and for me.

Richard Edward Noble - The Hobo Philosopher - Author of:

"America on Strike" A survey of Labor strikes in America.

It's uncanny, how history is repeating itself these days, in the exact manner that Galbraith describes. True, in 1954, when he first wrote the book, or in 1997, when he wrote the preface, we still had some safeguards in our banking and corporate sectors, or at least the knowledge that financial irresponsibility wouldn't bring us another depression. This was, of course, before the repeal of the Glass-Steagal Act (a crucial banking safeguard), and before Enron, WorldCom, the Fannie Mae and Freddie Mac collapses, and finally the 2008 meltdown and the Madoff scandal. The name "Ponzi" is back in the news, and today's corporate hotshots are doing much that Richard Whitney or Samuel Insull did back then.

"Of course, the 1920s were different from the 1990s," says the product writeup above. Well, not any more. The "investment trusts" of today turned out to be overvalued paper once more, unemployment insurance is running out for individuals and in the aggregate, the bank and brokerage losses exceed the deposit insurance funds, and the safety net is in shreds.

Galbraith also is clear that the crash was not simply a matter of an October panic on Wall Street. The 1987 crash showed how things could bounce back, if a panic was all it had been. What Galbraith shows is how fundamental and wide-spread the dry rot had become in 1929, and how the financial and business collapse was under way well before Wall Street fell. Galbraith describes how loans on collapsed-values properties and businesses can pull down banks and holding companies -- what's scary is not how this is happening all over again, but rather, what will happen if we go into another deflationary spiral, as in 1929.

Normally I don't give away a book's ending, but Galbraith's five conclusions are horribly on point today. The 1929 crash, he says in summary, was the result of (1) a big and inequitable gap in income distribution, as well as irresponsible and unregulated (2) corporate structures and (3) banks, as well as (4) large imbalances in trade, and (5) lousy economic intelligence. The book spells this out in lucid and eerily familiar detail. It wasn't just a bubble or an Enron; that disparity between rich and poor is #1 on his list suggests something for our times, where real wages have been flat since at least 1980.

I should caution that those looking for information on FDR and the New Deal will find little of that; the author expressly focused on 1929 and the run-up to it. How we got out of the 1930's Depression is another story. How we get out of this is another matter as well. This is how we got into it, and it's astonishing how clearly Galbraith saw it.

We should have known.

This book needs reading more than ever.

Having just lived through the crash of the dot-com stocks, I thought it was a particularly appropriate moment to reread John Kenneth Galbraith's famous history of the stock market crash of 1929 in the United States. Professor Galbraith's final words prove to be prophetic as he suggests that as soon as the lessons of 1929 are forgotten, the speculative excesses that led to that debacle will recur. I am sure that when the dot-bomb experience is forgotten, it will be repeated with some new class of speculation in some future generation.
With the recent experience of seeing a market mania, I came away more impressed with this book than before. Professor Galbraith does a fine job of capturing the psychology that builds into and sustains a mania. He also writes like a novelist rather than like an economist. That talent makes the message easy to grasp and appreciate.
I was also impressed by how our popular perceptions of 1929 are so often wrong. For example, most people believe that many "broken" speculators committed suicide. Although some did, there was no significant rise in the suicide rate compared to a general trend in that direction.
Economists often like to fault the Federal Reserve for the crash. That blame seems somewhat misplaced when you learn that there was very little government debt that the Fed could repurchase to create liquidity. Had the Fed acted differently, the crash might have come a little sooner and not been quite so severe . . . but the fundamentals would probably not have changed too much.
Another misperception is that everyone was speculating. By even the most generous measures, the speculators probably never numbered over a million people.
Although this is a history, Professor Galbraith takes on the economic question of how the crash contributed to the Depression. Although we know very little about the economic details of 1929, I was impressed by the point about how much consumer spending was concentrated in the wealthiest people. As they lost vast sums, both spending for consumer goods and savings for capital were decimated. With the broader income distribution of today, such a cataclysm would not be so harmful (as we saw in the aftermath of the dot-com crash).
There is an excellent parallel discussion of the land boom in Florida earlier in the 1920's that is very rewarding. I was intrigued by the ways that ever increasing ways of extending leverage were created so that both bubbles could climb higher. In Florida, people didn't actually buy the land. They bought options to buy the land, and traded those. In the stock market, holding companies sold stock and then floated new holding companies. These were capitalized with common stock, preferred and debt so that all of the appreciation would accrue to the common holders. Naturally, the opposite occurred on the way down. Many stocks fell by over 99 percent, as a result.
Everyone who is tempted to buy any item primarily because it is thought to represent an opportunity for a quick buck should read this book.
Look for true value in all that you do!

Galbraith wrote The Great Crash in 1954 and he notes in his introduction that every time it was about to go out-of-print a new speculative mania would come along and a new printing would issue. One expects that the 2008 version must be in the works.

Galbraith writes for the general audience, which means he not only leaves out most of the arcane details, but he also writes in an engaging style. Galbraith's view is that the great speculative boom that preceded the Great Crash was fueled by not by easy credit, but rather by a mindset that ignored risk and assumed that the market would go ever upwards - in short, a mania. The leverage that helped raise the market to unknown heights, particularly buying on the margin, also built in the means for the sudden collapse. Once the market nosed over, margin calls went out, some were met, many were not, and the market tumbled faster and farther. Galbraith demonstrates that many leaders held onto a `boundless optimism' long after any rational support for such a view had disappeared.

Galbraith's main focus is on the market speculation and its collapse, but he also takes the view that the stock market collapse did in fact contribute greatly to the cause of the Great Depression. Galbraith asserts that the economy was not in strong shape before the stock market collapse. He likens the Great Crash to `typhoon which blew out of lower Manhattan'. The crash in the market struck the rich especially hard and because wealth was so concentrated the subsequent shrinkage in spending and investment by the rich caused serious damage to the economy. While we have significant safeguards in place today that did not exist in the 1930's, we also once again have a concentration of income and wealth eerily comparable to the pre-depression era.

Highest recommendation. Well-written, well-argued, and timely (once again). Readers may also appreciate Galbraith's equally readable A Short History of Financial Euphoria (Whittle)

I found this book an interesting slice of history which is not normally taught in school. As little tykes, we are taught, by word, deed, and implication, to honor and look up to the Robber Barons, the Greedy Wealthy, and all those who hold money as a kind of god. Our example as children is Scrooge McDuck, not Christ Jesus, Who warned us of the dangers of wealth accumulation and worshiping wealth. Our "Christian Nation" paid Him little heed in the 1920's and the chickens came home to roost with a vengeance in 1929.

I enjoyed the character studies of the individuals and how Galbraith drew out their foibles and peculiarities. He did a good job of showing us men who, like John D. Rockefeller, were never satisfied to have all the wealth in the world, but wanted still "just a little more, young man, just a little more" (Rockefeller's reply to a young reporter who asked him how much more he needed as the wealthiest man in the world at that time).

I can't give this five stars because the technical terminology was hazy and sometimes hard to follow. Sometimes I had to reread a sentence a couple of times to try to get what was being said. Galbraith needed to remember that there would be people reading his book who would be, at best, economic novices. You have to get the crayons and big sheet of white paper out for us!

Still, a good book for showing the economic prostitution which took place in the "Old Boy's Club" and how it inevitably led to the downfall of the market. The economy would stay stale until WWII, and then, unfortunately, someone figured out that war is a boon to the American economy and we have had scant few years of peace since then.

Galbraith does an excellent job in demonstrating how the private sector commercial bankers' unregulated short run,short sighted, penny wise ,pound foolish profit and sales maximizing behavior provided the financing and leverage for the real estate and stock market bubbles of the mid to late 1920's that led to the financial collapse of the DOW by mid 1931.The writing and analysis is excellent.

I have one major criticism.No mention is made of the analysis provided by Adam Smith of precisely the problem discussed by Galbraith in this book. Smith's analysis covers nearly 100 pages and correctly identifies what the problem is-loans made by private commercial banks to 3 different categories of borrower-prodigals,imprudent risk takers(the "new" balloon payment financing of the 1925-1928 real estate bubble closely resembles the sub prime and alternative- A loans of the 2003-2006 period).Galbraith certainly could have used the analysis provided by Smith on pp.250-340 of The Wealth of Nations [1776;Modern Library (Cannan)edition] to buttress his position . Unfortunately,it appears that Galbraith never read Smith's book. He could have made use of the support provided by Smith,universally acknowledged as the world's greatest economist. The WN is a timeless classic that is just as applicable and relevant today as it was in 1776. Washington and Hamilton used Smith as the base of early American economic policy .The reader of Galbraith's book is advised to purchase a copy of WN as well.

Galbraith's inventive work on the fascinating events leading up and preceding the 1929 stock market crash is must-read for anyone interested in the national economy, how it functions, how it fails, and what role the federal government plays in perpetuating or stifling the situation.
He very convincingly establishes a good groundwork for the reader, explaining why the stock market was in such a large expansion and how federal regulation (or lack therof) enabled the financial firms to operate in very risky and perhaps unethical ways.
Obviously, the book chronicles the disastrous declines in 1929 and further discusses the federal government's attempts to revive the American economy, those for the most part failed.
The most important lesson this book can allay to the reader is that economies are not self-sustaining structures that are only subject to supply and demand shifts. In instances like the 1929 crash, the prognosis for dynamic economies can often lie in the actions of a handful of actors/people. A good lesson to remember.
Indeed there are many lessons to be learned from this book, many that are relevant to today's economy (2003). Read this book with care and with a comparative mindset!
A must read for economists and public policy makers!

The more things change, the more they stay the same

Greenspan used the words "irrational exuberance" in the late 90s to describe investor activities that were driving up the "value" of stocks (many of which had no BUSINESS value). Unfortunately, he and the Fed never took appropriate action to rein it in, and the market ultimately crashed.

In this book, Galbraith reveals numerous examples of "irrational exuberance" by investors that foreshadowed the 1929 crash.

The actual decline of the stock market was a bit frustrating to follow since the book is all text, with no charts/graphs. And Galbraith keeps changing the stocks he quotes price declines on. Perhaps that's irrelevant, since the CAUSE of the crash was fairly well laid out.

Recall the talk before the bust of the "New Economy," in which distended P/E ratios and lack of profits were to be irrelevant. Recall Enron's public proclamations of its stability and projected earnings increases. Keep these in mind as you read The Great Crash, and you will be very, very skeptical of analysts, to say nothing of executives.

Galbraith's theme is that market stability and corporate interests are fundamentally at odds. After pumping up prices by gambling with borrowed money, the financiers and executives simply hope to cash in and make it out alive. In the ensuing crisis, CEOs will never speak evil about their own companies or the condition of the market, so their speech is about as useful to an investor as a pre-game pep talk is to a bettor. Analysts, as well as executives, are salesmen of their own stock, and their primary objective is to get you to buy high.

Galbraith is a talented storyteller, and he highlights themes that are likely to accompany future bubbles so that the reader knows what to be skeptical about. This is a very entertaining read, and if you actively compare what Galbraith tells you of the 20's to what you know about the 90's, you'll likely not be swept away by future investing mania.

* * *

2008 Update:

Having learned a thing or two since I wrote that, I can think of no book better suited to explain our current predicament to the layman. Excessive leverage, housing bubble, financial deregulation, and crony capitalism -- sound familiar? You'll read about this stuff happening back in the '20s and shake your head in disbelief.

First published in 1954, this book is understandably piquing interest because of the current financial issues facing the United States and world. The causes of the 1929 crash do seem similar in many ways to the current issues of today in 2008. However, many circumstances are similar, as many are different.

But also similar, there seems to be a rule about the phenomenon of Karma in individual human behavior. And this rule of Karma seems to apply to investing behavior.

Author John Galbraith provides evidence for his argument that cheap and easy credit wasn't the major reason for the bubble-like conditions that led to the crash, but that the real factor was "speculation for the sake of speculating." Speculation for the sake of speculation caused prices to artificially rise to extremely high levels simply because investors were buying with the intent to sell for a profit ---> and the next buyer would do the same, and so on.

During the 1920s many conditions inside and outside of the US financial markets provided a sense of false prosperity which was actually based on greed and speculation for the pure sake of speculation. These strong aspects of human mind and behavior that propel steep rising bubbles and steep downward slides. It's interesting how human psychology plays such a large role when markets rise in bubbles and then sharply decline. Mania involves greed on the way up, and fear on the way down.

From this 50+ year-old book (with an update in the late 1990s), a reader will immediately realize some of the parallels of 1929 that exist in 2008: This does not mean the same results will happen, however. But they could happen....

Gailbrath notes the significant inequality in income distribution that existed in 1929, deregulation of the banking industry, poor leadership, and bad policy and decision-making by the government because of economic ignorance and myopia. This ignorance is referred to by the author as a lack of "economic intelligence." Today, look at the current cast of characters in their *appointed* economic-power positions, and the criticism they're receiving for not only what they did *not* do, but what they *did* do once the financial downward spiral started unraveling.

As a historian, the author also noted another concept from then that reminds us of current times: the Florida real-estate bubble of the 1920s. In addition to buying land, people could by the "option to buy land" on a piece of paper. They could then re-sell it, where the option would be re-sold and re-sold again, and so on, and so on. Again, speculation for the sake of speculation. These buy-options and other means, were creative financing, and over-extended lending, and excessive leveraging. Just like today, and just like then, the result was a hard fall.

Housing bubbles have happened before. A disturbing concept of until recently was people treating their owner-occupied home - the home a person lives in - as an speculative investment and ATM machine during the big leaps in equity increases. Conditions caused by human "bubble-behavior" on the way up, at the peak, and on the way down.

John K. Galbraith noted over 50 years ago in this book that "money doesn't grow on trees." Nor does money grow on Collateralized Debt Obligations (CDOs) that are fraudulently rated AAA when they are not, and then sold to the world. Credit Default Swaps, Helocs, ARMs, teaser rates, and NINJA. Money cannot be invented out of nothing. Call it Karma, physics, or the fundamental concepts of investing. Making money out of thin air can only last a short time, with negative consequences often the result. The author stated that as time passes and the seismic crash of '29 fades from memory only to be highlighted as a side-note in history books: that rampant speculation, greed, and bubbles will happen again, followed by an inevitable bust.

"Those who cannot remember the past are condemned to repeat it."
~ George Santayana, The Life of Reason, Volume 1, 1905

As a layman who consistently attempts to self-educate myself about economic events, I do see a similar, yet also very different type of crash happening today as in 1929. Currently I see it as a steady decline. A slow and steady decline, that will be long-term and bring a lower standard of living. People will to have change their focus about what is important in life, if they'll be able to cope with the new economic circumstances and world that we'll be living in.

This is a well-written and good historical book by Kenneth Galbraith.

The book provided a good background of the Depression Years when financial crisis was at its most critical. The scenarios depicted have not hitherto been presented elsewhere. It dealt with the cold financial figures as well as the snippets of emotional side of human dramas behind.It is also a tremendously valuable piece of work in terms of its contribution to history on the topic. It should serve as a valuable "BIble" for people working intimately with the financial circles, when they construct their policy - with the Great Crash as a background reminder. As far as the analytical aspect goes, the insightful pronouncements could not have been done more brilliantly by any other author or academician, past or present.
*Did'nt have time to finish, computer lab closing.

It is well worth reading Galbraith's chronicle of the 1929 stock market crash together with the rich crop of analyses of the great recession of 2008. If Rogoff/Reinhard in 'This Time is Different' provide the academic analysis of financial folly over the centuries, Galbraith provides the well told story of one of these incidents with many quotes and financial "innovations" that could have been taken verbatim from the reporting on the latest if certainly not last financial bubble. Enjoy!

I recently decided to read The Great Crash 1929 by JK Galbriath because I thought it may provide some insights into the parallels between the Great Crash and the recent GFC. The most remarkable aspect of this book is that the causes of the Great Crash and the recent GFC were very similar. Indeed some of the very same companies made the same mistakes on both occasions - eg Goldman Sachs.

I didn't expect such a well written and entertaining book. Galbraith traces the events leading up to the Great Crash of 1929 and identifies the prime causes in easy to understand language, However what I didn't expect was his sense of humour in explaining various events and describing some of the main players in 1929.

One bit I particularly liked was the introduction to the edition I read, where he comments on the tendency of authors of relatively successful books to explain to their readers how they were able to write such a great book. After identifying this tendency of authors, he proceeds to engage in precisely the same conduct

An excellent and entertaining read. Not you average economics text!

John Kenneth Galbraith's slender book is an easy-to-read chronicle of the events leading up to and following the crash of `29. Galbraith was a Harvard economist in 1954 when he published "The Great Crash 1929", just 25 years after the event occurred. He relied heavily on newspaper accounts and congressional testimony for his research. As a result, the book lacks a first-hand perspective that could have been achieved by interviewing the participants in the fiasco, many of whom were surely still living when Galbraith conducted his work.

That said, "The Great Crash 1929" is worthwhile reading. It's natural to compare the causes of the 1929 crash with the events that led up to the market correction in 2000-2002. Although Wall St. and the financial infrastructure have come a long ways since the late `20s, Galbraith notes that human nature cannot change and "inaction will be advocated in the present even though it means deep trouble in the future." Those words will resonate for anyone still licking his wounds from the implosion of the late-90s dot-com mania.

I recently decided to read The Great Crash 1929 by JK Galbriath because I thought it may provide some insights into the parallels between the Great Crash and the recent GFC. The most remarkable aspect of this book is that the causes of the Great Crash and the recent GFC were very similar. Indeed some of the very same companies made the same mistakes on both occasions - eg Goldman Sachs.

I didn't expect such a well written and entertaining book. Galbraith traces the events leading up to the Great Crash of 1929 and identifies the prime causes in easy to understand language, However what I didn't expect was his sense of humour in explaining various events and describing some of the main players in 1929.

One bit I particularly liked was the introduction to the edition I read, where he comments on the tendency of authors of relatively successful books to explain to their readers how they were able to write such a great book. After identifying this tendency of authors, he proceeds to engage in precisely the same conduct

An excellent and entertaining read. Not you average economics text!

John Kenneth Galbraith's slender book is an easy-to-read chronicle of the events leading up to and following the crash of `29. Galbraith was a Harvard economist in 1954 when he published "The Great Crash 1929", just 25 years after the event occurred. He relied heavily on newspaper accounts and congressional testimony for his research. As a result, the book lacks a first-hand perspective that could have been achieved by interviewing the participants in the fiasco, many of whom were surely still living when Galbraith conducted his work.

That said, "The Great Crash 1929" is worthwhile reading. It's natural to compare the causes of the 1929 crash with the events that led up to the market correction in 2000-2002. Although Wall St. and the financial infrastructure have come a long ways since the late `20s, Galbraith notes that human nature cannot change and "inaction will be advocated in the present even though it means deep trouble in the future." Those words will resonate for anyone still licking his wounds from the implosion of the late-90s dot-com mania.

Somebody on comp.software.year-2000 urged me to read this Galbraith volume because, he noted, "the parallels with current economic conditions -- with an out-of-control, logic-defying stock market, and happy-face government posturing in face of obvious disaster -- make it a must read." Fine. I bought this book 2 weeks ago on the store (I'm a regular) and just finished.
True, the parallels are there. And I highly recommend the work if nothing more than to highlight in the reader's mind the elements of human nature that insure that we will always have depressions -- every 70 years or so ... secula seculorum... but in a small way, I expected more.
I find Galbraith (author of some 20 works on economics) to lack an emotional, visceral style that should have enunciated a polished telling of this critical set of events - (I say "set" because although October 24, 1929, or "Black Thursday" may have set events in motion... the bottom did not come until July, 1932). To borrow from Trekkies, if I may, I felt like I was following a history lesson from a Vulcan history professor. The chronology was well placed and organized, but there was nothing to help me "feel" the event.
Nonetheless, I appreciated the referral and the read. And I think that this work will have even more renewed interest when the world investment community eventually comes to grips with the lack of rationale in supporting stock values whose P/E ratios stretch well into infinity.
Greg Caton Lumen Foods (soybean.com) [email protected] March 14, 1999

I discovered this book at our local book-store, and I was motivated to read it when I noted that it was written in 1954. Currently there are many books being promoted in book-stores that are attempting to explain the cause of the 1930s depression and trying to forecast the current recession, but the analysis is biased by modern finance theory and what is occurring today. So I figured it would be really interesting to read a book about the 1930s depression written over half a century ago.

The book is easy and entertaining to read. It essentially discusses three different events: the Florida real estate boom and crash of 1926, the stock market crash of 1929, and the 1930's depression. The author's viewpoint was that these were separate events. The cause of the Florida real estate crash and the 1929 stock market crash were the same as any other historical speculative bubble: a belief that there can be effortless and free wealth. He then concluded that the cause of the 1930's depression was a separate event, mainly due to poor government policy.

As I read the book and read about previous speculative bubbles such as the South Sea bubble, the Florida real estate boom, or the 1929 stock market crash, I found myself drawing many parallels to recent bubbles. In particular, parallels between the 1929 stock market bubble and the dot-com bubble, and between the Florida real estate boom and the recent housing market bubble.

I was working as a software engineer during the build-up and subsequent crash of the dot-com bubble. Basically, any company associated with the Internet was suddenly worth billions of dollars. So [...], a company to sell pet food over the Internet, had a market cap of over a billion dollars. And any traditional company that could somehow associate themselves with the Internet were able to propel their stock-price. This seemed similar to the stories of the 1929 bubble. In one, the company `Seaboard Air Lines' which was a railroad company, enjoyed speculative gains due to the belief that with the name `Air Lines' it would enjoy high growth.

The stories about the Florida real-estate boom that crashed in 1926 didn't seem dissimilar to the recent real estate boom. Vast real estate developments started in Florida and people purchased sections purely for speculative purposes. This didn't seem too different to the recent period in New Zealand where every second person saw themselves as a property magnate. On holidays in the Far North, it appeared that every small depressed town had suddenly realised they had sea views and therefore their properties were obviously worth a million dollars each. And the adjacent fields where the horses used to graze were being turned into sections with "million dollar views". Like Florida in late 1920s, these places in the Far North sold a lot of sections that no one ever built on, and like Florida they are speculative purchases with no intention to build. I wonder if this too will follow the Florida real-estate boom of 1926; a number of years after the real-estate collapse farmers were often able to buy the properties back for grazing, and the animals would navigate around the paved streets and lamp-posts of the previous sub-division.

I think the important viewpoint of the author was that despite these two periods of folly, the depression was a separate event that was caused by government policy. In the early 1930s, both political parties in the US were promoting a balanced budget as a solution to the contracting economy. A balanced budget involved slashing spending so that tax-receipts matched spending, and they did this year after year to try to balance the budget. The Federal Reserve also failed to provide liquidity to the money supply despite the continuing chain of bank collapses. Essentially, the author agreed with the current Federal Reserve chairman Ben Bernanke that the depression was caused by monetary contraction.

In summary, the book is easy to read and interesting to have a perspective written prior to modern finance theory and the events of the past half century. And reassuring that the author concludes the two bubbles and subsequent depression were separate events. There is currently a concerted effort around the globe to increase money supply, so I don't think the current contraction in global GDP will be anywhere near as severe as the great depression.

Economics, like physics, has a fundamental canon: you cannot make money out of nothing. To narrate the history of financial bubbles is to chronicle those times when people overlooked that fact. In those instances, asset prices soar merely to be resold for profit, with little regard as to their actual value; when something shakes confidence and buyers are in short supply, a crash follows as prices were sustainable only insofar as they could be resold higher.

According to John Galbraith, the stock-market crash that took place in the fall of 1929 was typical of this prototype. Mr. Galbraith, a Harvard economist, traced the optimism to the Florida real-estate bubble of 1925 which made people forget the elementary rules of money making. What follows is an elegant narrative that interweaves economics with history to produce one of the most telling and lucid accounts of the developments, economic and otherwise, that lead up to the October 1929 crash.

The crash, according to Mr. Galbraith, was caused by an admixture of bad income distribution (economy too dependent on luxury spending and investment), bad corporate structure, bad banking structure, foreign imbalances, and bad economic intelligence. In seeking compelling explanations, the "Great Crash" often resists conventional wisdom: for example, to those who blame the abundance of credit, Mr. Galbraith answers: "on numerous occasions before and since credit has been easy, and there has been no speculation whatever." Mr. Galbraith looks beyond central banking and interest rates to compile a rich and diverse history of the 1929 crash.

So what about preventing future crises? Here, Mr. Galbraith is ambivalent. Regulation has and can play a substantial role in preventing future troubles. But the problem lies elsewhere: people continue to believe that they have been blessed, and that they can make money with little or no effort. When wise men see such folly and decide to partake in it rather than spoil it, a bubble that later crashes is inevitable. For all those who seek an economic solution to this economic problem, Mr. Galbraith surely disappoints. The surest protection against over-speculation, he writes, is to remind people that you can never get something from nothing. Those in love with central banking might find the idea simplistic, yet its beauty lies with its simplicity.

Galbraith, a great writer has given us a vivid and detailed account of the worst stock market disaster in the US history. He builds up to Black Thirsday beautifully. No need to know economics or stocks just need to have a thirst to know the real truth. Read the book and you will realize that stock market crashes involve not only panics and hysteria but also personal motives at high levels. A must read for all you out there who think that this 1997 market wont crash. The time is 1929 but the lessons are universal

The Great Crash of 1929 is essentially two books. The first 130 pages or so is a overview of the stock market crash of 1929 and the events leading up to it. This section of the text is quite readable, provides a good overview and contains most of the major events. This is, given the material related to the topic and the relatively brief number of pages, necessarily a very high level view. Anyone who has read on the subject will probably be disappointed. Anyone who is new to the subject will receive a satisfactory introduction.

The remaining 60 or so pages are more problematic inasmuch as they attempt to analyze the causes of the crash and depression of the 1930s. Unfortunately this section, while not irrelevant, shows its age badly. The book was written in 1954 and consequently it leaves out all of the subsequent research on these issues. Most notably it is oblivious to the issues raised by Milton Friedman in "A Monetary History of the United States 1867-1960". A major revelation of that book was that the Federal Reserve was severely contracting the monetary supply in 1929-1930.

Obviously Friedman came after initial publication of this book. However, author John Kenneth Galbraith (1908-2006) reissued the book many times prior to his death, most recently 1997. I surmise that whenever the stock market declined his publishers would ask him for a new introduction, comparing the Great Crash of 1929 to the then current uncertainty, and re-issue the book. While this opportunistic marketing may have made the book a "evergreen" it did not address the fact that the analysis was aging. Apparently Galbraith couldn't be bothered to update the book itself.

Given that the book is written in such high level generalities it is impossible for a reader not to find parallels with any current situation. Some reviewers have found the writing cynical or condescending. The author's "wit" is an acquired taste but only his comments on female investors are truly offensive (pat them on the head and tell them they simply couldn't understand any thing such as the stock market). I'm sure this was not deliberately insulting but simply a relic of 1950s irony that has not aged well. While John Kenneth Galbraith was a well known "liberal" the book is not blatantly ideological. The contribution of the government to the crash is largely absent from the analysis but it doesn't push Roosevelt's New Deal policies too much.

The book remains readable but there are better books out there on this subject (i.e. Robert Sobel's The Great Bull Market: Wall Street in the 1920s). However Galbraith's book remains better known due to his name recognition and the history of timely re-issues.

Yes, I'm giving several to friends. Entertaining enough to not put my Mom to sleep yet vivid enough to show her the real risks of mutual funds ("Investment Trusts" in 1929). They can't short sell in a down market. They can't go to cash and be safe or they lose people. Anyway, Galbraith does an EXCELLENT vivid job of who did what when, dispells myths, and it's free from today's free-for-all perspective to see how insane we are over stocks.

The book The Great Crash: 1929, by John Galbraith, is a cynical look at the stock market crash of 1929. In his book he tries to convince the reader of the stupidity of the American people for not realizing the eventual collapse of the stock market. The book for what it is worth is factual and the only point is to explain the crash and the stupidity of the people involved. He writes with a style that is cynical, yet all knowing. He makes it very obvious why the crash occurred but when it comes to explaining how it could have been avoided he gets rather shady. All in all, this book is just a factual account of the tragedy of the stock market crash of 1929.
Galbraith starts his book off with the people, and their mindsets, involved in the pre-crash years. In the beginning it seems that people would have known about the stock market crash eventually to occur, but if they did they did not care. People in the years from 1925 to 1929 played the stock market without really even paying for it. In those years you could go to a broker and purchase stock on margin, which means that instead of buying your stocks with the money you have, you put down 10% and make monthly payments. Since everyone was doing it the stock rose and was became worth more in days or even hours so you ended up not even paying for it. The average person would think at this point that people knew that this would not last forever, but they didn't care because they were making money at the time. The question is why did the government not do anything to stop this. Well before the crash Coolidge was in office and he did not care what happened. In 1929 Hoover was inaugurated and he and the F.R.B started having meetings every day about the condition of the stock market.
The first of many smaller crashes and recoveries starting occurring on Monday, March 25, 1929, in the following six months it was the most unreliable, jumpy market ever. Oddly enough though, the summer held much optimism for the market. The crash itself began on Thursday, October 24, 1929. Even at telegraphic speed, the volume of stocks exchanged was having an effect on time. Crowds started to gather outside of the NYSE trying to figure out what was going on and police had to be called to maintain control. On Friday, the market recovered. On Monday, October 28, 1929 over 9,250,000 shares trade but there was not much of a recovery and this lead to Black Tuesday.
Black Tuesday was the result of the stock market boom in the past 5 years. There were to be 16,410,030 shares traded on that day, everyone was trying to get out. In order to get out you had to get sell at market value. People were dumping their securities and causing even more downward pressure on the market. There was no recovery, the market had crashed and it would take a lot of time and effort to rebuild it. Finally there was the aftermath. People who were rich suddenly became poor in the span of a day. The suicide rate for the next few years rose. The entire world was affected by this crash and it eventually led into the great depression.
The author of this book presented a point, the point that people should have done something to prevent the crash of the stock market, and it was easy for him to succeed in proving this point, for what is there to prove. This book, which gives a account of the crash of the stock market in 1929 is accurate in all accounts and has no falsities in it as far as can be seen. The information is documented and there are many primary and secondary sources used in the writing of this book. This book is easily understood and is a great tool to explain the stock market crash.

This gives a pretty good examination of the economic crash of 1929 and important events in the preceeding decade.

However, since this was originally published in 1954, there was at least one section in the book where the "rhetorical present" of the author's narration was in the 1950s (in its comparison on the 1929 crash with circumstances extant in the 1950s); however, in this same section, it refers to 'our current situation' in the late 1990s, and then later in the same section, it reverts back to the reference to the 1950s as 'our present.'

Also, the tone of the narration occasionally comes off as elitist when it refers to 'others who aren't intelligent enough to understand this discussion' (my paraphrase-I don't have the time/inclination to cite the exact page number).

All-in-all, though I would encourage the reading of this book for an understanding of the events leading up to and surrounding the 1929 crash and the following depression.

I read this book in 1979, during the Jimmy Carter years. I was looking for explanations not only of the Great Depression but also what was happening at that time.

I had read several Galbraith books, and was puzzled by them. But the vacuity of this book, its lack of useful analysis, and its polemic style, dispelled the notion that this man could explain anything.

At that point I started looking once more, and discovered Rothbard, Mises, Hayek and the Austrian School. Not everything they wrote is perfect (I think Jude Wanniski found the most-probable "tipping point" event for the start of the Great Depression in his The Way the World Works, 20th Anniversary Edition (Gateway Contemporary)), but this book was pivotal in making me realize this man had no idea what was going on.

I would recommend you read it with the following question in mind: "What is Galbraith telling me that I could apply today?" If you get an answer you like, jolly good. But make sure your own beliefs don't color the evaluation.

And if you realize there is no "there" there, then you are one step farther on the path of knowledge.

You want to know how irrational and unpredictable the stock market can be? Read this book. Written in easy-to-read language, it is digested almost as easily as a mystery novel, and yet provides a deep insight into the dramatic events of 1929, and gives an invaluable historic lesson. You can clearly see the parallels between events preceding market collapse in 1929 and today high-tech stock market boom - "...there is here a basic and recurrent process. It comes with rising prices, whether of stocks, real estate, works of art or anything else. This increase attracts attention and buyers, which produces the further effect of even higher prices. Expectations are thus justified by the very action that sends prices up. The process continues; optimism with its market effect is the order of the day. Prices go up even more. Then, for reasons that will endlessly be debated, comes the end. The descent is always more sudden than the increase; a balloon that has been punctured does not deflate in an orderly way." Book goes on to describe the inaction of the Federal Reserve, trade on margin, mergers, Florida real estate boom, investment trusts, leverage, short selling, and so on. Yet, you do not need to be a financial whiz to understand it. This is definitely a 5-star book.

This book offers an explanation of the market dynamics during the late 1920's; and helps the reader understand how people may have gotten swept up in the speculative frenzy that lead to the 1929 crash. It also covers the aftermath that ensued.
Quick enjoyable read. Recommended.
Particularly interesting to read while one can watch our own financial markets exhibit seemingly speculative behaviors.

This is the analysis of what went wrong according to the New Dealists & Liberals. JKG is incredibly biased, but then HE was the liberal economist during the go-go 60's & the building up the the Great Sociiety.
JKG speeds over the 2 REAL causes: The Tariff imposed by a Democratic on a still mainly agrarian society & the float of spurious stock certificates which flooded the market for redemption after the great Ponzi scheme of the Fla land market fell ( a week earlier) as the crooks knew that they would soon be caught.
If you read it ignore the last part with his analysis. Better yet, get von Mises' The Austrian Theory of the Trade Cycle and Other Essays (also with the store at 9.95) & see JKG for what he is: a liberal apologist. Either way, NEVER believe that the Great Crash & the Great Depression had anything in common ; again Liberal dogma. PS A lot the market take is wrong: his understanding of arbitrage, leverage, stock buybacks (real bad, he he he) & mergers. If the first 2 causes were as little to blame as JKG says, today's market should crash for in the boom economy of the go-go 90's leverage (people taking out equity loans to buy the store.com etc), Federal Reserve arbitrage (the Savings & Loan averted debacle)& stock buybacks (IBM, Microsoft etc) are causing NEW highs as they are rightly perceived as knowledgeable support. It is unfortunate that JKG lets his political ideas get in the way of economic facts; he is a gifted writer.

Excellent overview of the 1929 crash. I brought it on an airplane with me, and when the flight attendant saw the title, she said I was getting her nervous. It is informative, and gives some good insight into how the Great Depression developed. Good reading for econ junkies like me.

This book contains a great explanation abouth the 1929 crash. But, under my point of view, the most important aspect is that most of the features described in the book can be seen nowadays in the 90s financial crisis (speculation, asssets bought at a very high price over their real value, like a financial bubble). The book reviews most of the posible explanations economists have given to understand the causes of the 1929 crash and demonstrates that the real cause was speculation. The book would may one think about a cycles and financial crisis -maybe quite similar to what H. Minsky describes.

I am reading this book for a college economics class. It is one of 5 books I have already read on the Great Depression, since I am doing a paper on the subject. I am not so arrogant as to criticize the Economics ability of a Harvard professor in the subject, but I will say this book is superficial. It just glosses over the Crash in a jaunty sort of way. I do think it has some good points (shortness being one of them), and I will use it to illustrate one perspective when I write my paper, but there are a lot of books out there where the author clearly spent about 100 times longer thinking about what might have caused the Crash than JKG has put forth here.

One good thing: it captures the mood of the recent 1999/2000 stock bubble so perfectly that you could just about change the names and dates and re-release the same book. The more things change, in some cases, the more they stay the same.

There are bigger and more detailed accounts of the 1929 Crash, but Galbraith's effort is excellent at distilling and depicting what happened and why. It's a great place to begin a study of the Great Depression. I was surprised at how well Galbraith wrote, and his command of the subject. None of it is difficult to grasp, which is why it's a great place to begin.

All writers of market histories should read and absorb Galbraith's short and eminently readable history of the start of the depression. Going beyond popular ideas it gets to the heart of the matter and provides sobering lessons to speculators in today's markets. I give this a hearty 5 stars!