The Crash of 1929

The Crash of 1929 was the single most dramatic event in the economic history of the United States, perhaps of the world. In a few days, not only did the New York Stock Exchange suffer a crash not to be matched for nearly six decades, but an era of economic expansion and prosperity came to an end, as the American and world economy slid slowly but steadily into the Great Depression. John Kenneth Galbraith, the dean of American liberal economists, originally wrote The Great Crash in 1955, less than halfway between the time of the crash itself and the present day. A classic narrative account of the process that led to the Crash, and of the events of the Crash itself, it was reissued in 1988, almost unchanged in its text save for a new introduction by the author, in which he relates his account of 1929 to the events surrounding the stock crash of October, 1987. The pages that follow outline Galbraith's view of 1929, and compare the circumstances of that time to those at the end of the 1980s.

For two generations after the Crash, the underlying question was "could it happen again." When Galbraith originally wrote in 1955, memory of the original crash was still vivid, and people characterized their lives in terms of it: "in college before 1929;" "married after 1929" (1955 edition: 1). By 1987, the Crash of 1929 was a distant memory 

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rage might be increased to 9to1. An individual investor buying on 50 percent margin might thus have 18to1 leverage in the actual industrial stocks at the bottom of the leverage pyramid. The market rose sharply in 1928. In 1929, it went into hysterical gear. A sharp break in March seemed to augur the end of the boom, but it was only a blip: the market picked itself up and marched onward and upward. The stock market became a fixture of popular culture, often dominating the news; the papers were full, time after time, of news of record rises on record volume. All America seemed fixated on the stock market. In fact, the market had only about one investor for every fifteen American families  a greatly smaller proportion than in the 1980s, when corporate pension plans made a large fraction of American workers indirect investors in the stock market (and in junk bonds). But the number of direct personal investors was still very large, perhaps a million and a half people, of whom 600,000 were speculative margin players (p. 78). Many were desperately naive about the market. The 1988 edition of The Great Crash retains a remarkable passage from the 1955 original edition, regarding women investors; it sounds extraordinar
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Approximate Word count = 2042
Approximate Pages = 8 (250 words per page)

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