1929: Inside the Greatest Crash in Wall Street History
nybooks.com84 points by mitchbob 5 days ago
84 points by mitchbob 5 days ago
“The Great Depression: A Diary” is a great day by day first person account of someone living through the depression. It’s a great reminder how we don’t have a monopoly on insane politics
https://www.goodreads.com/book/show/6601224-the-great-depres...
I read this more than 10 years ago, so I don't remember a lot, but I do appreciate it for being the only account of the crash that doesn't have historical hindsight. It was interesting to hear someone trying to make sense of things on a near daily basis during the fog of uncertainty. It makes me want to find other such accounts of historical events without the inevitable-seeming cause and effect sequence of events you normally read about history.
The Wind is Rising, by HM Tomlinson. It's a diary of the first year or so of the second world war. It has an unforgettable first line: "All we hear from Berlin is the music of marrow bones and cleavers," and is similarly vivid throughout.
It looks like you can borrow it from archive.org, but I suggest buying a physical copy. It was printed in 1941 - and I don't believe ever had a second edition - so it's on thin, wartime paper, which adds to the experience of reading it. It's like something pulled out of a time-capsule, a tangible relic of the time it covers.
Interesting how there is so little information about this book online. It’s a good reminder of how a ton of stuff basically still isn’t on the internet and is still only accessible in old books.
> It has an unforgettable first line: "All we hear from Berlin is the music of marrow bones and cleavers," and is similarly vivid throughout.
A nice example of the power of media to bring something to life in the reader.
Check out Demons of Unrest, which covers the few months before the American civil war. It covers the stories of Lincoln, other union leaders and Confederate leaders and their understanding and misunderstandings about what the other side thought.
It's remarkable about what assumptions people can make without talking to people from other places.
There's the diary 1660-1669 of Samuel Pepys, which covers as the Great Plague of London, the Second Anglo-Dutch War and the Great Fire of London.
Good recommendations here, thanks. I was aware of Orwell's account of the Spanish civil war, so maybe I'll start there.
George Orwell's Homage to Catalonia is about his experience in the Spanish Civil War, published in 1938. He was there between '36 and '37 I think. It's pre WWII, and I found it very interesting for the same reason you say here: his account doesn't have the benefit of hindsight. The civil war wasn't even over when the book was published. It's very interesting to see his perspective, what things he saw coming, and what things he didn't.
A book along similar lines: https://www.amazon.com/Not-Nickel-Spare-Sally-Cohen/dp/04399...
(haven’t read it yet so I can’t vouch for it)
I read 1929 and my main takeaway was how unlikely it is for us to have a crash of that magnitude again. The differences between then and now are stark.
First, everybody was buying shares on margin. Everybody. Random lower class households were buyings shares on 10:1 margin. They had door-to-door salesmen pushing shares on uneducated households.
Second, nobody was talking about market cap. The whole world revolved around the share prices but nobody seemed to talk about what a company was worth.
Third, there was no SEC. There were no reporting requirements, no quarterly earnings calls. No rules of any kind.
Fourth, knowing prices was very hard. The current price of a stock was shown on physical signs that had to be updated and during heavy trading they were often many hours behind. Absolutely nobody knew what the price of various stocks was during the heat of the moment.
Fifth, the US economy is much more diversified than it was. Back in 1929 it was basically oil, rail, and banks. RCA was the Nvidia of its day.
We're in the middle of a correction now due to Iran, but I don't see a 1929-style crash happening.
> Andrew Ross Sorkin’s history of the 1929 stock market crash reminds us that financial bubbles are inevitable—and that another one may be about to pop.
He's made a lot of predictions: Apple will acquire Disney (recent), Microsoft will acquire Yahoo (mid 2000s), we'd have a "hard landing" in 2023/2024. None of these have turned out true. It's especially hard to meaningfully evaluate claims of crashes.
Well, if I remember correctly Microsoft was very close to acquire Yahoo.
So it means it made sense to do it. Even if you correctly predict the economic, political currents, sometimes it is up to the actions of individuals that are very hard to predict.
Even if there was a 29 style crash, assuming you can hold for 20 or so years, less than the length of most home mortgages, you would still come out ahead. Not that it wouldn’t be painful for seniors and those who are middle age and not well diversified, but it’s hard to not see a US crash as a buying opportunity for international capital.
Most people who have significant savings in the stock market don't have the lifespan to ride out a 25 year recovery cycle. And those young enough to have the time usually don't have much in savings yet.
I guess it depends what you call "significant". I am 40 and have over 200k in my 401k, which I think is significant. And I could most likely expect to live 25 more years. If there's a crash tomorrow, my money wouldn't grow the way I am hoping it will over that time, but I should come out ok considering that I will be getting discount stocks while the market recovers.
It is significant if you remain healthy and employed with income.
But it is basically nothing if you get laid off at age 56, and you can't find another job due to age discrimination, your COBRA runs out after 18 months, but you are not 65 years old yet for Medicare . Obamacare may be completely neutered by then, so private health insurance may cost $30k/year for a 57 year-old. You still have a mortgage, you can't afford health insurance, so you take a risk and decide to skip it, because you are healthy. Then you get pancreatic cancer, and without health insurance, your chemotherapy completely depletes your 401k in one year. Then you die of cancer at age 59, because you cannot pay for the treatments anymore.
Which is likely what happens.
It would not really be a great depression of there was not mass layoffs and immense job insecurity.
In this scenario I would take that 200k (or whatever there would be), and move to some low COL country.
Doesn't that imply magical foreknowledge about exactly how lengthy the bad-period will be?
> move to some low COL country.
So you are now alone in a foreign country, no family nearby, trying to adapt to a new lifestyle at nearly 60 lol.
You are probably in the top 25%, depending on where in your 40s you are. Median is about 162k for Americans in their 40s.
If you're only expecting to live to 65, you would be trying to time your 401k into a roughly 5 year window (assuming you wait until 59 1/2 to begin withdrawl).
It went down 89% Between 1929 And 1932, it took 25 years to close above 400 again. https://denisgobo.blogspot.com/2008/12/how-long-did-it-take-... Of course with Dollar-Cost Averaging you will be buying at the low until as well
If you're lucky enough to have a job. Which you probably won't in a Great Depression II
A 1929-style crash was accompanied by mass unemployment (~25%), meaning people were often forced to sell at the bottom precisely because they had no income. You can't "hold" if you're selling assets to eat. Also just because it recovered in the past doesn't mean it'll follow the same trajectory in the future.
"A 1929-style crash was accompanied by mass unemployment (~25%), meaning people were often forced to sell at the bottom precisely because they had no income. You can't "hold" if you're selling assets to eat."
That's the evil thing about economic crises. People with enough capital usually can sit them out and often even benefit. People with less capital often lose everything and when the recovery comes, they have nothing that could benefit from it.
I am close to retirement and I often think how quickly your reserves can be wiped out in a long enough crisis.
Because we know of the '29 crash, the next one will always be different. Arguably the GFC was way worse, but way different.
right. And because we know of the crashes of 2022, 2008, 2001, etc. the market is showing a lot more resiliency. Which is good, but it will take longer to have a correction. Which may be bad by itself.
Stabilizing from those crashes were all about the injecting liquidity and faith and credit in the US Treasury. Hoover didn’t handle the events subsequent to 1929 well, but more out of ignorance than malice.
In 2026, the POTUS, his family and friends are looting the treasury with brazen acts of fraud. The government is buying losing futures contracts to manipulate oil and other markets, and “mysterious people” are buying securities before scheduled, secret events to profit from it.
The US assassinated the leaders of a hostile power after they essentially gave in to our demands.
We eliminated the governments experts in a variety of strategic topics including oil, and installed toadies to run the fiscal service that disburses government funds.
People are working on undermining the FDIC and decapitating social security.
So a crash now is really disturbing. Nobody can have the level of confidence in the faith and credit of the United States as we did in 2008. The people who understand the complex issues have been purged by the government, and the rest of the leadership is complicit in criminality and is counting on loyalty to secure pardons for later. So you should be anxious.
> In 2026, the POTUS, his family and friends are looting the treasury with brazen acts of fraud.
Proof?
I definitely don't think it's a case of more market resiliency but rather a case of central banks willing to act much more aggressively to respond to these things. This is often what Ben Bernanke argues, given he wrote his thesis on the '29 crash, and how he handled the '08 crisis.
Yes, Trump knows about the crashes of 2022, 2008, 2001, he will make good choices. :)
How was the GFC worse? Not in unemployment rate. Not in losses to bank depositors, either. (As a kid, my mother lost money in a bank that went down in the Great Depression.) Not in business bankruptcies.
In what sense was the GFC worse?
It was worse because we bailed out the banks, because they were too big to fail, teaching them the lesson that they can do stupid shit and not really pay and consequences. There's no number on that to compare to a different situation, but thems the breaks.
In at least some of those cases, the shareholders got nothing. We bailed out the depositors.
A 29 style crash would be accompanied by a 29 crash in other countries. Besides most countries (besides Argentine) suffered, some more some less. The US market wouldn't necessarily be a bigger bargain than others.
We may see it again soon
I hope not, my parents were teenagers at the time, my fathers life was terrible back then, he had to join the CCC to survive and to help out his family.
He had told me working with the CCC was not a bed of roses and he saw many terrible accidents to some of the workers. But he was glad it existed.
Also, back then, I believe people were on average stronger and more resilient people alive today. Having such a crash will be far worse for society then 1929.
Yes, nothing in recent history gives me any faith that we'll all pull together in the face of economic hardship - as opposed to letting charlatan politicians put all the blame on already marginalized scapegoats.
Crashing the economy in order to put all the blame on already marginalized scapegoats may well be the point.
“ I believe people were on average stronger and more resilient people alive today”
People step up very quickly once they have to face a difficult situation. A while ago I talked to Ukrainian about their war. He said some years ago he couldn’t have imagined living in a war zone but once it gets started you get used very quickly to drones flying over you, buildings in your town bring blown up, losing power for days, hiding in the basement. It very quickly becomes normality.
> People step up very quickly once they have to face a difficult situation.
You have to have people that can step up: at least in the US, I do not see evidence of that. Not in the White House, not at the SEC, not in Treasury and Commerce.
The most recent cataclysmic event (GFC/2008) at least had smart people around: Bernanke happened to be in charge and he was once of the foremost experts in the Great Depression. Paulson also had notable experience before Treasury. Who do we have now?
People do adapt, at least the Ukrainians are tough people, their lives have never been as comfortable as westerners.
Some do, others sit down and cry until they die. Read “Deep Survival “ to get inside the heads of people going through severe hardship.
More people back then knew how to survive by growing their own food, making (and mending) their own clothes, etc. Many were only a generation or two away from farm living where those kinds of skills were just part of every day existence.
Pardon my ignorance, but what’s CCC?
That's a fun one because none of three Cs listed on Wikipedia stand out to me.
You sound like an old curmudgeon. Give me my avocado toast and exotic coffee carefully prepared in a French press and I can supervise other people clearing trails all day long (via Zoom--we're never so desperate as to need unnecessary sun exposure). Of course, I need my rebalancing hours of yoga in the morning and afternoon and personal time to ensure work-life balance.
I loved your post, it made me chuckle.
But you may have misunderstood something I failed to bring across. Most people in in my generation, including me will have just as a bad time as yours should that crash occurs.
The only difference is my generation will only endure it for a much shorter time than yours.
FWIW, I hate everything avocado, but I will miss my bagels with cream cheese and hot chocolate with whole dairy whipped cream on top :)
> Having such a crash will be far worse for society then 1929
It wouldn't be as bad. People will lose their retirement savings but they won't starve. Jobs will be lost, but it's just a matter of time before they're lost anyway to AI.
There you go, that is the clue.
This is why I have always said every year to not have any "new years resolutions" and instead prepare for 2030. [0]
> Beyond the intrinsic difficulty of revivifying the top-hatted dead, Sorkin’s rendition is limited by his desire to frame 1929 as a story about people. His focus on individuals comes at the expense of analysis—particularly of the deeper economic forces that made the crash likely, if not inevitable. Sorkin is more interested in how the crisis felt than why it happened. He has little to say about why the government failed to take any meaningful steps to prevent it—or why, unlike in 2008, its responses failed so spectacularly.
Sigh. This reviewer, Jacob Weisberg, is sadly either unfamiliar with the basics of major economic theories, or simply didn't connect the dots.
> or why, unlike in 2008, its responses failed so spectacularly.
Keynesian economics, which heavily influenced the 2008 response (fiscal stimulus part) to the financial crisis, didn't exist in useful form until 6 years after 1929. John Maynard Keynes’s book 'The General Theory of Employment, Interest and Money', which is the foundational text of the field, came out in 1936.
Additionally, on the monetary expansion side of things, Bernanke’s 2013 history of U.S. central banking [1] is useful: he says the Fed may have suffered less from lack of leadership than from the lack of an adequate intellectual framework for understanding what was happening, and that the dominant framework in place pushed them toward the wrong conclusions about whether aggressive expansion was needed or legitimate. And so monetary expansion attempts didn't occur until 1931/1932. Quantitative Easing, made famous in 2008, is a refinement on monetary expansion, I think.
[1] https://www.federalreserve.gov/newsevents/speech/bernanke201...
It is a pretty good book, but when I got, I personally hoped for more finance in it. A large fraction of the book is devoted to people.
When all was said and done the market crashed by 89% and took 25 years to recover to the previous high.
People often mix up the 1929 crash with the great depression. Those things are related but not strongly so. A stock market crash does not lead to a major recession or depression.
The initial crash was worse in 1987 then in 1929. But in late 80s there was no recession.
So crashes are bad for people who have invested but it looks much more like a bubble in hindsight because of how it turned out. Lots of good companies were also destroyed in Great Depressions, companies, including banks that were mostly sound.
People always focus in the initial crash rather then the actual causes for long run recession. Those are related to monetary and fiscal policy more then anything else.
In the case of the 20s there were a number of very famous economists in the 20s who had warned that structural deflation was happening and that companies need to work together to combat the problem. And this is exactly why this crash turned into such a long term disaster.
So the real worry is not AI bubble but the response to any crash.
No, no. There's no bubble here. This time it's different. :)
... "so far."
I saw this book at a local library and I set it back down. [0]
> Beyond the intrinsic difficulty of revivifying the top-hatted dead, Sorkin’s rendition is limited by his desire to frame 1929 as a story about people. His focus on individuals comes at the expense of analysis—particularly of the deeper economic forces that made the crash likely, if not inevitable. Sorkin is more interested in how the crisis felt than why it happened. He has little to say about why the government failed to take any meaningful steps to prevent it—or why, unlike in 2008, its responses failed so spectacularly.
Emphasis added.
The review here seems intent on filling in the gaps it finds the author to have left himself.
This one reads more critically:
"1929: Sorkin Rounds Up the Usual Suspects"
> [...] Sorkin stages morality play rather than history. He also helps set policymakers up for the kind of grand theatrical action they are inclined to take anyhow whenever markets turn down. In other words, another 1933- or 2008-style rescue: flooding the market with liquidity, and stringing up wrongdoers and even the better Wall Streeters, such as the Mitchells whom Sorkin seeks to rehab. The same subpar results are likely to follow.
[...]
> Were 1929 a documentary produced by Michael Moore, its suggestions would not matter. We are accustomed to illogic in television. But 1929 presents itself as the researched book Sorkin wants it to be. It therefore claims the authority that such books can carry.
> Sorkin quotes H. G. Wells, who called human history “a race between education and catastrophe.” Indeed, indeed. But for education to beat catastrophe, that education must be a little more thorough.
https://www.coolidgereview.com/articles/1929-crash-sorkin
[0]: I was returning Stalin: The Glasnost Revelations by Walter Lacquer (1990). I found its research and ensuing narrative worth the effort.
Sorkin is more interested in how the crisis felt than why it happened.
Thank you - this is exactly what I want to learn more about. Placed an order.
Perhaps the greatest buying opportunity of all time.