Book Review: The Great Crash 1929 by John K. Galbraith
Reviewer: YUEN Wai Pong Raymond
The book review discusses one of the greatest books accounting for the free fall of the stock market in 1929. After the collapse of the stock market in 1929, the world entered a regime switch from an exuberant bull market into one of the longest bear market in history, the Great Depression. Then, followed was the Second World War.
Body of Article
In the Mid of Twentieth Century, 1954, Mr John Kenneth Galbraith drafted a book known as The Great Crash 1929 about the reason and the aftermath of the stock market crash happened in 1929. With 200 odd pages of the book, it was a short account of the history of The Great Crash happened in the United States in 1929. After the Great Crash, it was the longest recession in the recent history of capitalism known as the Great Depression that last until the start of Second World War.
The book did not attempt to explain the financial mania of 1929 but described the history in the form of one after one episode. The description was vivid, lively, readable and clear. The limitless false hope and overt optimism ("Chapter 2 of the book 'Vision and Boundless Hope and Optimism'") of the public before 1929 had driven the stock market getting one after the other great advancement and record high. In fact, when the stock market advanced from one record high to another, from time to time, there were advises from various sources saying that the stock market was too high.
In Chapter 3, the title of the chapter also explicated this ("Something Should be Done?"). However, the advices were mired in the continued advancement of the stock market and the frenetic rise of the stock market. In 1929, the public bought units in investment trusts that invested in other shares or even another fund. But the cost committed for the investment trust shares were much higher than the value of the underlying assets actually held by the trusts.
Chapter 4 to 6 described the episodes leading to the eventual crash of the stock market. Although a lot of people including investment bankers and the government tried to save the situation. However, all efforts were to no avail. After a few rounds of catastrophic falls in the stock market, the whole economy was badly hurt by the collapse.
I found the description of the aftermath of the crash was very interesting in Chapter 7 to 9. And although the crash might have contributed to the severity of the Depression, it certainly wasn't the only causes. The economy was basically unsound for many reasons such as protectionism, high trade barrier, tightened liquidity, high price level and high wage level.
Lastly, I found the book interesting. I was delighted to have the chance to read this book.