John Kenneth Galbraith’s 1954 classic, The Great Crash 1929, has been running off the book shelves of late. People are searching for wisdom or a wise prescription to help them negotiate a path out of their personal recession.
The book has been revised and reprinted but it is amazingly fresh. The stories of ‘get rich’ schemes, the original Ponzi and bankers brazenly paying themselves lavish salaries when their banks are in crisis, give this book an astonishing contemporary feel.
Readers will be interested to study the role of the President (‘too hands off or hands on?), the Federal Reserve, the calls of ‘superficial optimism’ designed to boost confidence and the issue of how to regulate the regulators.
1929. These four numbers are etched into the collective memories like 1066, 1776, 1914 or 9/11.
Galbraith says that his literary task was “to tell what happened in 1929 and immediately before and after.” (p25)
It is not the purpose of this author to make predictions about whether history would repeat itself and whether there would be another recession on the size of the crash in ’29.
While Galbraith is not assuming the role of economic forecaster, this book does have some important lessons to say to businesspeople and individuals who are seeking to be wise about their saving and spending. This book is a vaccination against memory loss. Galbraith believes that instead of transacting loads of legislation to ensure a crash doesn’t happen again it is far better to regularly refresh the memory with the lessons of history.
The cyclical nature of speculation, boom and bust make this book an antidote to amnesia. It should be read every five years or when contemplating the possibility of a big investment. Sadly, this is a history book that illustrates that people learn little from history.
One doesn’t have to be an economist to enjoy or benefit from this book on economics as it has simplicity, drama and fluctuating emotion.
This is a close and careful study of an economic cycle, stopping frame by frame to comment on the forecasts, the disintegration of confidence, the mysteries of the Stock exchange, the explanations, the postmortems, the suicides, the ‘pregnant lessons’ and the calls, ‘Never Again’.
Galbraith writes engagingly and with color. For example, writing about Wall Street he says:
“Wall Street, in these matters, is like a lovely and accomplished woman who must wear black cotton stockings, heavy woolen underwear, and parade her knowledge as a cook because, unhappily, her supreme accomplishment is as a harlot.” (p48)
Similarly, Galbraith pours out pithy wisdom in apt definitions like this:
Will Payne explains the difference between a gambler and an investor. A gambler, he pointed out, wins only because someone else loses. Where it is investment, all gain. (p50)
John Kenneth Galbraith, The Great Crash 1929 (London: Penguin, 1954, 1975).
This book is available from Magrudy’s Bookshops in the UAE at a cost of Dh 65.00.
Dr Geoff Pound
Image: Front cover of The Great Crash 1929.