the crash of 1929 by john kenneth galbraith

The great Crash of 1929 , after several years of retrospective aided by hindsight and the violent upheavals of global economy many times over is still shrouded in airs similar to a romantic tragedy . Yesterday 's millionaires flinging themselves out of high rises is a myth propagated by many reports , documentaries and movies symbolically representing the thud and the bloodiness of the crash which sent the American economy into a deep depression ( though it is arguable whether the crash had a causal relationship with the depression or was merely a manifestation of the

impending doom

Of the many scholarly works available to evaluate and enumerate the happenings in and around the crash , The Great Crash of 1929 by John Kenneth Galbraith (who missed his own centenary by just 2 years in 2006 is considered to be a masterly work and a reference point for various conclusions drawn that have influenced world and U .S . economy in particular in the coming years

John Kenneth Galbraith was blissfully ensconced in academic pursuits when the Crash happened and perhaps that is the best seat available to view the upheavals , which were as exciting as they were painful . Though the crash and seeming fury at the vagaries of the Stock market led economy led to the rise of sympathy for Communist or Socialistic movements , Galbraith escaped becoming influenced . This was purely because of his fundamental belief in the primacy of the Capitalism and its inevitability in the world . Though Galbraith is prone to his own idiosyncrasies in propagating his forms of control on the market basically his arguments are pro-market

In his acclaimed work Galbraith accords a ring side view of the happenings of the Period around the Crash

The general mood just before the period of crash was a sustained period of optimism which swatted away any attempts at caution . In fact there were indications that the bubble was a not a balloon in full flight that could carry its occupants upwards but more of a bubble which could drench all the supporters squirting misery all over , were evident in brief periods of adjustment that happened in the first and second quarter of 1929 and once before in 1927 . However , the recovery only made the optimists more brazen in their speculation

As Galbraith explains in the scheme of things , the essential reason for loss was Greed on the part of the speculators and apathy on the part of the banks , administrators and general consensus not to exercise caution in any which form . The concept of margin money comes out as one of the major manifestations of evil . Speculators borrowed nine times the value of the stock (ironical in hindsight , they had the stocks placed as the collateral . Any increase in the share prices resulted in earnings nine times the original investment . The obvious corollary that the loss would be nine times as high and if the share price actually took a down turn the collateral would decline in value as well was conveniently...