Sunday, March 16, 2014

The Great Crash 1929, by John Kenneth Galbraith

John Kenneth Galbraith's witty survey of the Great Crash reads like a novel, full of great characters and unbelievable events. The moral of the story seems to be: don't let economic optimism get too out of hand. A fall is sure to follow.

John Kenneth Galbraith's style is so witty and ironic it's always easy to presume that he was British. He was actually Canadian but lived a large portion of his life in the US. His writing is more akin to English wits like Nancy Mitford and Max Beerbohm, rather than your typical yawn-inducing academics. What further complicates matters is Galbraith's subject matter: economics. You'd expect the tone to be dry and pedestrian, rather than lively and humorous.

Galbraith's 1954 examination of the Great Crash is short (200 pages) and typically pithy. He presents more of a history of the crash than an explanation of why and how it happened. Indeed, he makes it fairly plain that there was no real culprit for the crash and presents it pretty much as a mystery.

Interestingly, Galbraith says that the total amount of people actually involved in speculation, out of a population of some 120 million at the time, was no more than a million. This small group caused such havoc. The Great Depression that followed, Galbraith writes, also defies explanation. Its length and severity were not caused by any weaknesses in the fundamentals of the American economy at the time, in this author's opinion.

Why read The Great Crash 1929 then if it can't give a clear explanation for why the crash happened? Galbraith writes the story of the Great Crash like a spirited novel. The book has an intriguing cast of characters and many jaw dropping events. For those interested in a study of the harmful effects of extreme optimism, then look no further. The whole culture believed, in a rather childlike way, that America had been blessed with a stock market and economy that would make every one rich, with minimal to no effort. This wasn't just a belief amongst the punters, but even the cultural elite subscribed to such a view – people who really should have known better.

Galbraith writes his history of the crash like a witty yet philosophical novel. It is peppered with ironic commentary, extraordinary events, self-deluded characters who must finally face reality and ultimately a moral to the story: too much self-belief is a one way ticket to disaster.

The Great Crash 1929, by John Kenneth Galbraith. Published by Mariner Books. ISBN: 9780547248165 Price: $24.95