We are back writing for Mises (as hinted #1419510)! It's been a while—seven months, by my count.

In time for the autumn blues last year, Andrew Ross Sorkin delivered a riveting doorstopper-sized account of the fateful year 1929. What most people know about the 1920s revolves around endless optimism, dancing, underground bars, and speculative financial fevers. Sorkin—the co-anchor of CNBC’s Squawk Box and author of Too Big to Fail—captures this in a diary-style account of the days and months before Black Thursday and Black Tuesday—both days of double-digit stock market losses in late October 1929.

It was a bliss to read, the author's values and track record aside.

"1929: Inside the Greatest Crash in Wall Street History—and How It Shattered a Nation is something of a Wall Street thriller, filled with drama and intrigue and quite a bit of murder, at least of the financial sort.""1929: Inside the Greatest Crash in Wall Street History—and How It Shattered a Nation is something of a Wall Street thriller, filled with drama and intrigue and quite a bit of murder, at least of the financial sort."

it wasn’t just the financiers and the banking hotshots. Sorkin shows us that plenty of maids or shoeshines or dishwashers had unbelievable sums riding on US Steel or Radio Corporation of America—quite often on margin, i.e., financed by only a small “down payment,” effectively buying stocks with 5-10x leverage. When cheap money engulfs the economy, it swallows everyone.

Here's an observation that peeps today easily overlook and just assume that 1929 stock market crash = Great Depression. Not really:

One twist that most observers of the banking crises and depression of the 1930s overlook is that, when zoomed out, the stock market losses for 1929 weren’t particularly overwhelming; on their own, they couldn’t have unleashed the disasters of the ’30s for which they’re frequently blamed.
Sorkin reports as much: “The Dow Jones closed 1929 at 248, down just 17 percent for the year. Bankers and traders could look at that number and reasonably say to themselves, ‘Not so terrible. We’ve seen worse.’” He admits that “the crash may not have caused the larger business depression, but it certainly had a powerful effect.” (Aswath Damodaran’s S&P 500 series at New York University reports just -8 percent for 1929).

Finally, that infamous Irving Fisher quoteFinally, that infamous Irving Fisher quote

Most people have heard of Fisher's terrible statement ("permanently high plateau") about stock prices like a week or so before the whole edifice collapses. What's even worse, and what Sorkin digs up, is earlier in the year he explicitly says:

"stock prices are not too high and Wall Street will not experience anything in the nature of a crash”" (Irving Fisher, Sept 1929)"stock prices are not too high and Wall Street will not experience anything in the nature of a crash”" (Irving Fisher, Sept 1929)

ENDING:

The awkwardly-outsized epilogue, then, leaves us with a bitter taste from the total reversal of fortunes, with some cosmic rumination on economic justice. The hot-shot Wall Street traders and financiers all end up destitute, in jail, or committing suicide. (Good riddance?). The more fateful result for the world is that the largely-laughable Mr. Churchill, together with the outsider Roosevelt, end up two of the most powerful men in the world, running the two superpowers of note. That might be the real, underappreciated tragedy coming out of 1929.