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Cash is King

Book Review: The Great Crash 1929, by J K Galbraith
It wasn't clear whether I was being prepared or tempting fate, but I decided the time had come to give this one a read. The copy I have has an extra introduction from 1961, prepended to the 1954 text. The introduction itself gives a key to Galbraith's factual but wryly humourous style of writing, as it describes the success of the book, his testimony to Congress at around the time of the book's publication, and the observation by a shop assistant that a title like that wouldn't sell in an airport bookshop.

For the most part, the book attempts to be a telling of facts rather than opinions, and I think it succeeds. Only in the final chapter does Galbraith attempt some analysis of the cause of the 1929 crash and its consequences. Whilst the cause seems fairly clear - the ending of a speculative boom, a period of "irrational exuberance", Galbraith observes that this is not sufficient to explain the subsequent Great Depression of the 1930s, though he does venture some possible linkages between factors.

There are recurrent themes throughout economic history: relatively easy access to money (see also the run up to the credit crunch), a "new basis" for valuing company stocks (see also the dotcom boom), the impotence of government and regulatory authorities. One of the more interesting observations Galbraith makes is that the stock market tends to adjust prices reactively, on the basis of information (such as company earnings, production trends, and so on) gathered in the past; the irony is that one is frequently told that stock prices are supposed to value future earning potential.

Galbraith has written well for a general audience, interested but not familiar with details. His apology for the use of footnotes is an irritation; his highlighting of a split infinitive (in the mission statement of a Senate Committee) I find amusing. Despite the subject matter, the reading of this book puts me in a philosophical mood more than a depressed one, though one can certainly see the parallels some commentators are now making with our present conditions.
Tags: books, economy, history, money, politics
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