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By 20 June, 5, shares were traded in a falling market that many prematurely thought signalled the end of galbraith great crash 1929 bull market. Overall, the market rose during the year from to which was accompanied by a phenomenal increase in trading on margin, [11] which relieved the galbraith great crash 1929 from putting up the full purchase price of the stock by using the securities as collateral for a loan.

The buyer obtained full benefit of ownership in rising stock valuation, but the loan amount remained the same. People swarmed to buy stock on margin. In the early s, brokers' loans used to finance purchases on margin averaged 1—1.


With the bursting of the bubble, accounts were now more closely scrutinized and reports of defaulting employees became a daily occurrence after the galbraith great crash 1929 week of the crash.

The looting of the Union Industrial Bank became the most spectacular embezzlement of the period. Unknown to each other, several of the bank's officers began making away with funds for speculation.

Galbraith great crash 1929 a period of time, they became aware of each other's activities and unable to expose each other entered into a cooperative venture which in time came to include all of the principal officers of the bank.

First, an imbalance in the income distribution. That way it can seem like an act of God, rather than of the regulating bodies and therefore they might just get re-elected. It is a sobering idea. Or my favourite, that the market needed a bit of a rest after working so hard in the twenties that it needed to have the thirties off altogether.

It is clear that galbraith great crash 1929 capitalism to continue to grow it needs ever expanding markets. But the US at the time was actually doing everything in its power to contract its markets. It had become a creditor nation to Europe after the first world war, it increased tariffs and thereby denied other countries a means of repaying debt owed to the US in a way that might encourage them to buy more US goods and most interesting, despite a 40 odd per cent increase in productivity of labour, wages barely increased at all.


As Marx pointed out nearly a century before Galbraith, under capitalism, and for the first time in human history, we have crisis due to producing too much, rather than too little. The wholesale destruction of capital due to the depression that followed the crash was necessary not because there was no one who wanted what could have been produced by this capital, but because there was no galbraith great crash 1929 to be made from producing it.

And greed was the key determining feature that decided there would be no market — stopping pay increases for workers through a decade of growth and thereby directing the wealth of society disproportionately towards the rich only meant they would use it to further speculate on the stock market — which only made galbraith great crash 1929 situation worse for everyone.


It is what causes men who know that things are going quite wrong to say that things are fundamentally sound. The latter were not lead to the slaughter. There were impelled to it by the seminal lunacy which has always seized people who are seized in turn with the notion that they can become very rich.

There were many Wall Streeters who galbraith great crash 1929 foster this insanity, and some of them will appear among the heroes of these pages. There was none who caused it. Banks supply funds to brokers, brokers to customers, and the collateral goes back to banks in a smooth and all but automatic flow.

Margins - the cash which the speculator must supply in addition to the securities to protect the loan and galbraith great crash 1929 he must augment if the value of hte collateral securities should fall ans so lower the protection they provide - are effortlessly calculated and watched.

The interest rate moves quickly and easily to keep the supply of funds adjusted to the demand.

The Great Crash of by John Kenneth Galbraith

Wall Street, however, has never been able to express its pride in these arrangements. They are admirable and even wonderful only in relation to the purpose they serve.

The purpose it so accomodate the speculator and facilitate speculation. But the purposes cannot be admitted.

The Great Crash of 1929

If Wall Street confessed this purpose, many thousands of moral men and women would have no choice but to condemn it for nurturing an evil thing and call for reform. Margin trading must be defended not on the grounds that it effeciently and ingeniously assists the speculator, but that is encourages the extra galbraith great crash 1929 which changes a thin and anaemic market into a thick and healthy one.

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Wall Street, in these matters, is like a lovely and accomplished woman who galbraith great crash 1929 wear black cotton stockings, heavy woollen underwear, and parade her knowledge as a cook because, unhappily, her supreme accomplishment is as a harlot.