The Great Crash of 1929 by Galbraith John Kenneth

Author:Galbraith, John Kenneth [Galbraith, John Kenneth]
Language: eng
Format: epub, mobi
Publisher: Houghton Mifflin Harcourt
Published: 2009-09-10T04:00:00+00:00

VIII

On Friday and Saturday trading continued heavy—just under six million on Friday and over two million at the short session on Saturday. Prices, on the whole, were steady—the averages were a trifle up on Friday but slid off on Saturday. It was thought that the bankers were able to dispose of most of the securities they had acquired while shoring up the market on Thursday. Not only were things better, but everyone was clear as to who had made them so. The bankers had shown both their coin-age and their power, and the people applauded warmly and generously. The financial community, the Times said, now felt "secure in the knowledge that the most powerful banks in the country stood ready to prevent a recurrence [of panic]." As a result it had "relaxed its anxiety."

Perhaps never before or since have so many people taken the measure of economic prospects and found them so favorable as in the two days following the Thursday disaster. The optimism even included a note of self-congratulation. Colonel Ayres in Cleveland thought that no other country could have come through such a bad crash so well. Others pointed out that the prospects for business were good and that the stock market debacle would not make them any less favorable. No one knew, but it cannot be stressed too frequently, that for effective incantation knowledge is neither necessary nor assumed.

Eugene M. Stevens, the President of the Continental Illinois Bank, said, "There is nothing in the business situation to justify any nervousness." Walter Teagle said there had been no "fundamental change" in the oil business to justify concern; Charles M. Schwab said that the steel business had been making "fundamental progress" toward stability and added that this "fundamentally sound condition" was responsible for the prosperity of the industry; Samuel Vauclain, Chairman of the Baldwin Locomotive Works, declared that "fundamentals are sound"; President Hoover said that "the fundamental business of the country, that is production and distribution of commodities, is on a sound and prosperous basis." President Hoover was asked to say something more specific about the market—for example, that stocks were now cheap—but he refused.7

Many others joined in. Howard C. Hopson, the head of Associated Gas and Electric, omitted the standard reference to fundamentals and thought it was "undoubtedly beneficial to the business interests of the country to have the gambling type of speculator eliminated." (Mr. Hopson, himself a speculator, although more of the sure-thing type, was also eliminated in due course.) A Boston investment trust took space in The Wall Street Journal to say, "S-T-E-A-D-Y Everybody! Calm thinking is in order. Heed the words of America's greatest bankers." A single dissonant note, though great in portent, went unnoticed. Speaking in Poughkeepsie, Governor Franklin D. Roosevelt criticized the "fever of speculation."

On Sunday there were sermons suggesting that a certain measure of divine retribution had been visited on the Republic and that it had not been entirely unmerited. People had lost sight of spiritual values in their single-minded pursuit of riches.

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