The entry below is being cross posted from Marjorie Arons-Barron’s own blog.

1929: Inside the Greatest Crash in Wall Street History – and How it Shattered a Nation by Andrew Ross Sorkin is a spellbinding deep dive into the irrational exuberance of the Roaring Twenties, the amassing of wealth and wild stock market speculations that eventually blew out the fortunes of Wall St. insiders as well as average Americans hoping to get in on the action. Sorkin, author of Too Big To Fail, about the 2008 financial crisis, now reaches back to the worst depression in American history. His work on the project took him eight years. What he produced is not so much a deep macroeconomic explanation of why the crash led to the Great Depression but a character-driven look at the human side of men behind the headlines (and, yes, they were men).  What distinguishes this book is what he reveals about the personalities and daily lives of key players in the seismic events of 2029 and into the thirties.

It was a time when Wall St. bigwigs became celebrities. At one point I 2029, the stock market was up 62 percent over the previous year. People were greedy and giddy. Leverage piled up on leverage. One of the first seismic shifts was a 13 percent drop in the stock market on October 28^th. The next day was one that John Kenneth Galbraith would call “the most devastating day in the history of markets.”

A major focus in on Charles Mitchell, CEO of the First National City Bank of the United States (precursor of Citibank), a powerful banker and pillar of New York society who, despite his reputation as a civic benefactor and his position on the Federal Reserve Board, prospered by lending small investors money so they could buy stock (especially stock in his own bank). Unfortunately for them, the debt they took on was more than the declining value of their investments when the stock market tanked. They ended up on the losing end, running to the banks to take out whatever was left in their accounts.

Values of bank stocks declined dramatically. As the stock market gyrated, there was a run on banks, and smaller banks were wiped out. At the top of the heap, well-heeled bankers feverishly bought stocks in their own institutions to prop them up.

It was not just bankers who were caught in the financial whirl. John Rascob, head of General Motors, which had been successful in selling cars on credit, worked – as did other players- on creating pools of elite investors to buy and sell in unison, manipulating stock prices.   Pool operations were not illegal, but, when smaller speculators tried to buy in and do it on margin, they ended up losers.

Sorkin delves into the stock trading of other notables like Winston Churchill (in New York for a visit), financier Bernard Baruch, and Thomas Lamont of JP Morgan.

An activist President might have acted to bar banks from loaning to speculators in amounts more than their equity. Republican President (1923-1929) Calvin Coolidge (“Silent Cal”) had a distinctly “hands off” policy. Similarly, his successor Herbert Hoover saw no precedent for Presidential intervention.

Beyond the well-researched portraits of key players, Sorkin reminds us readers that October 29, 1929 was not a one-off event. The boom/bust patterns of ’29 continued into 1930, 1931, 1932 when stock prices had plunged 80 percent from their 1929 peak. The travails lingered toward the end of the thirties.

Sorkin asserts that, in the early months of 1933, as conditions worsened, Hoover, still stalling,  privately tried to persuade President-elect Roosevelt to declare a bank holiday upon his swearing in, so some 9000 more banks failed during the transition. (Back then Presidents weren’t sworn in until March following the election.)

In his second day in office, FDR then declared a national emergency, announced a bank holiday and shut down the banking system for a week.  Other writing by Sorkin reveals how many of the banking heavyweights failed to pay income taxes in 1932 and 1933. Under FDR (and with the help of Senator Charlie Glass and Congressman Jay Steagall ), Congress passed several financial bills, including the creation of the Securities and Exchange Commission, charged with ending the host of deceptive practices that fueled the speculative markets.

Sorkin’s narrative feeds our voyeuristic impulses by his lifestyles-of-the-rich-and-infamous descriptions of the large mansions, sumptuous summer homes, and high living of the movers and shakers.  His style is cinematic, and, perhaps as one of the co-creators of the TV series Billions, he’s looking for another series.

The president of the New York Stock exchange, Richard Whitney, embezzled $1 million in securities to support his own lifestyle. JP Morgan is described as offering stocks to elected officials at discounted prices. A jury refused to convict banker Charles Mitchell of tax evasion. Sound contemporary? Sorkin’s assertion that those who were made examples of weren’t any worse than the era’s other major financial figures who took advantage of weak laws and lax enforcement is surprising and cringeworthy.

Some experts, including CEO Jamie Dimon of JP Morgan Chase, having looked at today’s softening job market and international factors, are predicting a correction at some point during the next six to18 months. Today, 53 percent of new growth is due AI and mega-companies investing huge amounts in data centers with potential revenues being highly uncertain.

Sorkin misses the opportunity to draw bright-line connections between 1929 and 2025. The reader can infer his warnings about today’s overheated stock market from his emphasis on the risk of buying on margin, taking on debt to buy stocks.

Yet, at the end of the book, his warnings are relevant but largely generic. I would have preferred more take-aways.

But his focus is, after all, on the Great Depression. Sorkin quotes Albert Einstein that “no one, it seems, can benefit by the experiences of others. …Each must learn its lesson anew.” As if that weren’t depressing enough, he quotes John Maynard Keynes that “Markets can stay irrational longer than you can stay solvent.”  All of which persuades me to go back to fiction, which I promise to do in my next blog.