Primary navigation:

QFINANCE Quick Links
QFINANCE Reference

Home > Capital Markets Finance Library > The Great Crash, 1929

Capital Markets Finance Library

The Great Crash, 1929

John Kenneth Galbraith (1955)

Why Read It?

  • Entertaining account of the market mania and resulting historic crash of 1929.

  • Tells a relevant and timely story of over-investment and market frenzy, and why financial bubbles since then have always been compared to the Great Crash.

  • Traces the market fluctuations of the time, showing how the crash evolved and helped ignite a full economic depression.

Back to top

Getting Started

The Great Crash, 1929 depicts a time of rampant speculation, record trading volumes, and assets bought not because of their value but because of a gold-rush mentality. An enjoyable read, it offers an explanation of the market dynamics during the late 1920s, and how people got caught up in the stock market frenzy that led to the 1929 crash, and how the aftermath affected the economy.

Back to top


John Kenneth Galbraith (1908–2006) was an influential economist and author. He was an economics professor at Harvard, and later became an adviser to President Kennedy, president of Americans for Democratic Action, president of the American Economic Association, and was awarded the Presidential Medal of Freedom on two occasions.

Back to top


  • Shows the sustained mania for investment of the time in terms of crowd psychology—the investors wanted to believe that speculation would lead to great wealth.

  • Shows in detail the impact of speculative enthusiasm and how it caused the market to become extremely overvalued, and that despite the losses, people kept buying for the rise.

  • Details how government inaction enabled financial firms to operate in too risky and unethical a fashion.

  • Explodes a few myths about the crash, such as that it was caused by a lack of available securities, and that it hugely increased the suicide rate.

Back to top


  • Explains the increase in embezzlement of the time, euphemistically called “informal financial arrangements,” and how the crash impacted on some of the big names of the time.

  • Details the cause of the crash as also being due to a mixture of bad income distribution, bad corporate structure, bad banking structures, and lack of economic intelligence.

  • The similarities to more recent market downturns are unmistakable, from the trends toward corporate mergers and industry consolidations to the bubbles around certain sectors—investment trusts in the late 1920s and tech stocks in the late 1990s, and the current subprime and housing market problems.

  • Uses the story to show why economies are not self-sustaining after all, but susceptible to supply and demand shifts.

Back to top


As a protection against financial illusion or insanity, memory is far better than law.

A roaring boom was in progress in the stock market and, like all booms, it had to end.

But now, as throughout history, financial capacity and political perspicacity are inversely correlated.

Back to top

Further reading


  • Gow, Mary. The Stock Market Crash of 1929: Dawn of the Great Depression. Berkeley Heights, NJ: Enslow, 2003. Captures this key part of American history through firsthand accounts and quotes, and examines subsequent economic crises.
  • Sobel, Robert. The Great Bull Market: Wall Street in the 1920s. New York: Norton, 1968. An informative and enjoyable account of the times.
  • Williams, Andrea D. (ed). The Essential Galbraith. Boston, MA: Houghton Mifflin, 2001. A selection of Galbraith’s writings that show how relevant he still is.

Back to top

Share this page

  • Facebook
  • Twitter
  • LinkedIn
  • Bookmark and Share