1929: The Inside Story of the Greatest Crash
By Andrew Ross Sorkin
Published by Allen Lane, 2025 £30.00
Reviewed by Nick Hart
Shares traded on US stock markets at an all-time high. Companies dealing in the latest communication technology leading the way with huge paper valuations. The millionaire class enjoying a previously unimaginable explosion in their wealth, with cheap and readily available credit to allow the population to feel better off than they actually are.
All of these trends sound familiar in today’s world. But swapping AI and cloud computing for the then new innovations of television and telephone lines, they could equally be applied to the 1920s. With the ‘roaring twenties’ now as infamous for the economic boom in America as its abrupt end with the Wall Street crash, Andrew Ross Sorkin’s new book, 1929,aims to tell the story of how the bubble burst and gave way to the great depression of the 1930s.
A novelisation of the key processes and events, Sorkin brings the leading figures in America’s banking, industrial and political system at the time to life by making extensive use of quotations, anecdotes and biographical colour from a well-researched range of sources. This makes for a much easier and more engaging read than your usual history of financial markets. The early chapters bring out the enormous hubris of those who had become rich during the speculative mania that gripped the USA, with the proliferation of consumer stock brokerages, price ticker machines and, most importantly, cheap credit.
Sorkin describes how “Americans no longer had to save for the goods they wanted. Borrowing became a habit” – not just for new cars or domestic goods, but to buy stocks for as little as 10% of their price up front. This had the effect of driving up the price of shares in the biggest ‘blue chip’ companies ever higher, to the benefit of the large banks and trades in New York’s financial district. Especially as at that time the lack of regulation in the financial industry allowed for a whole manner of sharp practices and insider trading. In the fallout from the crash, National City Bank was revealed to have been commissioning salesmen to encourage ‘mom and pop’ investors to take out loans furnished by one of its subsidiaries to buy stock – in National City Bank!
In one memorable scene in the book as the market goes south, the house servants of financier Edgar Speyer bang on the door of his dining room asking for advice on how to avoid their own imminent financial ruin from over extension in the stock market. This provides a refreshing change of perspective. Due to much of the source material coming from biographies and correspondence of the rich and powerful, the book at times has the feel of a penthouse view of events with the working people who created the megaprofits and then carried the can for the crash appearing like ants on the Manhattan sidewalk.
The book uses a few sparing statistics to spell out the scale of economic devastation. As the panic in the New York Stock Exchange building begins to take hold on 19 October 1929 “in a matter of hours one billion dollars had quietly vanished” as share prices entered a downward spiral. In the space of two months following this $50bn was wiped off the US stock market – equivalent to half the country’s annual economic output at that time, and $941bn today!
Sorkin corrects the view of the crash in the popular imagination as a single calamitous day, describing how “the collapse was not a moment. It was a relentless unravelling”.
In fact, despite the precipitous crash in markets in late 1929, the mood music of the capitalist class as the year ended remained at least superficially relaxed due to the lack of discernible effect on the real economy and the fact that share prices only finished down 13% for the year.
Treasury secretary Andrew Mellon believed the crash would “purge the rottenness out of the system” while one anonymous banker said: “I have heard thousands of reports of merchants, farmers and men and women in all walks of life literally giving up their businesses to watch the stock market. Most of them will, by necessity, have to go back to earning their living in normal ways”.
However, this proved not to be the case in the decade-long slump that followed. Unemployment surged from 3% to 16% in the space of a year, peaking at 20 million and 25% of the workforce. A quarter of factory workers lost their jobs, with wages cuts of over 10% common for those that remained in work.
What tipped it over from a financial crisis to a wider economic one was the calling in of loans to consumers by banks desperate to cover their own losses, leading to a dropping off of demand. In the end, the Great Depression was caused not purely because of, as Sorkin says, people “at the top of industry and government” described as “flawed, self-interested, complicated” but by how it exposed one of capitalism’s fundamental flaws – the inability of workers to buy back everything they produce.
Bank runs could see up to 25,000 people gather outside single branch offices trying to withdraw their money. Still greater numbers gathered in so called ‘Hooverville’ camps of destitute unemployed. These are primarily described in the book in relation to the personal annoyance their nickname caused President Hoover!
The view of the man in the Oval Office as the slump took hold was that it was a crisis of sentiment, and that if the newspapers simply stopped talking about unemployment, “our troubles would be over in months”. As the 1930 mid-term elections approached and it became clear that this wasn’t the case, Hoover attempted to pass measures to stimulate the economy. This represented a new turning point for previously booming US capitalism, meaning Congress was “shocked at the revelation that our government for the first time in peacetime history might have to intervene to support private enterprise”.
This gathered pace under his successor Franklin Delano Roosevelt, elected president in 1932. Measures included the first bank deposit guarantee schemes, expanding the availability of credit through the ending of the ‘gold standard’ link between the dollar and the price of precious metal, and the 1933 Glass-Steagall Act mandating the Federal Reserve to provide credit to distressed provincial banks, not syndicates of their big city rivals, along with its well-known separation of retail banking from speculative activities.
But most well-known were the New Deal packages, an attempt to boost demand in the economy through public works creating employment, the introduction of social welfare payments and a strengthening of workplace rights. The calculation behind this for the American ruling class was simple; in the words of General Motors founder William Durant, without a change of course the nation faced “longer breadlines, more soup kitchens, continued uneasiness and distress, and a more pronounced tendency to socialism and communism”.
American Marxist James P Cannon wrote in 1931 that “the capitalists, bent on loading the burden of the crisis onto the backs of the workers, are preparing thereby the necessary conditions for a labor revolt. In this way they will convince the workers, as propaganda has been unable to convince them, that there is no way out but to fight”.
Membership of the Communist Party surged to 70,000, along with the launching of the Congress of Industrial Organisations (CIO) representing a widening of trade unionism to incorporate larger parts of the working class. The peak of struggle was reached with a general strike in Minneapolis in 1934 behind truck drivers led by co-thinkers of Leon Trotsky (see page 18).
In the expository introduction to 1929, Sorkin hints at “the remarkable parallels between that era and today’s political and economic climate”. With the memory of not just the Wall Street Crash but the 1990s dotcom bubble and the 2000s subprime crisis still fresh, today’s speculators are concerned as to when, not if, the current bubble in tech sector stocks will burst. This reflects the pessimism of an American capitalism that is no longer breaking new ground in productive forces as it was in the 1920s.
Key for socialists will not just be studying the events of 1929 in isolation, but the tumultuous class battles that followed in its wake.