I cannot recommend this book enough.
Backround from the Saturday Review:
Once in Golconda “In this book, John Brooks-who was one of the most elegant of all business writers-perfectly catches the flavor of one of history’s best-known financial dramas: the 1929 crash and its aftershocks. It’s packed with parallels and parables for the modern reader.” -From the Foreword by Richard Lambert Editor-in-Chief, The Financial Times Once in Golconda is a dramatic chronicle of the breathtaking rise, devastating fall, and painstaking rebirth of Wall Street in the years between the wars. Focusing on the lives and fortunes of some of the era’s most memorable traders, bankers, boosters, and frauds, John Brooks brings to vivid life all the ruthlessness, greed, and reckless euphoria of the ’20s bull market, the desperation of the days leading up to the crash of ’29, and the bitterness of the years that followed. Praise for Once in Golconda “A fast-moving, sophisticated account.embracing the stock-market boom of the twenties, the crash of 1929, the Depression, and the coming of the New Deal. Its leitmotif is the truly tragic personal history of Richard Whitney, the aristocrat Morgan broker and head of the Stock Exchange, who ended up in Sing Sing.” -Edmund Wilson, writing in the New Yorker “As Mr. Brooks tells this tale of dishonor, desperation, and the fall of the mighty, it takes on overtones of Greek tragedy, a king brought down by pride. Whitney’s sordid history has been told before..But in Mr. Brooks’s hands, the drama becomes freshly shocking.” -Wall Street Journal “It’s all there in Once in Golconda-the avarice of an era that favored the rich; and the later anguish of myriads of speculators doomed by a bloated market, easy credit, and their own cupidity and stupidity.”
If you read this for no other reason, it will assure you that “this time” is not really different. These boom bust cycles always happen, whether it be tech, housing or credit. You cannot legislate and regulated away people emotions when it comes to money. If anything, the more you try to regulate them, the more folks seem to become determined to find a way around those regulations and it typically involves more risk/reward, thus the bubble then pop (see “liar loans” or $100 tech stocks than ignored earnings).
By walking through history perhaps the reader will be able to put current events in a historical context, be able to see the “how’s” of the end of the crisis (not necessarily the “when’s”) and be better able to control oneself when the talking heads on TV or the MSM do their best to try and make you jump out of your office window everytime the Dow falls 300 points.
What was of particular interest was what “was to blame” for the 1929 crash and what followed:
1- “Short Sellers”
2- Banks
3- “Speculators”
4- Excess leverage
5- Lack of Gov’t regulation
Did any of them work? No…It was the war and the energy it out into business that did the trick…not Gov’t “engineering”.
Geez…..glad we have managed to avoid the same pitfalls now that were are allegedly almost 80 years wiser.
So, in the past eighty years we increased regulation, enacted capital requirements, separated investment houses from banks, set margin rates and yet…here we are.
You cannot, under any circumstances regulate stupidity and greed, no matter how hard you try.
It really was a great book.
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