The Great Crash 1929 by Galbraith: Chapter 5- "The Crash"

Summary
        By the autumn of 1929, the economy had faced a catastrophe: a depression. The industries and factories culminated to an apex and then plummeted, followed by the fall of the stock market. It was believed by many that the economy, too, was headed for trouble. In order to console themselves during such an adverse situation, terms such as preventive incantations were grasped. It elucidated that the stock market was not fundamentally conducive to instigate such drastic conditions. It emphasized that the true factors would comprise of production, employment, and spending, all of which remained unaffected. Thus, people continued to emphasize that depression was unreal.

Massachusetts Department of Public Utilities

        However, in reality, depression was indeed a predicament. There were an abundant amount of variations for explanations; however, a plausible speculation was that there was a serious shock to the confidence which infected pessimism into the speculators, leading to dramatic drops in sales.
        Two primary reasons were believed to have caused the drop in confidence, the first of which was the collapse Clarence Hatry. Hatry was renowned for developing an enterprise in the coin-in-the-slot vending and later shifted to the slot vending and automatic photograph industry. However, his decline in 1929 struck a sharp blow to the confidence in New York. Additionally, the refusal of Massachusetts Department of Public Utilities to allow the schism of Boston Edison's stocks from four to one increased the injury with insult. The department suggested that the "present value of the stock was due to the actions of the speculators."

New York Stock Exchange

        However, confidence did not disintegrate at once. The New York Stock Exchange sales increased and a lead story concerning Ivan Krueger, previously inaccessible to journalists, was garnered. Additionally, Professor Irving Fisher claimed to "expect to see the stock market a good deal higher."
        Unfortunately, on October 19, circumstances were reversed again. More compelling indications of an depression were depicted as the market was behaving very badly. Times believed "the end had come." No immediate explanation of the break was forthcoming. Wall Street was at its worst.

Irving Fisher

        But with such tribulations, hope was not lost. Organized support convened to provide aid. A group of powerful people organized to keep the prices of the stocks at a reasonable level. As a result, the market seemed to be displaying the facility to recover. Fisher again commented that he felt the boom "had not caught up with their real value and would go higher." Charles E. Mitchell claimed that "too much attention had been paid to the large volume of brokers' loans, and concluded that the situation was one which would correct itself if left alone."
        However, on October 24, it was the first day in history in which panic was consorted with 1929. The tides escalated to a whole, new level. Prices fell farther and faster. Stories degenerated into wild, mad scrambles to sell. Markets had surrendered to blind, relentless fear. And suicide waves were in progress. Panic was here.

Richard Whitney

        With the 1st initial panic in action, a miracle rose to appease the disaster. The organized support reappeared with the lead of Richard Whitney, who was expected to manage the affairs of the Exchange, brought much capital back into the market. Many had good reason to be grateful to the financial leaders of Wall Street. This execution led to the start of the laying of the foundation of the constructive advance which would end up characterizing the 1930s. The bankers had displayed both their courage and their power in times of desperate need, but things were about to get more serious.






Analysis
        The theme presented in the chapter aligns with work, exchange, and technology, and specifically with the role of the government in affecting society. As a result of the economic depression, the role of the federal government has shifted to more of a liberal approach. With the New York Stock Exchange and the stock market incapable of controlling the financial markets, individuals such as the leaders in the organized support and Richard Whitney took initiative to address the issues of the economy. As a result, the federal government has took less intervention in the economic life since the 19th century, allowing for popular ideas to emerge and consolidate such as capitalism and free market.
        A time period which is similar to the chapter is Period 7: 1890-1945 (Key Concept: 7.1-I.A)
Despite the exponential growth of the economy with the stock market and the bonds, credit and market instabilities such as from the crash of the stock market has led to the rise of a stronger financial regulatory system with the advent of the organized support led by Richard Whitney.

Citations

"Fuel Assistance, Weatherization and Conservation | Action Energy, Gloucester, Mass." Fuel 

    Assistance, Weatherization and Conservation | Action Energy, Gloucester, Mass. Accessed March 

    14, 2015. http://actioninc.org/energy_funding.html.

Galbraith, John Kenneth. "The Crash" In The Great Crash, 1929, 
    88-107. Boston: Houghton Mifflin, 1955.

"IntercontinentalExchange to Buy New York Stock Exchange Euronext for $8.2 Billion." IBNLive. 

    December 21, 2012. Accessed March 14, 2015. 

    http://ibnlive.in.com/news/intercontinentalexchange-to-buy-new-york-stock-exchange-euronext-  

    for-82-billion/311649-7.html.

"Irving Fisher." Wikipedia. Accessed March 14, 2015. http://en.wikipedia.org/wiki/Irving_Fisher.

"New York Stock Exchange Vice President Richard Whitney." - U508221INP. Accessed March 14, 

    2015. http://www.corbisimages.com/stock-photo/rights-managed/U508221INP/new-york-stock-  

    exchange-vice-president-richard.