The Great Crash 1929 by Galbraith: Chapter 7 - "Aftermath I"

Summary        

Ivar Kreuger

        However, as the Great Crash of 1929 began to worsen, the organized support was futile, and with such cataclysm came the advent of multiple suicide waves. With the stock market crash, life was no longer worth living as depicted with the substantial increase in suicides. Broken speculators began being consort with propensities for self-destruction. 

        Unfortunately, newspapers merely seized on suicides to evince that people were reacting appropriately to their misfortunes. Stories of violent self-destruction began to appear in the papers with some regularity with instances such as jumping from a window, diving into water, and taking gas. Suicides that received much attention were that of J.J. Riordan and Ivar Kreuger.

Union Industrial Bank
Flint, Michigan

        However, the effect of the crash on the embezzlement was more significant than that on the suicide. Embezzlement, in simple terms, is the shifting of stocks in a inconspicuous manner. The crime begins as the embezzlement is undiscovered due to conducive conditions. However, as the rate of embezzlement grows, it shrinks as depression appears and money is watched with a narrow, suspicious eye. The stock market exaggerated the normal relations of this process. People began exceptionally trusting and transitioned to extraordinarily dubious. Such reports are evident in the defaulting of employees as daily occurrences and looting of the Union Industrial Bank of Flint, Michigan.

Short Selling

        The crash, needles to say, was mortal. Unfortunates were revealed in their misery and the crash exposed the corrupt speculators. However, with such morality, came the last efforts at reassurance. The New York Stock Exchange began an investigation of the short selling of Jesse L. Livermore, who was believed to be driving the market down. Simultaneously, the Wall Street Journal complained that abundance of short selling and the egregious market. However, nothing came of Livermore's study.

President Hoover

         A more important effort at reassurance was conducted by President Hoover. At the time the general index of the industrial production was falling. As a result, Hoover announced to cut the taxes of the individuals and corporations by one full percentage. Such drastic reductions may at sight have seemed insignificant, but it revived a ambience of confidence. Furthermore, Hoover conducted one of the oldest, most important rites in America. He conducted the no business meetings. Such meetings were held to transact no business but merely just to relay ideas, coined as the exchange of ideas justification. They were a practical expression of laissez faire and a device for simulating action, when action is impossible. Such efforts by Hoover compensated for the influx of suicides and embezzlements but prospects of future continued to look bleak.

Analysis
        The theme depicted in this chapter aligns with work, exchange, and technology, and specifically how the growth of corporate power influences economic policies. With the previous growth of the holding companies and the corporations in the New York Stock Exchange, economic policies are now transformed to give the advantage to individuals in the capitalist market. Self prosperous actions such as embezzlements and short selling are conducted by corporations and people like Union Industrial Bank of Flint, Michigan and Jesse L. Livermore. 
        A time period which is similar to the chapter is Period 7: 1890-1945 (Key Concept: 7.1-I.C)
With credit and market instabilities such as the embezzlements and the short selling, call to a stronger financial regulatory system was taken up by Hoover. With the advent of the traditional no business meetings, Hoover devised the methods of taking action when action was impossible.

Citations

"Buy Postcards - Union Industrial Bank Building, Flint, Michigan 1943 - BidStart (item 

     25557598 in Postcards : United States : Michigan : Flint)." Union Industrial Bank 

     Building, Flint, Michigan 1943. Accessed March 14, 2015. 

     http://postcards.bidstart.com/Union-Industrial-Bank-Building-Flint-Michigan-1943-

     /25557598/a.html.

Galbraith, John Kenneth. "Aftermath I" In The Great Crash, 1929, 
    128-143. Boston: Houghton Mifflin, 1955.

"Ivar Kreuger." Wikipedia. Accessed March 14, 2015. 

    http://en.wikipedia.org/wiki/Ivar_Kreuger.

Rothbort, Scott. "How Short Selling Works." TheStreet. October 8, 2007. Accessed 

    March 14, 2015. http://www.thestreet.com/story/10383365/1/how-short-selling-

    works.html.

"United States Presidential Election, 1928." Wikipedia. Accessed March 14, 2015. 

    http://en.wikipedia.org/wiki/United_States_presidential_election,_1928.