The Crash and Its Aftermath A Review Article

I n The Crash and Its Aftermath, Barrie A. Wigmore presents a detailed chronology of financial markets from "Black Thursday" in 1929 to President Roosevelt's "100 days" in 1933. The book's strength is in its consideration of bond markets, including the U.S. Treasury, corporate, municipal, and foreign bond markets, as well as (to a lesser degree) commodity markets, in addition to money and stock markets. Nowhere else can as complete a financial history of this time period be found. The book's weakness is its underlying theme that the Great Depression was caused by an unbroken string of negative shocks which pounded financial markets and the U.S. and world economies into ruin. Wigmore begins with the fall of stock prices that took place from October to November 1929. This reflects his belief that the first negative shock causing the Great Depression was the speculative boom of the late 1920s which, on margin financing, raised stock prices to historic highs. Then, when reality inevitably burst this bubble, stock market prices tumbled, and tumbled, and tumbled, and took everything down with them. The view that overspeculation during the late 1920s caused the Great Depression has been subscribed to by many contemporaries of the Depression and can be found in a number of histories. Among those holding this view have been conservative economists such as Benjamin Anderson and Keynesian economists such as John Kenneth Galbraith as well as officials of the Hoover administration. Galbraith, in The Great Crash, wrote "the collapse in the stock market in the autumn of 1929 was implicit in the speculation that went before. . . . This was the way past speculative orgies had ended. It was the way the end came in 1929. It is the way speculation will end in the future." Wigmore makes this argument by gathering a voluminous amount of