69 pages • 2-hour read
1929: Inside the Greatest Crash in Wall Street History--and How It Shattered a Nation
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Themes
The Tensions Between Private and Public Stakeholder Interests
In 1929, Sorkin frames the crash and its aftermath around a direct confrontation between Wall Street’s legacy of private authority and growing calls for public empowerment. This tension reflects a historical reality of the era, with its growing momentum toward democratization and socio-economic mobility, used by Sorkin to create the book’s narrative drama and moral purpose.
Sorkin shows how, before the crash, powerful financiers operated with near-total freedom and treated federal supervision as an intrusion. The bankers’ reactionary opinions and defiant control of business in the months before the crash is plainly laid out by the book’s many primary sources. This growing clash—between the bankers’ conviction that they know best and Washington’s early attempts at oversight—sets the active momentum of 1929 in motion, as Sorkin emphasizes the Wall Street leaders’ longstanding opinion that their work was “none of Washington’s business” (9). Underlying this overt friction, 1929 makes clear that the disagreement largely centers around a conflict between the interests of the bankers themselves, and those of the public who, as small private investors and bank customers, or simply at the mercy of wider macro-economics, were largely unprotected by oversight or legislation.
In parallel, the antipathy between Mitchell and Glass—as figureheads of the two opposing sides—is used to characterize this debate. This dramatic tension escalates further as the book details March 1929, when the Federal Reserve tries to limit speculation, and Mitchell responds by openly challenging its authority, claiming that his bank has an obligation “paramount to any Federal Reserve warning” (92) to supply credit and steady the market. Wall Street is shown praising him for this projection of its shared vested interest, while reformers like Senator Carter Glass see Mitchell’s independence as “mutiny” (105). These sources demonstrate the increasingly fierce argument being played out in real terms in 1929, as the crisis comes to its a climax.
Sorkin shows how the balance of power shifts after the crisis, opening space for congressional investigation, especially the Pecora hearings, to reveal systemic conflicts of interest and shift banking from a self-governed enterprise toward a system of public trust. Sorkin explores how public anger at the effects of the collapse influenced the style and scope of investigations, putting these affairs into the public arena. This theme especially follows the fall from grace of “Sunshine Charlie” and his resignation under a “cloud of criticism” (350). In particular, 1929 shows how Prosecutor Pecora uses the Senate investigation to make an example of Mitchell to show that Wall Street’s elite are “not immune from scrutiny” (325). The narrative explores wider moral questions, as Pecora exposes practices within the law yet which startle the country as unfair or irresponsible, such as market manipulation and large-scale tax avoidance. As Charles Mitchell falls from prominence and J.P. Morgan & Co. face pointed questioning and disgrace, the book charts a turning point in which public judgement, including the press, overcomes the protections and privacies of the elite. This public embarrassment, paired with the exposure of the firm’s “preferred lists” that gave discounted stock to influential figures, is shown to cause the widespread view that the financial world had been rigged. Following the loss of faith in bankers as “the stewards of the national interest,” (372) this theme traces how the age of private power shifted into an age of increased legislation and public protections after 1929.
The Importance of Political Leadership in Times of Crisis
In 1929, Sorkin sets up a comparison of US presidents Herbert Hoover and Franklin D. Roosevelt to show how their different leadership styles shaped government responses to the 1929 crash and the deepening depression. While Hoover is shown relying on technocratic caution and faith in private solutions, failing to contain the economic unraveling, Roosevelt responds with forceful federal action and confident public communication to alter the country’s political direction. This theme explores how the 1929 crisis was a test of political will through the two presidents’ contrasting philosophies on the relationship between government and its citizens.
Hoover, the “Great Engineer,” treats the crash as a technical problem that can be fixed by steady management and minimal change, designed to reassure the public. Early on, the book reveals that he dismisses the crash as a “purely psychological” break on Wall Street, (247) claiming that “words are not of any great importance in times of economic disturbance” (250). Although he gathered business leaders, urged them to keep wages stable, and supported public works, he resisted direct federal relief, arguing that “economic depression cannot be cured by legislative action or executive pronouncement” (299). Sorkin presents Hoover’s non-interventionist approach and, especially, his communication style as lacking the “emotional appeal” (251) required to rally a strained nation and significantly boost confidence. Hoover’s restraint, grounded in his small-government, laissez-faire political ideology, kept him from taking the sweeping steps the public wanted. The book emphasizes the contrast drawn by Roosevelt and the advantage conferred by being a change of administration, voted in by an anxious and angry electorate eager for change. When Roosevelt declares a national bank holiday, Sorkin comments that, under Hoover, the move would have looked like a “desperate measure”; under Roosevelt, it appears as “bold executive action” (357). Sorkin commends Roosevelt’s direct and modernizing approach such as his first “fireside chat,” when he explains the banking crisis to 60 million Americans, reassuring them, “It is safer to keep your money in a reopened bank than under the mattress” (366). Sorkin shows how swift intervention paired with confident communication steadied the country, eased the banking panic, and created the conditions for the major reforms of Roosevelt’s first 100 days, including the Glass-Steagall Act.
Sorkin also shows how the ideological and personal differences between the two leaders were deliberately emphasized at the time, especially by Roosevelt for political gain. The transition before Roosevelt’s inauguration reveals Hoover’s hesitation and Roosevelt’s political opportunism: When bank runs sweep the country in early 1933, and Hoover repeatedly asks Roosevelt to release joint statements to calm the panic, Roosevelt refuses because he does not want to be associated with a collapsing administration. Similarly, Sorkin shows how, on the night before the inauguration, Hoover pleads with Roosevelt to support a national bank holiday, having hesitated to impose it himself. Roosevelt is quoted as answering, “If you haven’t the guts to do it yourself, I’ll wait until I’m president to do it” (354). This exchange shows how the chasm between the two was exacerbated by Hoover’s paralysis and Roosevelt’s desire to signal a fresh start to the American people. Although Roosevelt’s approach is in his own political interests, Sorkin also examines how this ruthlessness reveals Roosevelt’s understanding of the self-fulfilling value of strong leadership, especially at a time when public confidence is in crisis.
The Relationship Between Financial Manipulation, Risk, and Deception
In 1929, Sorkin explores how many financial products of the “Roaring Twenties” hid widespread manipulation and personal interest misrepresented as sophisticated modernity. Sorkin shows how stock pools and aggressive sales campaigns by bank-securities affiliates flourished under this veneer, often blurring the lines between investment and speculation. These practices drew inexperienced buyers into opaque markets which favored insiders, exacerbating elitism and exploitation. Sorkin’s analysis of the crash also shows that the bankers themselves had an increasingly unclear idea of the effects of these experiments, especially around pyramid risk and the false inflation of stock price, leading to the banking sector’s ultimate loss of control in 1929.
Sorkin identifies stock pools as the era’s most organized manipulation. describing them as “patently underhanded and deceptive,” although they remained legal and attracted powerful figures (63). Sorkin uses the example of the March 1929 RCA pool to show the reader how this system worked. Michael Meehan, the RCA specialist on the New York Stock Exchange, assembled wealthy insiders such as William Durant and Walter Chrysler, who raised over $12 million from investors. They then “painted the tape” by trading shares among themselves to create the illusion of rising demand and upward momentum (100). The public saw the climb and bought shares at inflated prices. Once the price peaked, the pool managers “pulled the plug,” sold their stock, and collected nearly $5 million in profit. Ordinary investors were left with steep losses while insiders profited. In this way, 1929 shows how, for short-term gain, bankers were willing to continually exploit the public without understanding that this could have a negative impact on public confidence.
This theme reveals how banks built conflicts of interest into their retail behavior. Charles Mitchell’s National City Bank and its securities affiliate, National City Company, is used to illustrate this problem: Mitchell promoted bringing “the Everyman” into the market, yet his institution protected its own interests above its clients’ needs and National City’s sales team, driven by large bonus incentives, pushed securities aggressively. Although Mitchell claimed transparency, saying, “We sell our goods over the counter just the same way a clerk sells a necktie” (47), the bank in fact deliberately manipulated the ordinary consumer and their choice of product. For example, Sorkin shows that it marketed bonds despite an internal report warning of “complete ignorance, carelessness and negligence,” a clear case of mis-selling. (53) Salesmen also pushed Anaconda Copper stock while Mitchell, an Anaconda director, sold his own shares, arguably an example of insider trading. These double standards show how obfuscation was used to conceal the real level of risk from the ordinary consumer, using their combined investments as a means to manipulate the market for self-enrichment. Similarly, J.P. Morgan & Co. added a different kind of leverage through “preferred lists” that gave discounted shares to politicians and corporate leaders before the public could access them. These offerings, described as courtesies, acted in effect as bribes. In a similar way to stock pools, these closed groups relied on the unsuspecting public to bolster the price, and often ended in stock-dumping by those in the know.
By exposing how these manipulations caused the crash, the book argues that the widespread concealment of risk, whether couched as necessary sophistication and innovation or misrepresented as public access, ultimately led to the market’s unviability.
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