From Airmail, October 11:
Andrew Ross Sorkin pieced together forgotten diaries and letters to reveal the Shakespearean characters behind the 1929 financial crash—and how they set the stage for Jamie Dimon and Elon Musk
Contrary to popular belief, there is only one top financial journalist named Andrew Ross Sorkin. But who could blame anyone for thinking there were three, since Sorkin is not only the founder and editor at large of DealBook, the online daily report for The New York Times, and the co-anchor of CNBC’s morning show Squawk Box, but he also co-created the hit show Billions for Showtime and wrote the best-selling Too Big to Fail. In his new book, 1929, Sorkin takes the most famous stock crash in history and turns it into a thrilling saga of greed, folly, and despair that resonates with present times.
JIM KELLY: Of all the finance books you could have written, why did you choose to write about the Great Crash of 1929? As you point out, the topic has not exactly been under-covered. What do you hope a reader will take away from your book that might not be so easily gleaned from other books?
ANDREW ROSS SORkIN: I wanted to write a true character-driven narrative that would let readers feel like they were actually in the room as the drama unfolded. The Crash has often been told in economic terms or explained in an armchair kind of way—charts, numbers, theories about speculation. But what was missing, to me, were the people themselves: what they whispered in smoke-filled rooms, what they confided in letters, what they scribbled in their diaries when no one was looking.
The truth is, for most Americans 1929 is a hazy conception. And that’s not because they haven’t read enough books; it’s because the full story has never been told in this granular, fly-on-the-wall way. As I dug into the archives, piecing together forgotten diaries, transcripts, and letters, I found myself swept up in a tale with Shakespearean characters—you could admire them, you could loathe them, sometimes both in the same breath.
And when you get in the room with these people—when you can hear verbatim what Hoover was telling Thomas Lamont, or what Charles Mitchell confessed to his wife at home, or what Carter Glass really thought of the bill that’s named after him—you realize just how much of the history we thought we knew is incomplete. Despite everything I believed I already understood, I kept uncovering surprises, twists that changed the way I saw this period. And while it was never my intention when I started this project, so much of what was happening then seems to rhyme with what’s happening today.
J.K.: You do a terrific job of setting the stage for what happened in 1929, including the rise of the Wall Street tycoon as a cultural figure in the 1920s. Folks like Bernard Baruch joined the celebrity ranks of Babe Ruth and Charles Lindbergh. Did the awe many Americans had for these financial wizards help induce a kind of blind worship for the market?
A.R.S.: Yes—and what struck me in the research was how consciously these men were cast as folk heroes. You open a magazine from the 1920s and there’s Baruch, written about with a sense of awe. It was the coming of age of capitalism, when wealth itself became a stand-in for genius. That celebrity aura gave people permission to suspend skepticism, to believe the market was guided by men with almost supernatural instincts. And just like in any great drama, the worship turned into disillusionment once the curtain fell. In many ways, it set the stage for today—where financiers like Jamie Dimon, Stephen Schwarzman, or Elon Musk occupy the same space in our cultural imagination.
J.K.: You shape part of your story around Lamont, who, in effect, ran J. P. Morgan & Co. What lesson did you draw from his career?
A.R.S.: Lamont believed that if you could put a couple of great men in a room, you could solve anything. That was his worldview—finance and politics weren’t about systems, they were about personalities. He was also the ultimate relationship man. When I was in the archives, I’d find him everywhere: dining with Mussolini, meeting with Hitler, negotiating with Hoover, then turning around and trying to charm Roosevelt. He thought diplomacy, persuasion, and personal gravitas could hold the world together. And for a while, it seemed to work—until it didn’t.
J.K.: A disaster like 1929 has many fathers, but is it fair to say easy credit and buying on margin are the main culprits for the crash? And in that sense, despite tighter regulations today on margin buying, is it fair to say that too many Americans have too much money invested in stocks today? Or, to put it another way, do too many Americans disregard the chances of a crash that could take years to recover from?
A.R.S.: I have a somewhat counter-intuitive answer. Every crisis is ultimately a function of too much leverage—that’s always the accelerant. And then you marry that with runaway speculation. But one of the lessons I came away with—that surprised me a bit—is that speculation in itself isn’t the villain. In fact, speculation is what fuels innovation. The challenge is knowing how to keep it from boiling over....
....MUCH MORE
It is always the leverage that gets you. And in the current culture of nihilism you will find leverage everywhere you look. At the government level, at the corporate level, at the individual level, formally in the market via the margin loan business and informally by borrowing to pay bills and buy stuff while using cash on hand to speculate.
What a time to be alive.
Related, October 16 - "Stock Market Leverage Blows Out"
