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Roosevelt, Glass-Steagall, and the Eight-Year Climb Back
Audio is available on Spreaker — see link below.
The 1929 Wall Street Crash didn't end with falling prices — it ended with Roosevelt's New Deal, Glass-Steagall, and the SEC rebuilding American capitalism from the rubble. This chapter traces how a broken system was forced to reform, and why it took eight years to claw back what a single decade of leverage had destroyed.
Audio is available on Spreaker — see link below.
Most people think the nineteen twenty-nine crash happened in a single terrible day. Black Tuesday, the market collapses, the economy follows.
To understand what happened in October nineteen twenty-nine, you have to understand what the nineteen twenties had built. The decade wasn't just prosperous.
Black Thursday was October twenty-fourth, nineteen twenty-nine. Trading volume hit nearly thirteen million shares, a record at the time.
Here's what made the nineteen thirty crash different from every previous American financial panic. The banking system failed not as a single catastrophic event but as a slow, grinding cascade that the authorities watched and largely failed to stop.
The Federal Reserve had been created in nineteen thirteen precisely to prevent this kind of cascading bank failure. It existed to be the lender of last resort.
By the time the contraction reached its worst point, one in four American workers had no job. Twenty-five percent unemployment.
As if the financial collapse weren't enough, the environmental catastrophe of the Dust Bowl compounded the agricultural devastation across the Great Plains through the nineteen thirties. Years of drought combined with decades of intensive farming that had stripped away the native prairie grasses.
Franklin Roosevelt won the election of nineteen thirty-two by an enormous margin. When he took office in March nineteen thirty-three, over four thousand banks had failed in the preceding two months alone.
Two specific regulatory responses shaped American finance for the rest of the twentieth century. Glass-Steagall, passed in nineteen thirty-three, drew a hard line between commercial banking and investment banking.
The stock market didn't recover to its September nineteen twenty-nine peak until nineteen fifty-four. Twenty-five years.
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