Friday, December 26, 2014

A Great Book on the Great Depression

It hasn't been written yet, but in this post I'll tell you how to do it.  The title is Fire Sale: How the Asset Buying Binge of the Great Depression Changed America.  Here are the chapters:

1. The Great Depression: A Good Time to Have Money.  How did the rich (some of them) shelter their wealth during the Depression?  How deflation in goods increased the real return to holding liquid assets, and how asset price deflation offered opportunities to make lucrative long-term investments.  (Some Irving Fisher here on the mechanism of debt deflation and its logic for counterparties.)  Perhaps some cultural aspects: the portrayal of high-end consumption in books and movies, the golden age of tourism, etc.

2. Stocking up.  This chapter begins with the stock market crash of 1929 but then continues the story.  How did stocks fare over the '30s?  How did depressed stock prices allow for the consolidation of new financial empires?  Who were the big winners from the stock swoon, and how did the financial and industrial landscape of the post-WWII era reflect their gains?

3. This Land Is Your Land.  What happened to urban and rural land values during the Depression?  How did low prices make it possible for new land barons to emerge?  But a big part of the story is the purchase of large tracts of land for parks and public infrastructure, for instance as reservoirs (e.g. the Quabbin Reservoir in central Massachusetts).

4. Riding out the Slump.  A whole chapter should be devoted to the purchase of trolley lines at bargain prices by auto and tire producers.  What happened to public transit financially during the Depression, and how did this lead to a collapse in the value of trolley lines?  Who was building new housing during the '30s, where was it being built, and how did this affect the demand for transit vs cars?  And how did the scrapping of urban rail systems change the design of cities and suburbs?

5. After the Great Sale.  What were the long run impacts of the asset reshuffling of the the '30s?  How did it change the level of market concentration?  The role of family versus industrial farming in agriculture?  The face of urban America?  The political economy of the postwar era of renewed economic growth?

There are a lot of question marks in this outline, since many of these topics haven't been researched, at least not synoptically.  You have some work cut out for you, but you'll be fascinated by what you find, and your readers will be enthusiastic.  Do it.

3 comments: said...

There were a few dramatic reshuffles that happened as a result of the GD, with the most prominent ones involving people who bailed out of the stock market just before the crash big time and managed to put their money in some other asset that did not fall so hard and did them well in the longer run, although in the famous cases these people were already pretty well off.

Among the most famous of all was Joseph P. Kennedy who put a big chunk of his money from selling out of the stock market into buying the Merchandise Mart in Chicago, at the time the largest building in the United States in terms of floor space. The first building to exceed it in floor space was the Pentagon, but the MM was Number 2 for a long time and is still way up there.

Another who got out near the peak famously was Bernard Baruch, although I do not know what he put his money into. I think he was the one who sold when a shoeshine boy gave him a stock tip on something to buy, although maybe that was Kennedy.

Mitchell J. Freedman said...

You mean It's A Wonderful Life is correct when George Bailey was warning everyone that Potter was buying up the entire town and had gotten his hands on everything except the Bailey Building & Loan?

Kaleberg said...

My father graduated from CCNY and got his first real job in the early 30s. He lived at home, like everyone else back then, so he invested his savings in the market and took advantage of the boom, a lot like the more recent one.

If you look at the numbers, the Great Depression was a great time to have a full time job