Academic

Today in 1930 And The Great Mississippi Bubble

By Kim Krawiec

Wednesday, July 9, 1930: Dow 219.08 +0.75 (0.3%)

Washington Irving's book ?The Great Mississippi Bubble? republished by Random House. "The story was written about a hundred years ago and the actual event occurred more than two hundred years ago, but the narrative ... will interest many who witnessed the recent debacle of stock prices." A couple of quotes from the book: The boom - "Every now and then the world is visited by one of those delusive seasons when the 'credit system,' as it is called, expands to full luxuriance; the broad way to certain and sudden wealth lies plain and open ... "; The bust - "a panic succeeds, and the whole superstructure built upon credit and reared by speculation crumbles to the ground, leaving scarce a wreck behind."

That?s according to the Wall Street Journal from July 9, 1930.  This quite clever blog, News From 1930, posts a daily news summary based upon the author?s reading of the Wall Street Journal from the corresponding day in 1930.  As ikedim notes: ?A common observation by people who like the blog is that lots of it could have been written today. Well, here's a review in the 1930 Journal ... of an 1830 book ... about events in 1720 ... and it still could have been written today!?

And courtesy of Eldon, in the comments:

Washington Irving's story, "The Great Mississippi Bubble" is available online as a short story in "The Crayon Papers," and can be downloaded in several e-reader formats. Read it online at THE GREAT MISSISSIPPI BUBBLE.

 Also available in Google book format here. 

According to the blog author, one of his most interesting findings so far is that:

In histories of the Depression the leaders of the time are commonly portrayed as oblivious to what was going on, do-nothing, and stupidly optimistic. For example, every school kid has seen the much ridiculed pronouncement by Herbert Hoover that "prosperity is just around the corner." Even from my limited reading so far it's clear this criticism is mostly unfair. It appears that the people in charge at the time were well aware of what was happening, and did most of the things that we're doing now to alleviate it (with a couple of notable exceptions). And as for unjustified optimism, we will see that at least in mid-1930 there was a fair amount of good news coming out about the economy. And I mean actual good news where things were improving month-to-month, not the asinine stories we see today where bad numbers are interpreted as good because they were "better than expected," and declining numbers are called good because the rate of decline is slowing down (AKA second derivative stories). [See here also on the second derivative]

See this item also from Tuesday, June 24, 1930: Dow 219.58 +4.28 (2.0%):

J. Westerfield of the NY Stock Exchange lectures civics clubs of Yonkers on the causes of the current business recession. Says the effort to attribute it to any single cause is superficial; criticizes sanguine statements of ?new era? economists that ?the vast amount of reliable statistical information had practically abolished the old-time evils of large inventories and overproduction.? Concludes that an illusion grew popular that ?paper profits in ... quoted values for real estate, commodities, securities, and other forms of property increased fortunes and thereby spending power.?

Other headlines from other days also seem eerily familiar.  Check it out sometime. 

Full post as published by The Faculty Lounge on July 10, 2009 (boomark / email).