It was 1929, and in the United States things could not be better for those smart enough, or for that matter, brave enough, to gamble on the Stock Market. All of the big stocks were paying off handsomely, the little ones too. However, as much as analysis tried to tell the people that this period of great wealth would last, no one could imagine what would come of the United States economy in the next decade. The reasons for this catastrophic event in American 20th century history are numerous, and in his book, The Great Crash, John Kenneth Galbraith covers the period and events which lead up to the downward spiral in the fall of 1929 and the people behind the scenes on Wall Street who helped this fire spread.One thing is for certain, no one single reason can be given for the stock market crash. There are however smaller causes and much larger causes which can be attributed to this down period in the economy. Galbraith lists in his book five of the main reasons, or as he puts it, weaknesses, which lead to the disaster. The first one he believes is to blame is the bad distribution of income. In 1929, five percent of the American population held the wealth. This meant that in the that year, this high income bracket received 1/3 of all the personal income. This translates into a lack of American spending, and as Galbraith puts it, " the rich cannot buy great quantities of bread" Most spending was done by the lower classes, even though they made far less money.The second reason Galbraith lists was the bad corporate structure. During this period, the weaknesses could be found in the new holding companies and investment trusts. Trusts such as the one ran by Harrison Williamson and the American Founders Group came under heavy scrutiny by the Securities and Exchange Commission for their role in the economic failure. As explained in the book, holding companies controlled large proportions of such facets of the economy as railroads, utilities a...
