Certain years are forever etched in history by a single, earth-shattering event. For the world of finance, 1929 and 2008 stand as twin pillars of catastrophic market collapse. Andrew Ross Sorkin, the celebrated New York Times journalist who masterfully chronicled the 2008 crisis in "Too Big to Fail," has now turned his formidable narrative skills to the original disaster: the Great Crash of 1929.
Revisiting the Roar and the Ruin
In his new book, aptly titled "1929," Sorkin dissects the boom that preceded the bust. The American stock market in the 1920s was a spectacle of unchecked optimism, soaring by nearly 500% from its 1921 low to the peak of 1929. This rally was fuelled by rampant speculation and dangerous, debt-driven trading. The inevitable combustion came in October 1929, triggering a conflagration that raged for over two and a half years. The ensuing Great Depression lingered until America's entry into the Second World War, with the Dow Jones Industrial Average not reclaiming its 1929 high until 1954.
Sorkin anchors this sprawling history through the eyes of two pivotal figures: Thomas Lamont, the acting head of J.P. Morgan, and Charles "Sunshine Charlie" Mitchell, head of National City Bank (now Citibank). These men were not mere bankers; they were titans with direct access to the highest levels of power in Washington.
The Chain of Credit That Snapped
The mechanics of the crash were deceptively simple and alarmingly familiar. Banks had extended enormous loans to brokerage firms, which in turn lavished credit on a new wave of exuberant retail investors. When stock prices began their terrifying freefall, this delicate chain of credit snapped. In a desperate and futile bid to stem the panic, a consortium of banks led by Lamont burned through hundreds of millions of dollars buying shares during the sell-off.
The aftermath was brutal. As mass unemployment took hold, figures like Lamont and Mitchell faced public vilification and were hauled before legislators to testify about their businesses and personal incomes. The political reckoning was significant, leading to landmark reforms like the 1933 Glass-Steagall Act, which separated commercial and investment banking activities.
Eerie Parallels to the Modern Day
While Sorkin's tale is rooted in the past, he leaves it to the reader to draw compelling—and concerning—parallels with today's financial landscape. By the late 1920s, consumer credit in the form of installment plans—a direct precursor to today's "buy now, pay later" schemes—was widespread. Investing had transformed from a pursuit of the elite to a national pastime, spreading financial pain to a much broader section of society when the bubble burst.
Most strikingly, the rampant use of margin debt left investors not only with devastating losses but also with crushing loan repayments. This mirror reflects clearly on 2025: the exposure of American households has recently hit record highs, with margin debt soaring to near-record levels relative to the size of the economy. The familiar cycle of hubris, panic, and regulatory delusion repeats.
Yet, Sorkin's work, built on extensive research where first-hand interviews were impossible, also offers a thread of hope. The pattern proves that even the darkest financial moments pass. As Winston Churchill, who was dabbling in speculation and present in New York on "Black Tuesday," observed during the crash: "The English critic would do well to acquaint himself with the inherent probity and strength of the American speculative machine. It is not built to prevent crises, but to survive them." Nearly a century later, that verdict still holds a powerful lesson for investors navigating today's volatile markets.
