It would be tempting to say that among bestselling American financial authors, Andrew Ross Sorkin is the new Michael Lewis – were it not for the fact that the original Lewis, whose Liar’s Poker (1989) set a benchmark a generation ago, is still knocking the ball out of the park with admirable regularity.
Sorkin’s Too Big to Fail (2009) was another milestone for the genre, topping every list of the many histories and memoirs of the 2008 financial crisis and usually attracting the adjective ‘definitive’. Accordingly, his new history of the 1929 Wall Street crash has been eagerly awaited: a sure-fire conversation piece for the cognoscenti of Manhattan and Mayfair this autumn, with literary prizes and movie options likely to follow.
But still we should ask, is Sorkin (who, incidentally, should not be confused with Aaron Sorkin, the screenwriter of The West Wing and much else) at the top of his form? Has he added to what we already knew from John Kenneth Galbraith’s elegantly acerbic The Great Crash, 1929, published all of 70 years ago, and a shelf of weighty tomes since.
The answer to both questions has to be yes, but although Sorkin reassesses some of the reputations involved, he does not end in a different place from Galbraith. By different methods – Galbraith’s a professorial overview, Sorkin’s an immersive reconstruction – they arrive at much the same conclusion, that speculative booms and busts are bound to happen at intervals, simply as a function of human greed and short memory.
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Galbraith, writing in the mid-1950s when American industry had the upper hand over finance and the Glass-Steagall Act had created a strict separation of main-street banking from Wall Street trading, nevertheless warned against the risk of recurrence. Sorkin, as a New York Times reporter, had the advantage of having seen that boom-bust cycle at least twice over, in the late-1990s dotcom surge and the explosion of derivatives trading that prefigured the events of 2008. So his conclusion is not new: ‘No matter how many warnings are issued or how many laws are written, people will find new ways to believe that the good times can last forever… And in that collective fever, humanity will again and again lose its head… The antidote… is not regulation by itself, nor skepticism, but humility – the humility to know that no system is foolproof, no market fully rational, and no generation exempt.’
Then again, Sorkin is less concerned with behavioural theorising and much more concerned with depicting, in a cinematic way, the interplay of personalities. The framework of 1929 is a conflict between, on the one side, the bankers, brokers and investors who did indeed believe the good times could last for ever if fuelled by ample credit; and on the other, politicians and officials who wanted to spoil the party by stopping banks from lending for speculative investment. In essence it was the same division that emerged in the 2000s between those who believed financial trading in itself to be an engine of wider prosperity as well as enrichment for themselves – and those who saw it as a ‘socially useless’ diversion of capital as well as a threat to economic stability.
Among the good-timers, Sorkin offers finely drawn portraits of ‘Sunshine Charlie’ Mitchell, chairman of National City Bank but up to his neck in share dealings of his own and later indicted for tax evasion; and the more respectable Thomas Lamont, senior partner of J.P. Morgan & Co, whose experience had convinced him ‘there wasn’t a problem in the world that could not be solved by the wizardry of credit’. It was Lamont who tried to play down the panic as ‘a little distress selling’ – ‘like a man who comes on the stage of a burning theatre’, wrote Times correspondent Claud Cockburn, ‘and urges everyone to keep perfectly cool’.
Alongside them is ‘supercilious’ Richard Whitney, vice-president of the New York stock exchange at the time (and its president from 1930), who on the afternoon of 24 October 1929 marched on to the trading floor and bid up the price of US Steel and other blue-chips, temporarily halting the rout and earning the title of ‘Wall Street’s White Knight’ – but was eventually convicted of embezzlement and jailed.
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Sorkin eavesdrops on his cast in their meetings and mansions but ultimately lets the reader judge where guilt lay for the cataclysm – and whether or not it was the predominant cause of the Depression that followed.
This is at heart a story about Americans, told in a very American style: bite-sized chapters, each built around a single day’s developments, composed largely of short sentences and terse reconstructed dialogue between leading men. If his narrative lacks a little for background colour, Sorkin might perhaps have found more voices from the streets like that of Pat Bologna, the ‘bootblack with a reputation as a tipster’ who had his life savings of $5,000 riding on the market.
The British reader might wonder how, say, the outstanding City historian and master of social minutiae David Kynaston would have made a broader collage of recollections to tell the same story. But Sorkin’s prose has the great merits of clarity and forward drive and, most importantly, it’s exactly what his readers expect. 1929 is an epic exercise in bringing history to life through its big characters. Like Too Big to Fail it will be labelled ‘definitive’ – and deservedly so.
