Taking Stock of a Momentous Year

1929: The Year of the Great Crash by William K. Klingaman (Harper & Row: $22.50;448 pp., illustrated)

Working with a cast of thousands, including cameo appearances by Winston Churchill, Al Capone, Groucho Marx, Mohandas K. Gandhi, Golda Meir, Franklin D. Roosevelt, Irving Berlin, F. Scott Fitzgerald, Joseph Stalin, Herbert Hoover, Joseph P. Kennedy, Bernard Baruch and Adolf Hitler, William Klingaman has chronicled the ruin of the American stock market.

This is a star-studded immersion in history, almost a People magazine approach to the great individuals who cause great events. Having “1929” on the night table, in fact, is not so unlike having a yearlong stack of issues from a weekly magazine, to be read consecutively.

Jimmy Foxx was hitting home runs for the Philadelphia Athletics while Duke Ellington was heating up the Cotton Club, and the film, “Our Dancing Daughters,” was being banned in Massachusetts as “lascivious.” There was more to the world of 1929 than the market, even if Wall Street stayed open on Saturdays in those delirious days. A concert here. A liberation movement there. A St. Valentine’s Day Massacre here. A Five-Year Plan there. A timid President here. A ruthless dictator there. The failure of Prohibition here. The failure of Nicaragua’s original Sandino revolution there.

Stock speculation everywhere.

One apparent reason for reconstructing the peculiarities of an odd-numbered year is precedential: a warning that human endeavor is so often so foolishly repetitive that a raging, rampant market might go bust all over again.

A commercial reason for reconstruction is that old bad news is usually entertaining because it happened to somebody else. See those greedy borrowers and margin buyers jump out Wall Street windows. Churchill, visiting in New York, saw one of them outside his hotel window and commented: “A gentleman cast himself down 15 stories and was dashed to pieces. . . . Quite a number of persons seem to have overbalanced themselves by accident in the same sort of way.”

There are some parallels from 1929 presaging what could happen to what’s left of 1989.

Listen to Franklin D. Roosevelt, then the gadfly governor of New York, warning about the unholy kinship between big business and big government on Independence Day, 1929. Speaking at New York’s Tammany Hall, headquarters for the epitome of big-city machine politics, F.D.R. addressed the potential evils of “great industrial and economic mergers,” claiming that “independence in business is a thing of the past.”

Instead of wondering whether Warner Communications would be swallowed by Time Inc. or Time would be gobbled by Paramount, Roosevelt was looking at the Niagara-Hudson Power Corp., J. P. Morgan’s colossal merger, zapping three of the state’s biggest utilities into one $500-million electrical superpower. The takeover fever was as high then as it is now. So was the obsession with paper profit, not quality product. Business always seems to be in big trouble when it worries more about making stockholders happy than making useful things, although Klingaman does not dwell on that lesson.

The numbers of 1929 were large enough to speak a language of their own. They started out more than bullish: The count of American millionaires had grown from 7,000 to 40,000 in fewer than 15 years. Then numbers started falling: AT&T;, having peaked at a price of $310 early in the year, plummeted to $204 on Oct. 29, Black Tuesday. Between September and mid-November, the securities listed on the New York Stock Exchange lost $30 billion in value, more than one-third their total value.

People lost their nest eggs and their senses. Little guys, like Edgar D. Brown, once of Pottsville, Pa., later of Los Angeles, were wiped out by bad advice from bad brokers. Big guys, like banker Charlie Mitchell, were wiped out by their own avarice. Important guys, like Adm. Richard E. Byrd, wondered whether the South Pole might not be a more habitable climate than Wall Street. Even such dubious capitalists as Charlie Chaplin had been seduced and abandoned by the market.

Klingaman’s prose is serviceable and sometimes sprightly. His research is vast, and a helpful bibliography includes important earlier histories such as John Kenneth Galbraith’s “The Great Crash,” still in print. Casting a big net, Klingaman caught a mammoth collection of memoirs, newspaper stories and police blotters.

Much of the material rescued from the depths of libraries and newspaper morgues is amusing enough. Comedian Eddie Cantor, for instance, delivered a monologue at a 1929 celebration for the Jewish Theatrical Guild just when the shares were diving down: “If the stock market goes any lower, I know thousands of married men who are going to leave their sweethearts and go back to their wives. . . . As for myself, I am not worried. My broker is going to carry me--he and three other pall bearers.”

Yet anecdotes, vignettes and statistics are not quite the stuff of ultimate understanding. Klingaman brightly tells an old story without adding much hindsight to the mass of resurrected data. More reporter than interpretive writer, he puts together a huge jigsaw puzzle of delicious detail but barely interprets the picture that emerges.

A crash could happen again, as the end of 1987 suggested it might. A market collapse is not so likely to happen again because many brakes are in place to prevent a rockslide from becoming a landslide. But the elements of rapacious greed, inside information and dissembling hucksterism defy mechanical controls.

The free-enterprise system is not the villain, but the constituency of free human beings within that system always contains a certain proportion of liars, scoundrels and fools. Frenzied buying may still somersault into panic selling, the same sort of manic-depression people suffered in 1929 and continued to suffer until the beginning of World War II.