Harvard Economic Society Quotes
The Wall Street crash doesn't mean that there will be any general or serious business depression... For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game... Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before.
The great scholars were as wrong as everyone else about the Great Depression
Harvard Economic Society, November 2, 1929
Sourced by: Eigen's Political and Historical Quotations
Major bankers were not only clueless in the Meltdown of 2008 and the Great Recession that followed, but they were equally hapless in the Market Crash of 1929 and the Great Depression thereafter.
This may have been the worst stock market advice ever sent to customers. The Great Depression would suppress the economy of more than a decade.
There was. President Hoover and his aids were not the only ones to underplay the stock market crash of 1929.
We emerged from the depression and went on to grow stronger than ever. However, we did not learn how to prevent future depressions and recessions.
When the stock market crashed, the Board of Governors was entertaining the idea of putting a syndicate of banks together or back some financiers who would buy up the stock that people were trying to sell. There were those who wanted to sell but no buyers at any price. They concept of a market was being destroyed. Lamont correctly explained that the idea was not practical—it was too late for that. Lamont however had underestimated the market crash and made a feeble effort to assist President Hoover make his feeble effort to get the American economy going again.
Three days before the Great Depression Stock Market crash
This is one of the worst economics assessments in the nation's history. Hoover had been a very successful business man prior to his government experience, but good business experience has not been a good predictor of Presidential success. See {633214} for more on this point.
He distressed most of the other stock brokers on Wall Street by pointing out that if brokers were so smart, why would they not want to buy the stock for themselves rather than sell it to you. Therefore, he generally concluded that the best stocks are bought by the brokers and bankers for their own accounts, and the lesser quality shares are sold to the public.
The result was regulation of the banks and the creation of the SEC to regulate the stock market, However, over the years, the regulations were not able to keep up with the sophisticated development of new forms of investments and financial instruments and the financial industry were able to speculate with other people’s money in ways that FDR and his reformers never imagined. Finally, even the regulation that did exist was weakened by the policies of the George W. Bush administration and the combination brought about the Great Recession of 2008 where the profits from excess speculation were privatized and the losses, socialized with the taxpayer and the American worker bearing the brunt while most of the speculators were bailed out and made more money than ever. The Obama administration tried to reform the situation, but was unable to put an end to the legal speculation with other people’s money or of having institutions that were “too big to fail.”
Speculation meant real estate investment and business.
The Stock Market went up slightly as a result of his efforts.
This is probably the greatest economic understatement of all time. In one of the great ironic touches of history, this is the gentleman that President Herbert Hoover turned to for advice and strategy of coping with the market crash and the Great Depression. Lamont turned out to be one of the worst strategists and economic planners in history. See {608636}. Nonetheless, note the illustration, Lamont made the cover of Time Magazine
