The landmark 1933 banking regulation wasn't just a principled reform. Parts of the bill were influenced, and even written, by a member of the Rockefeller family (owners of Chase) to strategically harm their primary competitor, J.P. Morgan.
Beyond his policy mistakes, President Hoover's historical reputation was actively tarnished by a secret, well-funded campaign from GM executive John Raskob. Raskob paid journalists to undermine Hoover, shaping public perception for decades to come.
The narrative of the 1929 crash as mass psychological panic is misleading. The primary driver was a mechanical liquidity crisis where heavily leveraged investors were forced by margin calls to sell, creating a downward spiral regardless of their long-term belief in the market.
Before the 1920s, personal debt was widely viewed as a moral failing. This changed in 1919 when John Raskob of General Motors introduced auto loans to boost car sales, fundamentally shifting the American mindset and paving the way for a consumer credit-driven economy.
In 1929, GM executive John Raskob argued for a five-day work week not for employee well-being, but as an economic strategy. He believed a free Saturday would spur growth by encouraging people to buy cars and other goods for their new leisure time.
The Federal Reserve knew speculation was rampant in 1929 but hesitated to raise interest rates. They were scarred by the political backlash from raising rates in 1920, which they were blamed for causing a brief but sharp recession. This fear of political reprisal contributed to their paralysis.
Post-2008 regulations on traditional banks have pushed most lending into the private credit market. This 'shadow banking' system now accounts for 80% of U.S. credit but lacks the transparency and regulatory backstops of formal banking, posing a significant systemic risk.
The conventional wisdom of a 1929 stock market bubble is challenged by a long-term view. Even investors who bought at the peak saw a 6% real return by 1959, suggesting the so-called speculators were correct about America's future growth, just extremely early.