1929 vs 2025: Andrew Ross Sorkin on Crashes, Bubbles & Lessons Learned

The conversation centers on Andrew Ross Sorkin's new book, 1929. The hosts say they plan to cover how the project began, what the period teaches, and whether today looks like another 1929. The opening is joking: one voice asks why anyone would write such a gloomy book, and another calls it a "beach read." One participant says they have studied the period for a while and expects listeners to be taken with the characters.

The account of how the book started links it to Too Big to Fail, the earlier book on the 2008 financial crisis. After that book, people kept asking about 1929. Most of them knew there had been a crash and often blurred it with the Great Depression, but few could say who was involved or what those people said to each other. The questions the author wanted answered were about people: "What was actually happening here? And what were the incentives and what were the motivations that led to what clearly were some poor decisions?"

On a vacation about 10 years earlier, the author read existing histories of the period on a Kindle. They are described as good books that lacked a character-driven story of the kind found in Den of Thieves or Barbarians at the Gate. The turning point came at Harvard's Baker Library. There, the papers of Thomas Lamont, who ran J.P. Morgan at the time, included transcripts his secretary kept of his phone calls with Hoover and Roosevelt. Those records suggested the whole episode could be reconstructed from the participants' own words. The research is described as spanning the last eight years.

A host asks for a short summary of the economic conditions before getting to the characters. The question lists overproduction, tightening interest rates and war debt as factors people tend to lump together. The answer starts in 1919, which is called a critical year. Before then, Americans did not really borrow, and getting credit was "like a moral sin."

The account traces the spread of consumer credit through a chain of firms. In 1919, General Motors began lending people money to buy cars. Sears, Roebuck (rendered in the transcript as "Sirius Roebuck") followed with credit for appliances. Then Charlie Mitchell of National City, the bank that later became Citigroup, applied the idea to stocks. Brokerage offices spread "on the corners of the streets the way we see Starbucks today," and a customer could put down a dollar and borrow $10 against it.

The discussion stresses that none of the checks of later decades existed yet: "Zero risk underwriting," no SEC and no regulations. An early reader asked whether the research had turned up company prospectuses. The reply was that a leaflet handed out on the street would have been lucky. In 1928 the market rose 48%. The mood is compared to Chuck Prince's line about dancing while the music plays.

The leverage was not limited to individuals. One speaker notes that banks were putting depositors' money into stocks. The answer adds that ordinary corporations were lending out their balance sheets so people could buy shares. The modern comparison offered is J.P. Morgan and Goldman "going long" Nvidia with depositor funds. Manipulation and insider trading were widespread, and nobody went to jail for them "because there wasn't a rule against it."

Parallels with today raised in this section: - A major technology shift: radio then, AI now. RCA is called "the invidia of its time" because everyone wanted to own it. - A push to "democratize" finance, framed as letting everyone in after the elites had taken their share. - A key difference: crazy amounts of manipulation and insider trading that no rule prohibited.

The Federal Reserve was new, founded in 1913. According to the diaries and notes reviewed for the book, its officials knew the market was "a mess." They were afraid to do what they probably should have done, which was raise interest rates. The speaker says they could not pull off "a Volker kind of thing."