I did something similar with TIME magazine several years ago--Read every issue from 1923-2000. You should check out notes at this site: https://www.thetimeproject.org
Curious if you'll reach the same conclusions from WSJ/FT on the key causes of the bubble and crash.
TIME's coverage of the 20s seemed to suggest that the bubble was caused by loose monetary policy from the Federal Reserve over the course of the decade. There were a few key turning points during the decade
1) Fed lowers rates to help Calvin Coolidge get re-elected in 1924
"Easier money was the most significant development of the past week..We have more gold, less active business in many lines, and a Presidential election ahead. No good Republican would particularly enjoy seeing the brakes applied to the money market as hard as to cause a skid downhill similar to that experienced last year. As long as the Federal Reserve Board consists of political appointees, it is somewhat beside the point to declare that politics has nothing to do with business tendencies." --February 1924
2) The Fed tries to raise rates after the election in 1925 but decides not to in order to help Britain return to the gold standard
"When the New York Reserve Bank raised its rediscount rate from 3 to 3 1/2 % (TiME, Mar. 9), financial London at once showed something nearly akin to excitement...when the Wall Street money merchants snap the whip, Lombard Street must jump." --March 1925
"The rates of the Reserve Bank of New York and the Bank of England are made cooperatively in order that the British rate may always be slightly higher and thus avoid heavy gold exports to this country. New York Reserve rate is now 3 1/2%, and a rise to 4% would consequently threaten the British gold supply and the sterling gold standard. Hence, after all these alarms and excursions, the money outlook in America is still for stable and relatively low rates. This in turn facilitates stable security prices and commercial prosperity." --October 1925
3) This attempt to keep rates low to help England leads to a schism in the Federal Reserve Board in 1927. Tight money interests in Chicago break from NY loose money proponents.
"the [Chicago] Journal of Commerce charged last week, "The little New York group that dominates the Federal Reserve System came to Chicago and tried to induce the directors here [of the Chicago Federal Reserve Bank] to cut the [re-discount] rate and afford pretext to New York. The request was flatly and somewhat indignantly refused.
Continued the Journal of Commerce: “Europe and particularly England wants, and no doubt needs, a very low money market in this country so that American bank funds in large totals may be' attracted to England; and to that end our re-discount rates are to be reduced, and probably Federal Reserve securities are to be sold, and easy credit is to be manufactured." --August 1927
4) The Chicago contingent takes control of Fed policy
[One week after forcing the Federal Reserve Bank of Chicago to lower its rediscount rate] "Daniel Richard Crissinger, governor of the Federal Reserve Board, tendered his resignation. Though bankers and lawyers were still dis- puting whether or not he had been "domineering" in forcing a reduced re-discount rate on the Chicago Federal bank (TIME, Sept. 12), Mr. Crissinger said that this dispute had nothing to do with his withdrawal" --September 26
5) Speculation runs wild in 1928 even though the Fed begins to tighten. Retail investors lead the charge.
"The Chicago Federal Reserve Bank last week increased its rediscount rate from 3½ to 4%. At once the Richmond Federal Reserve Bank did likewise. It was the first time since August, 1926 that any of the 12 Federal Reserve Banks had increased their rates." -February 1928
""[At the New York Stock Exchange] Every "record" of any shape or description was broken and rebroken. The explanation is simple. The "public" had finally come in, tardily, clumsily, "at the top," as always, with the greatest reservoir of cash of all, compared to which Wall Street's organized money force is small. It astonished nobody, because 7,000 tickers are now hypnotizing greedy eyes in 40 states, leaving scarcely a middle-sized town from Maine to California where citizens may not actually see their savings bank withdrawals dance past their giddy eyes in strange, cryptic abbreviations three minutes after passing their checks to the broker." --April 1928
6) Low interest rates lead corporations to lend excess deposit money on margin. Bankers warn that this is dangerous but only act as intermediaries.
"With $500,000 surplus cash to put aside until it is needed, a corporation usually does one of two things. It may bury the money, either in gilt-edged securities, yielding from 3 to 4%, or in its bank account, where it draws 2% as a commercial deposit. Or it may ask the bank to lend the money out on call, at interest rates ranging from 5 to 10%. As the bank asks only a small commission for this service and generally assumes all the risk, the conversion of surpluses into call loans has become a popular feature of corporation financing. In the last year, the total of such loans has risen from $906,144,000 to $1,808,645,000. To the corporations, this practice seems both obvious and admirable. But to the paternal superbankers, guarding the money market, it appears highly hazardous, deeply disturbing" --August 1928
7) In 1929 the Fed begins to actively fight speculation. The all out assault eventually bursts the bubble.
"Toward Wall Street last week the Federal Reserve Board shook a threatening finger, spoke a warning word. With loans to brokers standing at $5,669,000,000, the Board felt that too much money was being absorbed by the stockmarket, that other interests were being forced to pay too much for money they borrow, that indus-try as a whole was suffering from diversion of funds to brokers and speculators. It therefore expressed the opinion that a member of the Federal Reserve Banking System is "not within its reasonable claims for rediscount facilities" when it borrows Federal Reserve money to be used in "making or maintaining speculative loans." Further, the board threatened to "restrain the use of Federal Reserve credit facilities in aid of the growth of speculative credit." Taken at face value, this statement would mean refusal of loans for speculative purposes, plus a rise in the rediscount rate, which in turn would mean a stockmarket afflicted with scarce money and falling prices." --February 1929
"For so many months so many people had saved money and borrowed money and borrowed on their borrowings to possess themselves of the little pieces of paper by virtue of which they became partners in U. S. Industry. Now they were trying to get rid of them even more frantically than they had tried to get them. Stocks bought without reference to their earnings were being sold without reference to their dividends. At around noon there came the no-bid menace. " --November 1929
Curious if you'll reach the same conclusions from WSJ/FT on the key causes of the bubble and crash.
TIME's coverage of the 20s seemed to suggest that the bubble was caused by loose monetary policy from the Federal Reserve over the course of the decade. There were a few key turning points during the decade
1) Fed lowers rates to help Calvin Coolidge get re-elected in 1924
"Easier money was the most significant development of the past week..We have more gold, less active business in many lines, and a Presidential election ahead. No good Republican would particularly enjoy seeing the brakes applied to the money market as hard as to cause a skid downhill similar to that experienced last year. As long as the Federal Reserve Board consists of political appointees, it is somewhat beside the point to declare that politics has nothing to do with business tendencies." --February 1924
2) The Fed tries to raise rates after the election in 1925 but decides not to in order to help Britain return to the gold standard
"When the New York Reserve Bank raised its rediscount rate from 3 to 3 1/2 % (TiME, Mar. 9), financial London at once showed something nearly akin to excitement...when the Wall Street money merchants snap the whip, Lombard Street must jump." --March 1925
"The rates of the Reserve Bank of New York and the Bank of England are made cooperatively in order that the British rate may always be slightly higher and thus avoid heavy gold exports to this country. New York Reserve rate is now 3 1/2%, and a rise to 4% would consequently threaten the British gold supply and the sterling gold standard. Hence, after all these alarms and excursions, the money outlook in America is still for stable and relatively low rates. This in turn facilitates stable security prices and commercial prosperity." --October 1925
3) This attempt to keep rates low to help England leads to a schism in the Federal Reserve Board in 1927. Tight money interests in Chicago break from NY loose money proponents.
"the [Chicago] Journal of Commerce charged last week, "The little New York group that dominates the Federal Reserve System came to Chicago and tried to induce the directors here [of the Chicago Federal Reserve Bank] to cut the [re-discount] rate and afford pretext to New York. The request was flatly and somewhat indignantly refused.
Continued the Journal of Commerce: “Europe and particularly England wants, and no doubt needs, a very low money market in this country so that American bank funds in large totals may be' attracted to England; and to that end our re-discount rates are to be reduced, and probably Federal Reserve securities are to be sold, and easy credit is to be manufactured." --August 1927
4) The Chicago contingent takes control of Fed policy
[One week after forcing the Federal Reserve Bank of Chicago to lower its rediscount rate] "Daniel Richard Crissinger, governor of the Federal Reserve Board, tendered his resignation. Though bankers and lawyers were still dis- puting whether or not he had been "domineering" in forcing a reduced re-discount rate on the Chicago Federal bank (TIME, Sept. 12), Mr. Crissinger said that this dispute had nothing to do with his withdrawal" --September 26
5) Speculation runs wild in 1928 even though the Fed begins to tighten. Retail investors lead the charge.
"The Chicago Federal Reserve Bank last week increased its rediscount rate from 3½ to 4%. At once the Richmond Federal Reserve Bank did likewise. It was the first time since August, 1926 that any of the 12 Federal Reserve Banks had increased their rates." -February 1928
""[At the New York Stock Exchange] Every "record" of any shape or description was broken and rebroken. The explanation is simple. The "public" had finally come in, tardily, clumsily, "at the top," as always, with the greatest reservoir of cash of all, compared to which Wall Street's organized money force is small. It astonished nobody, because 7,000 tickers are now hypnotizing greedy eyes in 40 states, leaving scarcely a middle-sized town from Maine to California where citizens may not actually see their savings bank withdrawals dance past their giddy eyes in strange, cryptic abbreviations three minutes after passing their checks to the broker." --April 1928
6) Low interest rates lead corporations to lend excess deposit money on margin. Bankers warn that this is dangerous but only act as intermediaries.
"With $500,000 surplus cash to put aside until it is needed, a corporation usually does one of two things. It may bury the money, either in gilt-edged securities, yielding from 3 to 4%, or in its bank account, where it draws 2% as a commercial deposit. Or it may ask the bank to lend the money out on call, at interest rates ranging from 5 to 10%. As the bank asks only a small commission for this service and generally assumes all the risk, the conversion of surpluses into call loans has become a popular feature of corporation financing. In the last year, the total of such loans has risen from $906,144,000 to $1,808,645,000. To the corporations, this practice seems both obvious and admirable. But to the paternal superbankers, guarding the money market, it appears highly hazardous, deeply disturbing" --August 1928
7) In 1929 the Fed begins to actively fight speculation. The all out assault eventually bursts the bubble.
"Toward Wall Street last week the Federal Reserve Board shook a threatening finger, spoke a warning word. With loans to brokers standing at $5,669,000,000, the Board felt that too much money was being absorbed by the stockmarket, that other interests were being forced to pay too much for money they borrow, that indus-try as a whole was suffering from diversion of funds to brokers and speculators. It therefore expressed the opinion that a member of the Federal Reserve Banking System is "not within its reasonable claims for rediscount facilities" when it borrows Federal Reserve money to be used in "making or maintaining speculative loans." Further, the board threatened to "restrain the use of Federal Reserve credit facilities in aid of the growth of speculative credit." Taken at face value, this statement would mean refusal of loans for speculative purposes, plus a rise in the rediscount rate, which in turn would mean a stockmarket afflicted with scarce money and falling prices." --February 1929
"For so many months so many people had saved money and borrowed money and borrowed on their borrowings to possess themselves of the little pieces of paper by virtue of which they became partners in U. S. Industry. Now they were trying to get rid of them even more frantically than they had tried to get them. Stocks bought without reference to their earnings were being sold without reference to their dividends. At around noon there came the no-bid menace. " --November 1929