Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

VIEW FROM AMERICA: Exuberance of 1999 Matches That of 1929




If this were June 1929, Herbert Hoover would be president, Richard Mellon Scaife's great uncle would be secretary of the Treasury and a rising stock market would be celebrating a seven-year prosperity that seemed as limitless as it was unregulated.


If they'd only had the benefit of the technology now available to us, they'd have really gone bananas.


Let's see. They'd of course have discovered the joys of day trading.


The bellhops and taxi drivers who played the wild stock market of the 1920s would all have had cell phones and laptops handy for Internet trading. Then they'd surely have discovered the benefits of all-night trading.


I can't think of much we haven't done to replicate the atmosphere of 1929 and to update it for the electronic age. Above all, the unbounded confidence, not to say smugness, that infected Wall Street and the business community in early 1929 and even after the October crash is more than matched by the exuberance that has made the present population indifferent to widely promoted sex and spy scandals, a depression in Asia, even a raging air war in Europe.


Bill Clinton's grin may be a poor substitute for the dour Hoover's sour puss. And Robert Rubin is stylistically the opposite of Hoover's deeply conservative Treasury secretary, Andrew W. Mellon, a 19th century man in the wrong century. But, according to Webster's Guide to American History, Mellon was in 1929 "commonly considered the greatest secretary of the Treasury since Hamilton," a description that passed into disuse, even ridicule as the Great Depression revealed the fissures in the prosperity over which he presided. After his roof fell in, Mellon was packed off to be ambassador to Britain in 1932 and the title "greatest since Hamilton" was not revived until exactly 70 years later when it was, curiously enough, generously awarded to Robert Rubin on the recent announcement he was retiring from the Treasury.


It is, of course, dangerous to oversimplify random historical coincidences. But, anecdotally at least, these are the sort of similarities to send chills up our spine.


So what reed do we cling to for reassurance? Well, we have the Securities and Exchange Commission, federal deposit insurance and a large and sophisticated staff at the Federal Reserve, all of which didn't exist in 1929. We have a federal budget surplus and a low ongoing inflation rate.


But are any of these sufficient to resist the onslaught of instability that would accompany the deflation of a market that has gone so high so fast, discarding along the way many of the traditional measures of true market value?


It's interesting to recall that Hoover was caricatured as having given America "two cars in every garage and a chicken in every pot," not a vast boast by today's standards. Still, he was building on the success of Henry of Navarre, France's greatest king and lover, architect of one of the great periods of French economic expansion, who in the 16th century declared, "I want there to be no peasant in my realm so poor that he will not have a chicken in his pot every Sunday." Perhaps it won't come to that again.


Robert Reno is a columnist for Newsday.