Easy Money: Oil Promoters and Investors in the Jazz Age

Easy Money: Oil Promoters and Investors in the Jazz Age

Easy Money: Oil Promoters and Investors in the Jazz Age

Easy Money: Oil Promoters and Investors in the Jazz Age

Excerpt

The Lawyers, Doctors, Hatters, Clerks Industrious and lazy, Have put their money all in stocks: In fact, have gone oil crazy.

T HIS DITTY, "as sung in New York, Philadelphia, and all the principal cities of the Union where ile fever abounds" describes one of the great speculative manias of nineteenth- century America. Others, in land and in canal and railroad shares, preceded it, and many more would follow it.

Charles P. Kindleberger is one of the few scholars to examine speculative manias. In a pioneering work he explains what happens in booms in terms of investor "irrationality." Kindleberger describes "mob psychology" and "the irrationality of the gullible and greedy" over a vast expanse of European and American history. He concludes that, though they need a little help from government occasionally, capital markets work well: "Modern excesses burn themselves out without damage." Manias, thus, are aberrations, unrelated to the regular conduct of business or to the general health of the economy.

We believe that this view is open to question when speculative booms and manias are viewed with greater attention to detail than Kindleberger's broad overview permitted. A number of significant topics deserve further study, including the social and economic basis of speculative booms, the expectations and mentalities they reflect, the apparent difficulty of increasing assets during booms, the relation of fraudulent business activity to manias, and the effect of law enforcement on fraudulent boom-time activity.

The literature on mining and securities speculation has addressed these subjects in piecemeal fashion. We believe that these topics can be delineated more sharply through examination of a single industry during a . . .

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