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July 31, 2007
the forgotten man: a new history of the great depression
Amity Shlaes' the Forgotten Man is easily the most fascinating look back at the Great Depression I have ever read. The book is a breeze to read and serves as a refreshing look at the well intentioned policies that help prolong and strengthen the severity of the depression. The book starts in the twenties and reevaluates the myth of the "reckless twenties" that became the embodiment of the thirties propaganda. The center of the economic policy of that period was Treasury Secretary Andrew Mellon who served the post for three presidents. The twenties were a boom period for business, much like this decade and the nineties.
President Coolidge's pro-business policies fueled the economic growth of that period. The immensely popular Coolidge decided not to seek a third term and was replaced by Herbert Hoover. Hoover's idea of economics were at odds with Mellon and the previous administration and when the stock market finally corrected in 1929 after inflated growth the President did everything wrong. Hoover raised taxes, tariffs, interest rates and turned a normal recession into the Great Depression.
Political change was inevitable in 1932 and once Roosevelt became President the poor economic policies continued. It's easy to point the blame on Roosevelt, but I'm not sure there was any rational alternative. The Republicans at the time didn't have any better ideas. They were far too prone to support the kind of isolationist policies that were helping compound the problem. The only decent candidate to run against Roosevelt was Wendell Willkie who ran in 1940. By that time the war was the number one issue and there's no doubt that Roosevelt was a tremendous leader.
President Roosevelt's administration also spent a great deal of time going after businesses and Wall Street. This war against the private sector ultimately made the Depression worse as well, eventually leading to Black Tuesday in 1938. The administration's overzealous attack on Wall Street quelled investment and stopped growth. One example of the cluelessness of the administration was the price of Gold. When FDR was asked why he had sat the price of gold to twenty-one cents he replied "it's a lucky number, because it's three times seven." This kind of daily meddling wasn't uncommon and is an amazing insight into why the Depression is the greatest government blunder in our nation's history.
Despite the gloom of the period the book is an inspirational look at the truly "forgotten men and women" of the depression. These heroes overcame one of the most difficult periods in our history despite the incompetence of government intervention. For too long people have debated why the Great Depression happened and ignored why it lasted so long. The answer to the last question is the answer to both. The differences between Hoover and Roosevelt were slight; however, Roosevelt helped calm the public. Ultimately the start of World War II ended the Depression and the anti-business and anti-trade policies of the thirties faded after 1940. It's important for Americans to remember the mistakes made by the government during that period because they're too easy to make again. On the Right, Isolationism in trade and in immigration policy is damaging. On the Left anti-big business and class warfare are equally disturbing. The Forgotten Man is a stark reminder of how both out dated ideologies got it wrong.
Posted by nemov at July 31, 2007 6:03 PM
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Comments
as a self-proclaimed "academic" economist, i would think you'd be more leary of journalistic accounts of history, rather than those performed by real historians. this response to newt gingrich's comments about this book on amazon.com are insightful.
Posted by: brown at August 2, 2007 11:59 AM
It's funny you mention the Newt review, particularly because one of the 3 comments you mention is mine. There's a great deal of fantasy on the Left and Right about that period.
The Right tries to paint FDR as a socialist monster and the Left views the New Deal as some kind policy that saved America. Both are absurdly wrong. FDR was a much better leader than Hoover, but both had inept economic policies when it came to solving the problem of the depression.
It's a bit dismissive to label the book a "journalistic" account. Amity Shlaes spent several years putting the book together and she's a lot more than a simple journalist.
Posted by: nemov at August 2, 2007 5:38 PM