on the Great Depression
by David Gordon
the present recession, advocates of government intervention often
evoke the specter of the Great Depression. Unless the government
intervenes massively, we are told, we risk an economic collapse
comparable to that of the 1930s. To see the fallacy of this claim,
it is imperative to understand that government intervention both
led to the depression and prevented recovery from it. The following
books, I hope, will assist those interested in grasping what happened
in this vital historical era. When it appears, Robert Murphy’s forthcoming
Politically Incorrect Guide to the Great Depression and the New
Deal will no doubt be a notable addition to the list below.
and the Public Welfare. Anderson, the head economist of
the Chase National Bank during the 1930s, gives a detailed contemporary
account of the New Deal, as part of a history of American finance.
He stresses the disastrous effects of Roosevelt’s policies on business
confidence. Excellent treatment of FDR’s torpedoing the World Economic
Conference in 1933.
John T. Forgotten
Lessons: Selected Essays of John T. Flynn. Edited by Gregory
Pavlik. Very good criticism of fractional reserve banking, showing
how this led to financial instability that resulted in economic
collapse. Shows the business interests behind the NRA.
Road Ahead. Depicts the parallels between the New Deal and
fascism; Flynn shows wide knowledge of both American and European
Roosevelt Myth. Devastating portrayal of FDR. Shows how
the need to find outlets for government spending led to militarism
Deal or Raw Deal. Shows that New Deal programs, far from
helping the poor, actually burdened them through excise taxes on
essential items. Also excellent on use of welfare payments and government
jobs to secure votes for Roosevelt.
Against the New Deal. Edited by Bruce Ramsey. A collection
of contemporary articles by the great Old Right journalist, criticizing
the New Deal. Particularly good on the effect of government programs
on character. Garrett firmly advocates self-reliance. He writes
in a unique, poetic style.
Roger W. Time
and Money. Major study of Austrian business cycle theory,
comparing it with Keynesian, New Classicist, and Monetarist views.
Shows the radical aim of Keynes: he wanted to bring major investment
decisions under government control.
and Production and Other Works. Edited by Joseph T. Salerno.
The most elaborate statement of the Austrian theory of the business
cycle. Particularly important for our purposes is the essay "The
‘Paradox’ of Saving," showing that a fall in consumers’ spending
need not lead to depression.
War, and Cold War. Demonstrates that, contrary to near universal
belief, World War II failed to end the depression. Penetrating remarks
on the way in which uncertain expectations about Rooseveltian policy
eroded business confidence and thus prolonged the depression.
Causes of the Economic Crisis. Includes a classic essay,
written in 1928, that discusses the role of bank credit expansion
in causing the business cycle, as well as "The Causes of the
Economic Crisis" (1931), showing that inflation during a depression
will not succeed in ending unemployment. Only wage reductions in
industries with an oversupply of labor can achieve this goal.
Twilight of Gold. Strong criticism of the gold exchange
standard of the 1920s and defense of the classic gold standard.
Important criticism of Milton Friedman’s contractionist view of
the depression. Palyi was the chief economist of the Deutschebank,
192833 and advisor to the Reichsbank, 193133
Folly: How Roosevelt and His New Deal Prolonged the Great Depression.
The title tells all. Very detailed account of Roosevelt’s policies,
showing their disastrous impact. Among the highlights are a discussion
of the invidious effects of the AAA and an analysis of how Social
Security caused unemployment.
Myths of the Great Depression. Good short summary of the
free market position on the origins and course of the depression.
Excellent analysis of the Wagner Act.
Great Depression. Excellent application of Austrian business
cycle theory to the depression, pointing to bank credit expansion
as the cause of the crisis. Unfortunately, Robbins later repudiated
his own book, but he shouldn’t have. Murray Rothbard thought very
highly of this book.
Great Depression. The single most important book on the
Great Depression. Rothbard explains Austrian business cycle theory
and criticizes rival theories. He applies the theory to America,
showing how Benjamin Strong at the New York Fed promoted expansionary
monetary policy during the 1920s. When disaster struck, Hoover’s
interventionist measures made matters worse. Stresses the continuity
between Hoover and the New Deal.
History of Money and Banking in the United States. Shows
how Federal Reserve inflationist policy in the 1920s served the
interests of the House of Morgan. The New Deal represented the triumph
of the competing Rockefeller group.
Age of Inflation. Argues that the world economic crisis
of the 1930s stemmed in large part from the gold exchange standard.
Calls for a return to the classic gold standard. See also the same
Monetary Sin of the West.
New Deals: Reflections on Roosevelt’s America, Mussolini’s Italy,
and Hitler’s Germany. Draws parallels between the New Deal
and fascism. Schivelbusch emphasizes the quest for architectural
spectacles designed to overawe the masses and gives a good account
of the coercive aspects of the NRA.
Forgotten Man: A New History of the Great Depression. Very
well written account of the personalities behind the New Deal. Stresses
Roosevelt’s penchant for experimentation. Excellent discussion of
Schechter v. United States (1935), which held that
parts of the NIRA were unconstitutional.
the Great Depression. Shows how Roosevelt’s
interventionist policies led to a "depression within
the depression." Argues that World War II did not end the depression.
and Lowell Gallaway, Out
Unemployment and Government in Twentieth
Century America. The prolonged unemployment
during the 1930s stemmed from government and labor union programs
to prevent wages from falling.
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