What Caused the Depression? A New Overview Spreads the Blame.

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While many works of popular history tend to shy away from discussing the scholarship that informs their writing, Morris does a splendid job of introducing the fierce academic debates over the Depression’s causes. These excurses, scattered throughout the book, help illuminate why it is so hard to identify a single cause of the catastrophe.

One area where Morris avoids placing blame is Wall Street, and he cites scholars who believe the crash of 1929 had almost nothing to do with the ensuing crisis. Morris concedes that the stock market was due for a correction, but he plays down the kind of financial shenanigans that have occupied other writers, save for a detailed account of the mountains of leverage amassed by the public utility magnate Samuel Insull.

Morris instead turns his attention to the other side of the Atlantic. “All of the tangled threads that twisted together to create the catastrophe of the Depression originated in Europe,” Morris declares, though he concedes that the policy response of the United States (along with that of Britain, Germany and France) didn’t help matters. “It is hard to conceive of the Great Depression absent World War I,” he says, and he begins his book with the colossal military miscalculations that sent Europe into the abyss. Most of the remainder of the book dwells at great length on the “disordered aftermath” of this conflict overseas, which he believes set the stage for the collapse.

This is refreshing, and Morris traces in considerable detail the economic effects of the war, beginning with Europe’s abandonment of the gold standard and, even worse, the attempts to return to it at all costs (France gets particular blame for its “semi-messianic drive … to force a gold-based deflation on the rest of Europe”). His argument derives in no small part from the economist Barry Eichengreen’s “Golden Fetters: The Gold Standard and the Great Depression, 1919-1939,” and it’s good to see these ideas given such prominence.


Still, the average reader may not delight in being subjected to discussions of the nuts and bolts of war reparations and the endless negotiations in Europe over the gold standard. Morris does cover simultaneous developments in the United States, but these tend to showcase the underlying strength and resilience of the American economy. Though Morris acknowledges that the agricultural sector was a “laggard,” and grants that the stock market was getting a little frothy by 1929, he insists it was “international developments that pushed the United States over the brink” and into the Great Depression.

Indeed, if there’s a culprit here, it’s Europe, especially Germany with France a close second. At times, Morris goes out of his way to pillory Germany. “The Germans paid the reparations by borrowing from the war’s victors, and rubbed it in by defaulting on the loans,” he notes in a typical comment. In this account, Weimar Germany comes across as a nation of hypocritical deadbeats.

More than a few historians might quibble with such a characterization, but the focus on Europe also distracts us from what was going on in the United States. Morris offers a quite comprehensive account of the American economy in this decade, but it is one that tends to emphasize the positive. To be sure, there was much to celebrate: The decade witnessed significant gains in productivity, driven by the automobile industry and “the marriage of electricity with mechanical production.” He does an excellent job sketching these developments without succumbing to a simplistic entrepreneur-as-hero narrative.

But there was more going on at this time. Two related trends merit more than a mention. The first was the enormous and growing role of finance. Thomas Philippon, an economist at New York University, has published papers on the financial service industry’s share of the nation’s gross domestic product, or G.D.P. In the 1920s, finance’s share of G.D.P. doubled, with most of the growth taking place in the second half of the decade.

A comparable boom in the financial services industry took place in the lead-up to the 2008 crisis, and in both cases it’s hard to read these as anything but a misallocation of economic resources. In each instance, the metastatic growth of finance, along with staggering amounts of debt, yielded towers of leverage that came crashing down. And then, as now, this had real effects on the larger economy.

As in our own age, the growing dominance of finance in the 1920s went hand in hand with another trend: rising inequality. While Morris grudgingly acknowledges this fact, his claim that “the good times of the 1920s were such that even people on the bottom rungs of the ladder … could claim a modest share of the booming consumer economy” is more typical of his rosy view.

So, too, is his account of a black sharecropper buying a Model T with cash, to which he devotes three pages. But this was an anomaly. Yes, more people could afford more things, but most of those things came by purchasing on credit, not rising wages. Inequality skyrocketed in the 1920s, and the reason that this unpleasant fact could be ignored was because of the increase of personal debt and financial intermediation, much like the years preceding 2008.

There is a growing literature within economics that examines the possibility that inequality, household debt and financial crises may be related, but Morris shows little interest in this kind of work, and he dismisses Thomas Piketty and Emmanuel Saez’s groundbreaking analysis of inequality as a “hoary theory,” a breezy rejection of some of the most widely discussed work in economics in recent years.

Generally, however, Morris is remarkably evenhanded, giving both sides of scholarly debates in deep detail. This is particularly the case in his coverage of the New Deal, where he weighs the practical effects of the dizzying array of policies begun by Roosevelt, from his devaluation of the dollar to the creation of the Civilian Conservation Corps. And Morris explains in accessible prose how economists have used modeling to study the New Deal (he wryly notes that this “is still a work in progress — if only because results are often suspiciously consistent with the political dispositions of the modeler”).

“A Rabble of Dead Money” is a deft synthesis, blending colorful accounts of the past with the scholarly literature of the present. It may not be the last word on the Great Depression, but it is hard to imagine a more accessible and entertaining introduction to the subject.

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