The Big Picture of the Great Depression

Back in 1955, John Kenneth Galbraith called the Great Depression of the 1930s “the most momentous economic occurrence in the history of the United States,” and 30-odd years later that judgment, recorded in Galbraith’s bestseller, The Great Crash, still holds. Since then there have been more recessions, some quite severe, but nothing like what happened in the thirties. As dozens of economists and historians have shown, we now know, in theory, how to deal with violent cyclical downturns. We have learned what we should do to manipulate what Lester V. Chandler of Atlanta University has called “the determinants that influence the behavior of employment, output, and prices.”

Yet fears of another terrible collapse persist, even among the experts. And the higher the stock market soars, the greater the underlying fear. In The Great Crash, Galbraith spoke of “fissures” that “might open at…unexpected places,” and Chandler warned of some sort of “political deadlock” that might prevent the government from doing the things that would revive a faltering economy.

These fears are not without foundation. The American economy is complex and influenced by forces beyond the control of economists or politicians. More and more, economists are becoming aware of what historians have always known: that they can do a good job of explaining why the economy is the way it is and how it got to be that way, but that knowing exactly what to do to make it behave in any particular way in the future is another matter entirely.

The Great Depression of the 1930s was a worldwide phenomenon, great not only in the sense of “severe,” but also in the sense of “scope.” While there were differences in its impact and in the way it was dealt with from one country to another, the course of events nearly everywhere ran something like this: By 1925, most countries had recovered from the economic disruptions caused by the Great War of 1914-18. There followed a few years of rapid growth, but in 1929 and 1930, the prosperity ended. Then came a precipitous plunge that lasted until early 1933. This dark period was followed by a gradual, if spotty, recovery. The revival, however, was aborted by the steep recession of 1937-38. It took a still more cataclysmic event, the outbreak of World War II, to end the Great Depression. All this is well-known.

The effects of the Great Depression on the economy of the United States, and the attitudes of Americans toward both the Depression and the politics of their government, did not differ in fundamental ways from the situation elsewhere. This, too, scarcely needs saying.

However, there has been a tendency among historians of the Depression, except when dealing with specific international events, such as the London Economic Conference, and with foreign relations generally, to concentrate their attentions on developments in a single country or region. The result has been to make the policies of particular nations and particular interest groups seem both more unique and, for good or ill, more effective than they were.

It is true, to begin with, that neither President Calvin Coolidge nor President Herbert Hoover anticipated the Depression. In campaigning for the presidency in 1928, Hoover stressed the good times, which, he assured the voters, would continue if he was handling the reins of government. After the election, in his last annual message to Congress, Coolidge remarked that “the country can regard the present with satisfaction and anticipate the future with optimism.” When the bottom fell out of the American economy some months later, statements such as these came back to haunt Hoover and his party, and many historians have chortled over his discomfiture.

However, the leaders of virtually all the industrial nations were as far off the mark in their prognostications as Hoover and Coolidge were. When the German Social Democrats rode a “wave of prosperity” to power in June 1928, Hermann Mueller, the new chancellor, assured the Reichstag that the Fatherland was in a “firm and unshakable” condition.

Great Britain had been plagued by high unemployment and lagging economic growth in the late 1920s, but in July 1929 Prime Minister Ramsay MacDonald scoffed at the possibility of a slump. And as late as December 1929, the French premier, André Tardieu, announced what he described as a “politics of prosperity.” Fewer than a thousand people were out of work in France, and the Treasury was full to overflowing. The government planned to spend five billion francs over the next five years on a “national retooling” of agriculture, industry, commerce, health care, and education. Statesmen of many other nations made similar comments in 1928 and 1929.

Hoover has been subject to much criticism for the way in which he tried to put the blame for the Depression on the shoulders of others. In his memoirs he offered an elaborate explanation, complete with footnote references to the work of many economists and other experts. “The Depression was not started in the United States,” he insisted. The “primary cause” was the World War. In four-fifths of what he called the “economically sensitive” nations of the world, including such remote areas as Bolivia, Bulgaria, and Australia, the downturn was noticeable long before 1929, a time when the United States was enjoying a period of great prosperity.

Hoover blamed America’s post-1929 troubles on an “orgy of stock speculation” resulting from the cheap-money policies adopted by the “mediocrities” who made up the majority of the Federal Reserve Board in a futile effort to support the value of the British pound and other European currencies. Hoover called Benjamin Strong, the governor of the Federal Reserve Bank of New York, a “mental annex of Europe,” because the Fed had kept American interest rates low to discourage foreign investors.

According to Hoover, he had warned of the danger, but neither the Fed nor his predecessor, Calvin Coolidge (whom he detested), had taken his advice. Coolidge’s announcement at the end of his term that stocks were “cheap at current prices” was, Hoover believed, particularly unfortunate, since it undermined his efforts to check the speculative mania on Wall Street after his inauguration.

But Hoover could not use this argument to explain the decline that occurred in the United States in 1930, 1931, and 1932, when he was running the country. Instead he blamed the decline on foreign countries. European statesmen “did not have the courage to meet the real issues.” Their rivalries and their heavy spending on arms and “frantic public works programs to meet unemployment” led to unbalanced budgets and inflation that “tore their systems asunder.” These unsound policies led to the collapse of the German banking system in 1931, which transformed what would have been no more than a minor economic downturn into the Great Depression. “The hurricane that swept our shores,” wrote Hoover, was of European origin.

These squirmings to avoid taking any responsibility for the Depression do Hoover no credit. But he was certainly not alone among statesmen of the time in doing so. Prime Minister MacDonald, a socialist, blamed capitalism for the debacle. “We are not on trial,” he said in 1930, “it is the system under which we live. It has broken down, not only on this little island…it has broken down everywhere as it was bound to break down.” The Germans argued that the Depression was political in origin. The harsh terms imposed on them by the Versailles Treaty, and especially the reparations payments that, they claimed, sapped the economic vitality of their country, had caused it. One conservative German economist blamed the World War naval blockade for his country’s troubles in the 1930s. In the nineteenth century, “the English merchant fleet helped build up the world economy,” he said. During the war “the British navy helped to destroy it.”

When in its early stages the Depression appeared to be sparing France, French leaders took full credit for this happy circumstance. “France is a garden,” they explained. But when the slump became serious in 1932, they accused Great Britain of causing it by going off the gold standard and adopting other irresponsible monetary policies, and the United States of “exporting unemployment” by substituting machines for workers. “Mechanization,” a French economist explained in 1932, “is an essential element in the worsening of the depression.”

Commentators in most countries, including the United States, tended to see the Wall Street crash of October 1929 as the cause of the Depression, placing a rather large burden of explanation on a single, local event. But, in a sense, the Depression was like syphilis, which before its nature was understood was referred to in England as the French pox, as the Spanish disease in France, the Italian sickness in Spain, and so on.

When the nations began to suffer the effects of the Depression, most of the steps they took in trying to deal with it were either inadequate or counterproductive. Hoover’s signing of the Hawley-Smoot protective tariff further shriveled an already shrinking international trade. The measure has been universally deplored by historians, who point with evident relish to the fact that more than a thousand economists had urged the president to veto the bill. The measure was no doubt a mistake because it caused a further shrinking of economic activity, but blaming Hoover for the result ignores the policies of other countries, to say nothing of the uselessness of much of what the leading economists of the day were suggesting about how to end the Depression. Even Great Britain, a nation particularly dependent on international trade, adopted the protective imperial preference system, worked out with the dominions at Ottawa in 1932. Many Latin American countries, desperately short of foreign exchange because of the slumping prices of the raw materials they exported, tried to make do with home manufactures and protected these fledgling industries with tariffs. In Europe, country after country passed laws aimed at reducing their imports of wheat and other foreign food products.

And, while the Hawley-Smoot tariff was unfortunate, if Hoover had followed all the advice of the experts who had urged him to veto it, he would surely have been pushing the American economy from the frying pan into the fire, because most of their recommendations are now seen to have been wrongheaded. Opposition to protective tariffs, almost universal among conservative economists since the time of Adam Smith and Ricardo, was no sign of prescience, then as now. In their Monetary History of the United States , Milton Friedman and Anna Jacobson Schwartz characterize the financial proposals of the economists of the 1930s as “hardly distinguished by the correctness or profundity of understanding of the economic forces at work.” A leading French economic historian, Alfred Sauvy, compares the typical French economist of the period to a “doctor, stuffed with theories, who has never seen a sick person.” An Australian historian characterizes the policies of that country as “deeply influenced by shibboleths.”

The most nearly universal example of a wrongheaded policy during the Depression was the effort that nations made to balance their annual budgets. Hoover was no exception; Albert Romasco has counted no fewer than twenty-one public statements stressing the need to balance the federal budget that the President made in a four-month period. As late as February 1933, after his defeat in the 1932 election, Hoover sent a desperate handwritten letter to president-elect Roosevelt pleading with him to announce that “there will be no tampering or inflation of the currency [and] that the budget will be unquestionably balanced even if further taxation is necessary.”

But Hoover had plenty of company in urging fiscal restraint. Roosevelt was unmoved by Hoover’s letter, but his feelings about budget balancing were not very different. In 1928 William Trufant Foster and Waddill Catchings published a book, The Road to Plenty, which attracted considerable attention. Roosevelt read it. After coming across the sentence “When business begins to look rotten, more public spending,” he wrote in the margin: “Too good to be true—you can’t get something for nothing.” One of Roosevelt’s first actions as President was to call for a tax increase. According to his biographer Frank Freidel, fiscal conservatism was a “first priority” in Roosevelt’s early efforts to end the Depression.

Budget balancing was an obsession with a great majority of the political leaders of the thirties, regardless of country, party, or social philosophy. In 1930, Ramsay MacDonald’s new socialist government was under pressure to undertake an expensive public works program aimed at reducing Great Britain’s chronic unemployment. Instead the government raised taxes by £47 million in an effort to balance the budget. The conservative Heinrich Brüning recalled in his memoirs that when he became chancellor of Germany in 1932, he promised President Hindenburg “that as long as I had his trust, I would at any price make the government finances safe.”

France had fewer financial worries in the early stages of the Depression than most nations. Its 1930 budget was designed to show a small surplus. But revenues did not live up to expectations, and a deficit resulted. The same thing happened in 1931 and again in 1932, but French leaders from every point on the political spectrum remained devoted to “sound” government finance. “I love the working class,” Premier Pierre Lavai told the National Assembly during the debate on the 1932 budget. Hoots from the left benches greeted this remark, but Laval went on: “I have seen the ravages of unemployment.…The government will never refuse to go as far as the resources of the country will permit [to help]. But do not ask it to commit acts that risk to compromise the balance of the budget.” In 1933, when France began to feel the full effects of the Depression, Premier Joseph Paul-Boncour, who described himself as a socialist though he did not belong to the Socialist party, called for rigid economies and a tax increase. “What good is it to talk, what good to draw up plans,” he said, “if one ends with a budget deficit?”

Leaders in countries large and small, in Asia, the Americas, and Europe, echoed these sentiments. A Japanese finance minister warned in 1930 that “increased government spending” would “weaken the financial soundness of the government.” Prime Minister William Lyon Mackenzie King of Canada, a man who was so parsimonious that he cut new pencils into three pieces and used them until they were tiny stubs, believed that “governments should live within their means.” When King’s successor, R. B. Bennett, took office in 1931, he urged spending cuts and higher taxes in order to get rid of a budget deficit of more than eighty million dollars. “When it came to…‘unbalancing’ the budget,” Bennett’s biographer explains, “he was as the rock of Gibraltar.”

The Brazilian dictator Getulio Vargas is reported to have had a “high respect for a balanced budget.” When a journalist asked Jaime Garner, one of a succession of like-minded Spanish finance ministers in the early 1930s, to describe his priorities, Garner replied that he had three: “a balanced budget, a balanced budget, and a balanced budget.” A recent historian of Czechoslovakia reports that the statesmen of the Depression era in that country displayed an “irrational fear of the inflationary nature of a budget deficit.”

These examples could be extended almost without limit. The point is not that Hoover was correct in his views of proper government finance; obviously he was not. But describing his position without considering its context distorts its significance. Furthermore, the intentions of the politicians rarely corresponded to what actually happened. Deficits were the rule through the Depression years because government revenues continually fell below expectations and unavoidable expenditures rose. Even if most budgets had been in balance, the additional sums extracted from the public probably would not have had a decisive effect on any country’s economy. Government spending did not have the impact on economic activity that has been the case since World War II. The historian Mark Leff has recently reminded us, for example, that the payroll tax enacted to finance the new American Social Security system in 1935 “yielded as much each month as the notorious income tax provisions of Roosevelt’s 1935 Wealth Tax did in a year.”

It is equally revealing to look at other aspects of the New Deal from a broad perspective. Franklin Roosevelt’s Brain Trust was novel only in that so many of these advisers were academic types. Many earlier presidents made use of informal groups of advisers—Theodore Roosevelt’s Tennis Cabinet and Andrew Jackson’s Kitchen Cabinet come to mind. There is no doubt that political leaders in many nations were made acutely aware of their ignorance by the Depression, and in their bafflement they found that turning to experts was both psychologically and politically beneficial. Sometimes, the experts’ advice actually did some good. Sweden was blessed during the interwar era with a number of articulate, first-rate economists. The Swedish government, a recent scholar writes, was “ready to listen to the advice of [these] economists,” with the result that by 1935 Sweden was deliberately practicing deficit spending, and unemployment was down nearly to preDepression levels.

Throughout the period British prime ministers made frequent calls on the expertise of economists such as Ralph Hawtrey, A. C. Pigou, and, of course, John Maynard Keynes. In 1930, Ramsay MacDonald, who was particularly fond of using experts to do his thinking for him, appointed a committee of five top-flight economists to investigate the causes of the Depression and “indicate the conditions of recovery.” (The group came up with a number of attractive suggestions, but avoided the touchy subject of how to finance them.) The next year, MacDonald charged another committee with the task of suggesting “all possible reductions of national Expenditure” in a futile effort to avoid going off the gold standard. Even in France, where political leaders tended to deny that the world depression was affecting their nation’s economy and where most economists still adhered to laissez-faire principles, French premiers called from time to time on experts “to search,” Sauvy explains, “for the causes of the financial difficulties of the country and propose remedies.”

Many specific New Deal policies were new only in America. In 1933, the United States was far behind most industrial nations in social welfare. Unemployment insurance, a major New Deal reform when enacted in 1935, was established in Great Britain in 1911 and in Germany shortly after World War I, well before the Depression struck. The creation of the New Deal Civilian Conservation Corps and the Civil Works Administration in 1933, and later of the Works Progress Administration and Public Works Administration, only made up for the absence of a national public welfare system before 1936.

The New Deal National Recovery Administration also paralleled earlier developments. The relation of its industrywide codes of “fair” business practices to the American trade-association movement of the 1920s and to such early Depression proposals as the plan advanced by Gerard Swope of General Electric in 1931 are well known. (The Swope Plan provided that in each industry “production and consumption should be coordinated…preferably by the joint participation and joint administration of management and employees” under the general supervision of the Federal Trade Commission, a system quite similar to NRA, as Roosevelt himself admitted.)

That capital and labor should join together to promote efficiency and harmony, and that companies making the same products should consult in order to fix prices and allocate output and thus put a stop to cutthroat competition, all under the watchful eye of the government, were central concepts of Italian fascist corporatism in the 1920s and of the less formal but more effective German system of cartels in that period. The Nazis organized German industry along similar but more thoroughly regimented lines at about the same time as the NRA system was being set up in America. Great Britain also employed this tactic in the 1930s, albeit on a smaller scale. The British government allowed coal companies to limit and allocate production and to fix prices, and it encouraged similar practices by steel and textile manufacturers. The only major industrial power that did not adopt such a policy before the passage of the National Industrial Recovery Act was France. Later, in 1935, the Chamber of Deputies passed a measure that permitted competing companies to enter into “accords” with one another “in tinie of crisis.” The measure would have allowed them to adjust, or put in order, the relations between production and consumption, which is essentially what NRA was supposed to make possible. This projet Marchandeau died in the French Senate, but some industries were encouraged to cooperate for this end by special decree.

But the area in which American historians of the Depression have been most myopic is New Deal agricultural policy. The extent to which the Agricultural Adjustment Act of 1933 evolved from the McNary-Haugen scheme of the Coolidge era and the Agricultural Marketing Act of the Hoover years has been universally conceded. Beyond these roots, however, historians have not bothered to dig. The stress on the originality of the AAA program has been close to universal. Arthur Schlesinger, Jr., put it clearly and directly when he wrote in his book Coming of the New Deal that “probably never in American history has so much social and legal inventiveness gone into a single legislative measure.”

Schlesinger and the other historians who expressed this opinion have faithfully reflected statements made by the people most closely associated with the AAA at the time of its passage. Secretary of Agriculture Henry A. Wallace said that the law was “as new in the field of social relations as the first gasoline engine was new in the field of mechanics.” President Roosevelt told Congress in submitting the bill that it was a new and untried idea.

In fact, Wallace and Roosevelt were exaggerating the originality of New Deal policy. The AAA did mark a break with the past for the United States. Paying farmers not to grow crops was unprecedented. Yet this tactic merely reflected the constitutional restrictions of the American political system; Congress did not have the power to fix prices or limit production directly. The strategy of subsidizing farmers and compelling them to reduce output in order to bring supplies down to the level of current demand for their products was far from original.

As early as 1906, Brazil had supported the prices paid its coffee growers by buying up surpluses in years of bountiful harvests and holding the coffee off the market. In the 1920s France had tried to help its beet farmers and wine makers by requiring that gasoline sold in France contain a percentage of alcohol distilled from French beets and grapes. More important in its effect on the United States, Great Britain had attempted in the 1920s to bolster the flagging fortunes of rubber planters in Britain’s Asiatic colonies by restricting production and placing quotas on rubber exports. This Stevenson Plan, referred to in the American press as “the British monopoly,” aroused the wrath of then Secretary of Commerce Herbert Hoover. It also caused Henry Ford and Harvey Firestone, whose factories consumed huge amounts of imported rubber, to commission their mutual friend Thomas A. Edison to find a latex-producing plant that could be grown commercially in the United States. (Edison tested more than ten thousand specimens and finally settled on goldenrod. Ford then bought a large tract in Georgia to grow the stuff, although it never became profitable to do so.)

After the Great Depression began, growers of staple crops in every corner of the globe adopted schemes designed to reduce output and raise prices. In 1930, British and Dutch tea growers in the Far East made an agreement to cut back on their production of cheaper varieties of tea. British and Dutch rubber planters declared a “tapping holiday” in that same year, and in 1931 Cuba, Java, and six other countries that exported significant amounts of cane sugar agreed to limit production and accept export quotas. Brazil began burning millions of pounds of coffee in 1931, a tactic that foreshadowed the “emergency” policy of the AAA administrators who ordered the plowing under of cotton and the “murder” (so called by critics) of baby pigs in 1933.

Far from being an innovation, the AAA was actually typical—one of many programs put into effect in countries all over the world in the depths of the Depression to deal with the desperate plight of farmers. The year 1933 saw the triumph nearly everywhere of a simple supplyand-demand kind of thinking that the French called “economic Malthusianism,” the belief that the only way to raise prices was to bring output down to the level of current consumption. In February 1933, Indian, Ceylonese, and East Indian tea growers agreed to limit exports and prohibit new plantings for five years. A central committee of planters assigned and administered quotas limiting the exportation of tea. Dutch, British, French, and Siamese rubber growers adopted similar regulations for their product. In April 1933, representatives of nearly all the countries of Europe met in London with representatives of the major wheat-exporting nations, of which the United States, of course, was one of the largest. The gathering produced an International Wheat Agreement designed to cut production in hopes of causing the price of wheat to rise to a point where it would be profitable for farmers, yet still “reasonable” for consumers.

In addition to these international agreements, dozens of countries acted unilaterally in 1933 with the same goals in mind. Argentina adopted exchange controls, put a cap on imports, and regulated domestic production of wheat and cattle. The government purchased most of the 1933 wheat crop at a fixed price, then dumped the wheat abroad for whatever it could get. A Danish law of 1933 provided for government purchase and destruction of large numbers of low-quality cattle, the cost to be recovered through a slaughterhouse tax on all cattle butchered in Denmark. Declining demand caused by British restrictions on importation of Danish bacon led the Danish government to issue a specified number of “pig cards” to producers. Pigs sent to market with such cards brought one price, those without cards a lower one. The Dutch enacted similar restrictions on production of pork, beef, and dairy products.

Switzerland reduced milk production and limited the importation of feed grains in 1933, and Great Britain set up marketing boards that guaranteed dairymen a minimum price for milk. Sweden subsidized homegrown wheat and rye, and paid a bounty to exporters of butter. In 1933, France strengthened the regulations protecting growers of grapes and established a minimum price for domestic wheat. After Hitler came to power, the production, distribution, and sale of all foodstuffs was regulated. Every link from farmer to consumer was controlled.

Looking at the situation more broadly, the growers of staple crops for export were trying to push up prices by reducing supplies, ignoring the fact that higher prices were likely to reduce demand still further. At the same time, the agricultural policies of the European industrial nations were making a bad situation worse. By reducing imports (and in some cases increasing domestic output) they were injuring the major food-producing countries and simultaneously adding to the costs of their own consumers.

It was, the British historian Sidney Pollard has written, “a world of rising tariffs, international commodity schemes, bilateral trade agreements and managed currencies.” The United States was as much a part of Pollard’s world as any other country.

One further example of the need to see American Depression policies in their world context is revealing. It involves the recession of 1937-38 and President Roosevelt’s supposed responsibility for it. In early 1937, the American economy seemed finally to be emerging from the Depression. Unemployment remained high, but most economic indicators were improving. Industrial production had exceeded 1929 levels. A group of New Dealers who met at the home of the Federal Reserve Board chairman Marriner Eccles in October 1936 were so confident that the Depression was ending that their talk turned to how to avoid future Depressions. The general public was equally optimistic. “When Americans speak of the depression,” the French novelist Jules Romains wrote after a visit to this country at that time, “they always use the past tense.”

At this point Roosevelt, egged on by his conservative secretary of the treasury, Henry Morgenthau, warned the public in a radio speech that “the dangers of 1929 are again becoming possible.” He ordered a steep cut in public works expenditures, and instructed the members of his cabinet to trim a total of $300 million from their departmental budgets. The President promised to balance the federal budget, and in fact brought the 1937 deficit down to a mere $358 million, as compared with a deficit of $3.6 billion in 1936. This reduction in federal spending, combined with the Federal Reserve’s decision to push up interest rates and the coincidental reduction of consumer spending occasioned by the first collection of Social Security payroll taxes, brought the economic recovery to a halt and plunged the nation into a steep.recession. The leading historian of the subject, K. D. Roose, called the recession a downturn “without parallel in American economic history.”

Roosevelt had never been happy with deficits, and he was not much of an economist, but he was far from being alone in thinking that the time had come to apply the brakes to the economy. Economists who were far more knowledgeable than he saw the situation exactly as he did. Prices were still below 1929 levels in most countries, but they were rising rapidly. Using 1929 levels as an index, during 1937 prices jumped from 83 to 96 in Great Britain, from 80 to 93 in Italy, from 87 to 98 in Sweden, and from 80 to 86 in the United States.

These increases caused the grinding deflation of the years since 1929 to be forgotten. Fear of inflation resurfaced. The economist John Maynard Keynes had discounted the risks of inflation throughout the Depression. Inflation was a positive social good, he argued, a painless way to “disinherit” established wealth. But, by January 1937, Keynes had become convinced that the British economy was beginning to overheat. He was so concerned that he published a series of articles in the Times of London on “How to Avoid a Slump.” It might soon be necessary to “retard certain types of investment,” Keynes warned. There was even a “risk of what might fairly be called inflation,” he added. The next month, the British government’s Committee on Economic Information issued a report suggesting a tax increase and the postponement of “road improvements, railway electrification, slum clearance,” and other public works projects “which are not of an urgent character.”

During this same period, the Federal Reserve Board chairman Marriner Eccles, long a believer in the need to stimulate the economy, warned Roosevelt that “there is grave danger that the recovery movement will get out of hand, excessive rises in prices…will occur, excessive growth of profits and a boom in the stock market will arise, and the cost of living will mount rapidly. If such conditions are permitted to develop, another drastic slump will be inevitable.”

It did not take much of this kind of talk to convince President Roosevelt. When Roosevelt’s actions triggered the downturn, he reversed himself again, asking Congress for budget-busting increases in federal spending. The pattern elsewhere was similar. In the United States the money was spent on unemployment relief and more public works; in the major European countries the stimulus chiefly resulted from greatly increased expenditures on armaments. In 1939, World War II broke out, and the Great Depression came to a final end.

When viewed in isolation, the policies of the United States government during the periods when economic conditions were worsening seem to have been at best ineffective, at worst counterproductive. Those put into effect while conditions were getting better appear to have been at least partly responsible for the improvement. This helps to explain why the Hoover administration has looked so bad and the New Dealers, if not always good, at least less bad.

When seen in broader perspective, however, credit and blame are not so easily assigned. The heroes then appear less heroic, the villains less dastardly, the geniuses less brilliant. The Great Depression possessed some of the qualities of a hurricane; the best those in charge of the ship of state could manage was to ride it out without foundering.

Economists and politicians certainly know more about how the world economy functions than their predecessors did half a century ago. But the world economy today is far more complex and subject to many more uncontrollable forces than was then the case. A great depression like the Great Depression is highly unlikely. But a different great depression? Galbraith ended The Great Crash with this cynical pronouncement: “Now, as throughout history, financial capacity and political perspicacity are inversely correlated.” That may be an overstatement. But then again, maybe not.