BOOK REVIEW
BY GREGORY DL MORRIS
A Rabble of Dead Money : The Great Crash and the Global Depression 1929 – 1939
By Charles R . Morris Public Affairs Press , New York , 2017 , $ 30 389 pages , with photographs , charts , tables , appendices , notes and index
Charles Morris ( no relation ) is a polymath , which will be a delight to most readers but will vex a few . His prose is animated , and he manages to deliver all but the most dense economics with vigor . The research is broad and deep . Serious students of the period and of financial history will find plenty of substance . More casual readers will be impressed with the way Morris can summarize important , if recondite , research and communicate its relevance clearly .
This book , which is substantively a financial history , starts with an excellent , concise 16-page summary of World War I and the Treaty of Versailles . The premise is that the devastation of the war , which was highly concentrated in France and Belgium , led to cross purposes in the peace . Those conflicting national agendas magnified the biases of conventional wisdom about money supply and economic stimulus . Those , in turn , were underpinned by political , social and religious tenets .
There is a focus on the growth of the automobile , both as a new technology and as the defining consumer good of the period . Steel and appliances , as well as real estate , are touched upon , but Morris hangs his hat on the Ford Model T , its competitors and successors . There is also discussion of how religion and politics color views of economics and social mobility . There are more than a few unsettling parallels to current events .
Morris is hardly the first to explain that the Great Depression was not an immediate or inevitable consequence of the Great Crash . But Morris has done an excellent job of putting the two cataclysms in context . They were inter-related , not strictly as cause and effect as is widely believed , but as results of the same greater economic , political and social events . That is what Morris does so well . He puts events into context locally , nationally and globally . He takes pains to demonstrate that while the Wall Street collapse was a classic bubble and painful correction , it was unemployment and a liquidity crisis that transmogrified the situation into a national and global catastrophe .
In particular , Morris cites Yale economist Irving Fisher . Unfortunately , Fisher ’ s most famous pronouncement was that the stock market in 1929 had reached “ a permanently high plateau .” Such a howler should not be allowed to taint the greater body of Fisher ’ s work , which was spot on , Morris relates :
“ The worst possible reaction to a deflationary depression , Fisher continues , is to ‘ balance the budget ,’ because that always entails reducing spending and / or raising taxes , either of which worsens the deflation since it is extracting spending power from the economy .”
The book goes on to specify an incisive indictment by Fisher . “ A 1932 Hoover tax increase came ‘ when each dollar was already 60 percent more burdensome to the debtor than in 1929 .’” Morris details that if the Federal Reserve had “ actively supplied new reserves to the system it could [ have ] generate [ d ] up to 30 times that much in new economic activity .”
Morris is unsparing of Hoover . In a chapter about the brilliant young mining engineer and savior of starving Belgium , he seems to be taking the path of the revisionists who try to excuse Hoover for his inaction . But in the end the fault is all the more glaring . The man who built a legend as relentless and resourceful in getting things done in the end becomes hopelessly hesitant .
“ Hoover ’ s grasp of the potential power of government spending to off-set business downturns was proto-Keynesian , well before all but a narrow elite had heard of Keynes ,” Morris writes dolefully . “ His economic instincts , however , were waylaid by his scruples against expanding the federal government , his fear of inflation and his emotional attachment to the gold standard .”
It has been said that an economist is someone who , upon seeing that something works in practice , wonders if it will also work in theory . That would be funny except for the real and lasting suffering . “ To the average person , the central reality of the Depression was the collapse of the job market ,” Morris writes . “ Despite the haunting images of the Dust Bowl , he notes , “ cities were particularly hard hit since construction employment fell by more than 40 %, and hours worked were cut by 60 %.”
The toll was especially grim among blue-collar workers . “ In Chicago , a Census Bureau study found that 30.7 % of male workers were unemployed in 1931 ; 40.7 % of skilled workers , 36.6 % of semi-skilled workers and 57.2 % of unskilled workers … Detroit was particularly hard hit because of its dependence on the automobile industry . The Ford payroll alone shrank from 128,000 in March 1929 to 37,000 by the summer of 1931 .” A plunge of 71 %.
“ Hoover ’ s response was to set up the President ’ s Emergency Committee on Employment ,” Morris states . “ The committee comprised a number of talented and sincere people , but it had no appropriation except for a small staff budget , and could do little more than be a cheerleader for local efforts .”
The last few chapters of the book return to Europe . There is a solid review of how negotiations over war reparations were wholly confounded by cross purposes . Into that toxic ground came first the stock market collapse , then the Depression then the slide into totalitarianism .
36 FINANCIAL HISTORY | Summer 2017 | www . MoAF . org