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