Reddit reviews Lords of Finance: The Bankers Who Broke the World

Did the New Deal end the Great Depression? No. Did it make things worse? Absolutely not. Did it help millions of Americans avoid poverty and starvation? Emphatically yes. The period from 1933 to 1937 remains the fastest period of peacetime growth in American history. GDP growth averaged approximately 10% per year. You can see the full range of data here. Also, the PWA and WPA created the infrastructure the United States to grow for decades to come. The former completed projects in all but three counties of the United States such as the Triboro Bridge, the Lincoln Tunnel, and the Bonneville and Grand Coulee dams; the latter built 78,000 bridges, 1,000 tunnels, 6,000 schools, 67,000 miles of city streets, and 572,000 miles of rural roads (among a ridiculous number of other projects).


Additionally Roosevelt's monetary policy was probably more successful than his fiscal stimulus. First, the bank holiday restored the confidence of American savers and investors more so than probably any other action. Banks were closed on March 9, 1933 and began to reopen only after thorough auditing. When the banks opened on March 12, depositors, despite the suspension of gold convertibility, began putting their money back in the banks. Within a week, $1 billion had been put back into the banking system that had fled during the runs on banks prior to Roosevelt's inauguration. On March 15, the New York Stock Exchange opened for the first time in 10 days and the Dow jumped 15%, which was the largest single day movement in its history. By the end of the month of March, 2/3 of all banks were reopened and $1.5 billion had returned to the banks.

The second major act of monetary policy was the suspension of the gold standard. That action was overwhelmingly supported by financial and consumer markets. It removed a major deflationary burden from the American economy. Keynesian bias or not. On the day the change was announced, the NYSE jumped 15%. Within three months, wholesale prices had risen 45%. This lowered the real cost of borrowing significantly and investment began to flow into the private sector—orders for heavy machinery rose 100%—and into consumer markets--auto sales doubled. Overall industrial production rose 50%. By early 1937, overall industrial production had returned to its 1929 peak. Unemployment, moreover, had been halved from 25% nationally in 1933 (with certain cities and demographic groups even worse off--75% of black women in Detroit were unemployed) to about 12%-14% in early 1937 (Unemployment statistics prior to 1940 are always best guesses as the Bureau of Labor Statistics didn't collect them until then).

In 1937, FDR faced a growing conservative coalition in Congress and had his own misgivings about spending and reduced relief funding which caused a minor recession. Unemployment jumped to around 17%. GDP fell slightly in 1938, but was above its 1937 levels in 1939. Had this small recession not happened, the US may have left the Depression before military spending for WWII began to pick up. As it is, the combination of war production and the draft is what wiped out unemployment by 1942. So the New Deal didn't end the Depression, but it most certainly did not make things worse and was responsible for helping millions of people. There's a reason why FDR was elected four times and the Democrats only lost control of Congress once between 1930 and 1952.

Here's some light reading for you.

• Traitor to His Class: The Privileged Life and Radical Presidency of Franklin Delano Roosevelt, by H.W. Brands, Professor of History, University of Texas, Austin
  
  
• Franklin Delano Roosevelt, by Alan Brinkley, Allan Nevins Professor of History at Columbia University
  
  
• The Crisis of the Old Order: 1919-1933, The Age of Roosevelt, Volume I, by Arthur M. Schlesinger, Jr., one of the most prolific historians of the 20th century
  
  
• The Coming of the New Deal, 1933-1935 The Age of Roosevelt, Volume II, by Arthur M. Schlesinger, Jr.
  
  
• The Politics of Upheaval: 1935-1936, The Age of Roosevelt, Volume III, by Arthur M. Schlesinger, Jr.
  
  
• Building New Deal Liberalism: The Political Economy of Public Works, 1933-1956, by Jason Scott Smith, who was a fellow and assistant professor of history at Harvard and Cornell and is now at the University of New Mexico.
  
  
• "Lessons from the Great Depression for Economic Recovery in 2009," Christina D. Romer, Council of Economic Advisers
  
  
• Lords of Finance: The Bankers Who Broke the World, by Liaquat Ahamed, who worked at the World Bank and for several investment management groups. The book won the 2010 Pulitzer Prize in History.
  
  
• Stayin' Alive: The 1970's and the Last Days of the Working Class, by Jefferson Cowie, assistant professor of labor history at the Cornell School of Industrial and Labor Relations.
  
  
• Making a New Deal: Industrial Workers in Chicago, 1919-1939, by Lizabeth Cohen, Howard Mumford Jones Professor American Studies at Harvard
  
  
• Freefall: America, Free Markets, and the Sinking of the World Economy, by Joseph E. Stiglitz, winner of the 2001 Nobel Memorial Prize in Economics and a professor at Columbia
  
  
• Winner-Take-All Politics: How Washington Made the Rich Richer--and Turned Its Back on the Middle Class, by Jacob Hacker and Paul Pierson (Director of the Institution for Social and Public Policy Studies at Yale and the Avice Saint Chair of Public Policy at UC Berkley, respectively)
  
  
• Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty, by Esther Duflo (Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics at MIT)
  
  
• The Return of Depression Economics and the Crisis of 2008, by Paul Krugman, winner of the 2008 Nobel Memorial Prize in Economics and a professor of economics at Princeton
  

The "Hoover cut spending and caused a depression" story is false. For a detailed look at Hoover in the Depression, read Lords of Finance, but you need not go that far to realize that your perspective on Hoover is massively untrue.

Here is government spending as a percentage of GDP from 1920 to 1940. Notice the huge increase from 1929 to 1932, during which time Hoover was in office?

"But that was because GDP fell so much!" you say to yourself, dismissively. Nope. Spending in real terms rose significantly as well.

"But in nominal terms, spending fell due to deflation!" you protest. Not really.

"But Hoover didn't deficit spend like FDR, that's his real problem!" you say. Not really, once again. The federal budget went from surplus to deficit from 1929 to 1932, rather significantly.

Hoover had his problems, but balancing the budget in a recession wasn't one of them.

/r/history has a great wiki - https://www.reddit.com/r/history/wiki/recommendedlist

but, it doesn't look like a lot of Great Depression stuff there.

The only entry I saw in a quick glance was:

• *Lords of Finance: The Bankers Who Broke the World by Liaquat Ahamed. It's about the Great Depression in Europe. (Also available on audio and MP3 format.) Review of it from the NY Times Book Review.
  
  (and I assume you are looking for US Great Depression)
  
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  Here's a link to some photographers, you can search their names for more: https://www.smithsonianmag.com/smart-news/meet-photographers-charged-documenting-depression-era-america-farm-security-administration-180964123/
  
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I would highly recommend reading this book. It details the onset of the Great Depression and the behind the scenes financial decisions that allowed it to happen. You probably won't be convinced but the TL;DR is an active Fed that could have prevented the Depression and instead just sat back and thought it would all work out.

This doesn't answer your question, but you may find Lords of Finance interesting in this context. It's an economic history of the events from the end of WW I up to the Great Depression. Although it was not written with recent events in mind, there are interesting comparisons to be drawn.

Another great read.

Lords of Finance

I was trying to think up a name for my account, looked over on my bookshelf, and went "ahhh...." :) Purely coincidental.

I can heartily recommend Lords of Finance (http://www.amazon.com/Lords-Finance-Bankers-Broke-World/dp/159420182X)

From wp: "Lords of Finance: The Bankers Who Broke the World is a 2009 nonfiction book about events leading up to and culminating in the Great Depression as told through the personal histories of the heads of the Central Banks of the world's four major economies at the time: Benjamin Strong Jr. of the New York Federal Reserve, Montagu Norman of the Bank of England, Émile Moreau of the Banque de France, and Hjalmar Schacht of the Reichsbank. The book was generally well received by critics, and won the 2010 Pulitzer Prize for History."

The book is surprisingly easy to read and understand (I have basically no background in economics), and I certainly learned a lot.

Lords of Finance. Worth checking out if you're interested in the above link.