The Forgotten Depression: 1921: The Crash That Cured ItselfBy the publisher of the prestigious Grant’s Interest Rate Observer, an account of the deep economic slump of 1920–21 that proposes, with respect to federal intervention, “less is more.” This is a free-market rejoinder to the Keynesian stimulus applied by Bush and Obama to the 2007–09 recession, in whose aftereffects, Grant asserts, the nation still toils. James Grant tells the story of America’s last governmentally-untreated depression; relatively brief and self-correcting, it gave way to the Roaring Twenties. His book appears in the fifth year of a lackluster recovery from the overmedicated downturn of 2007–2009. In 1920–21, Woodrow Wilson and Warren G. Harding met a deep economic slump by seeming to ignore it, implementing policies that most twenty-first century economists would call backward. Confronted with plunging prices, wages, and employment, the government balanced the budget and, through the Federal Reserve, raised interest rates. No “stimulus” was administered, and a powerful, job-filled recovery was under way by late in 1921. In 1929, the economy once again slumped—and kept right on slumping as the Hoover administration adopted the very policies that Wilson and Harding had declined to put in place. Grant argues that well-intended federal intervention, notably the White House-led campaign to prop up industrial wages, helped to turn a bad recession into America’s worst depression. He offers the experience of the earlier depression for lessons for today and the future. This is a powerful response to the prevailing notion of how to fight recession. The enterprise system is more resilient than even its friends give it credit for being, Grant demonstrates. |
Contents
Preface | 1 |
The Great Inflation | 11 |
Coin of the Realm | 22 |
Money at War | 35 |
LaissezFaire by Accident | 55 |
A Depression in Fact | 67 |
City Bank on the Carpet | 80 |
Egging On Deflation | 92 |
A Kind Word for Misfortune | 119 |
Not the Governments Affair | 128 |
Cut from Clevelands Cloth | 135 |
A Kind of Recovery Program | 142 |
Shrewd Judge Gary | 156 |
Gold Pours into America | 176 |
America on the Bargain Counter | 192 |
A Triumph in Its Way | 212 |
A Debacle Without Parallel | 99 |
The Comptroller on the Offensive | 111 |
A Select Bibliography | 239 |
Other editions - View all
Common terms and phrases
administration Agricultural American August average bank’s bankers Benjamin Strong bonds boom borrowed business cycle capital central bank cents Chicago City’s Commerce commodity comptroller cost Crisis currency debt deflation deflationary demand Democrat depositors deposits depression dollar earnings economist farmers Federal Reserve Act Federal Reserve Bank Federal Reserve Board Federal Reserve System Fisher gold standard government’s governor Guaranty Trust Harding’s Herbert Hoover Hoover Ibid income industrial inflation interest rates inventory investment J.P. Morgan January jobless John Skelton John Skelton Williams July June labor lending loans Mellon million monetary months National Bank November panic percent political postwar pound president president’s Press production profit railroads Recent Economic Changes reduction reported Republican Reserve’s secretary Senate September shares slump stability stock market trade Treasury Trust Company Tumulty U.S. Department unemployment United wages Wall Street Journal Warren G wartime Washington Williams’s York Stock Exchange