The Forgotten Depression

1921: The Crash That Cured Itself

By: James Grant

Narrated by: Rick Adamson

Length: 9 hrs and 18 mins

Publisher's summary

James Grant's story of America's last governmentally untreated depression: A bible for conservative economists, this "carefully researched history... makes difficult economic concepts easy to understand, and it deftly mixes major events with interesting vignettes" (The Wall Street Journal).

In 1920-1921, Woodrow Wilson and Warren G. Harding met a deep economic slump by seeming to ignore it, implementing policies that most 21st-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 1921. Yet by 1929, the economy spiraled downward as the Hoover administration adopted the policies that Wilson and Harding had declined to put in place.

©2014 James Grant (P)2019 Tantor

Great for history buffs!

Ver detailed description of the years and anecdotes to boot! I would say one drawback is the stories may require some more knowledge about economics and history to grasp the full story portrayed.

Must Know Economic History

People forget that the "Great Depression" was not the only depression or the first depression the USA ever had. It was the first depression where the USA had elected a right-wing socialist in the White House at the start. Then elected a left-wing socialist right after.

This book explains quite well, why deflation is not a monster that people make it out to be. When an economy makes too much of one thing, the over production must go on Sale (aka Liquidated). On sale is not bad, all prices go down. So instead of people losing their job, they can work for a lower wage and buy goods sold at a lower price. That is a natural and low government intensity approach.

If you are familiar with the "Forgotten Man" book by Amity Schales, then you will understand this book even better, but you don't need to read Amity first. It just shows the origins and over-reaction of the Hoover presidency. When the government does too much, it makes people expect a bail out and makes depressions worse. The natural brakes on over-production is the risk of being stuck with bad debt, self management.

Best thinking-sharpener I know of

You do not have to agree with James Grant's viewpoint to benefit from his flawless prose. And, the times he describes do not have to be an across-the board match to our times, to have one's thinking sharpened by this terrific work. Sometimes the pacing get plodding though, as he a fair amount of uses numbers to tell his story. As I write this, the coronavirus is (and its financial consequences are) spreading across the land, ominously but with the outcomes unknown. Interestingly, this story features (as a tangent, not the central driver of the story) a flu at the end of World War I that killed, I think, 675,000 Americans. It also features a credit glut (such as got young Harry Truman, back from war, into business selling expensive shirts, ties and such) that faltered sharply (putting Truman out of business). Plenty of parallels are here. So too, we see the beginnings of today's political-economic debates. I have read several Grant books, and this one stands among my favorites (along with Money of the Mind, which I have read cover to cover twice, and will read again, being a broader banking and credit history than this one, and which I would LOVE to have in audio). Grant's portraits of people and situations, his brilliant use of terminology and phrasing, his crisp and witty descriptions, are all top-drawer, all through. This book satisfies my desire for a good story alongside my desire for a mind-sharpener. Grant's latest pronouncements in the media at this writing are about the weak state of USA's corporate financial "immunity" to the virus shock (based on having glutted on cheap debt and not used it most wisely, for this situation). This illustrates his bright thinking on the financial dimensions of what we experience. It is music to my ears, but he is not the most entertaining for the reader not pointedly interested in finance. For entry level (and more entertainment), one might try Michael Lewis's book, The Big Short.

Scoring Political Points

To read this book you will need to alter your complete understanding of the circumstances that precipitate and developed into the American Depression of the 1930’s. The political point of this book is to prove that Herbert Hoover was steps away from solving the financial ills of the impending economic crisis prior to his election defeat. Consequently, it was Franklin Roosevelt’s policies that expanded the crisis into a full depression. That in essence is the thesis which he poses.

It is not the thesis that is unsatisfying but his proof is lacking only because it’s basis is to prove that any form of government intervention is disastrous. The book almost teeters on the edge of being a conspiracy theory rather than a historical work.

My intention in writing this review, is not to admonish the thesis but to share with you the book lacks a factual and theoretical foundation to provide its thesis. Maybe I am overwrought with ALT-everything but, I felt it was like political target practice rather a critical work of historical merit.