Customer Reviews

America's Great Depression

5 star:		(28)
4 star:		(7)
3 star:		(0)
2 star:		(1)
1 star:		(4)

 

 

Economist Alan Reynolds wrote: "The terror of the Great Crash has been the failure to explain it." I wonder if he ever read this great book, which is now in its fifth edition. Murray Rothbard's exploration of this devastating economic calamity is both fascinating and pertinent.

Rothbard refutes key misconceptions about the market economy and the Hoover administration's interventionist policies. Was the Great Crash due to capitalism gone wild? Was President Hoover the proponent of laissez-faire that some continue to insist? Did his interventionist actions assuage the depression? _America's Great Depression_ will always be important because of the Great Depression's legacy. Many continue to believe that the free market economy is inevitably inclined to collapse. Also, the interventionist policies of Presidents Hoover and Roosevelt accelerated the growth of the welfare state.

Economists have always observed the relationship between money supplies and business cycles. Rothbard goes a few steps farther, applying the Austrian school's theory of the business cycle to the Federal Reserve's monetary policies during the 1920s. Rothbard spends the first part of the book detailing the credibility of the Austrian theory and dismantling other theories. He shows how artificial increases in the money supply creates harmful imbalances in the economy. With this premise, Rothbard explains that the Federal Reserve's inflationary abuse of the money supply in the "Roaring Twenties" set the economy up for an unsustainable growth spurt that ended in disaster in 1929. (The scary thing is that prices remained fairly stable and hid the effects of inflation with ruinous results.)

After talking money supplies and business cycles for a while, Rothbard turns his attention to President Hoover's actions to correct the problem. Despite good intentions, government involvement aggravated the Depression. The most damaging and glaring mistake of the Hoover administration was the Smoot-Hawley Tariff, which basically smashed the world's economy. But what else was done? How did different policies delay the economy's recovery? There's a lot to be learned here. In the end, the lesson Rothbard hopes to teach is that the best option for government in fixing a depression is "laissez-faire."

Since the book focuses only on the early part of the Depression (up to 1933), it's unfortunate that Rothbard didn't criticize President Roosevelt's interventionist policies, which eviscerated the economy while it struggled to recover. Rothbard would have had a field day examining the effects of the NRA, the AAA, the WPA, the CWA, the Wagner Act, and everything else the New Deal implemented that I can't remember off the top of my head.

Since this book was originally published in the 60s (1963, I think), many people probably sneered at it. After all, in a time when Keynsianism was trendy, who was willing to blame the government for the Great Depression? Praise to Rothbard for this important application of Austrian theory and his exposure of the government's clumsiness.

As a student of the boom and bust and subsequent Depression following the crash of 1929, I have read numerous books on this important subject. It is in knowing the past that we can control the future.

Most books cover the human aspect of this period in American history and that's important. And most of the books cover the events leading up to the crash and depression. But this is the only book I've read that exposes the dynamics behind the scenes that caused the crash and it's terrible crushing length and enormous suffering.

Rothbard explains in great detail how government butted in where it was not needed and created untold suffering. He explains how we allowed England to dictate to us and how in our desire to help Her, our government intentionally hurt its own citizens.

Rothbard was a great economist and a great proponent of the libertarian cause. His belief in Laissez-faire economics is behind his philosophy. It is Laissez-faire that created this country and it is the loss of it that has and is causing us grief and loss of liberty.

This is an excellent book. Published by the Ludwig von Mises Institute, it is a book you'll want to read again and again. Austrian economics are exciting and workable and the Ludwin von Mises Institute is a dynamic proponent of this very workable economic philosophy.

If you are interested in economics and the Great Depression and its real causes, you must read this powerful, well written book.

In "America's Great Depression", Professor Rothbard effectively demolishes the myths surrounding this tragic event. However, semi-literate pop-historians continue to ignore the fact that the depression was caused by government intervention. (Central bank manipulation is government intervention.) Rothbard's book stands out due to his refusal to reduce this complex event to a simple story of good (New Dealers, Socialists) versus evil ("capitalism"). Upon close examination of such accounts, it becomes clear that not only do "historians" get the facts wrong, they simply fail to comprehend them. Mainstream historians who refuse to even attempt to gain a basic understanding of economics have had their interpretations rendered embarrassingly obsolete by Rothbard.

First and last, this is a great book. It clearly explains one of the major economic theories of business cycles and goes on to apply it to the Great Depression. The book is best suited to a college economics student, or to a layman willing to devote a considerable level of effort to understanding the subject, but it would not be a particularly difficult project for anyone who reads on a college level. It should be noted that the book espouses ONE of the major economic theories of business cycles, the Austrian theory. Since the book is well written, it is almost dangerous to a student going into it blindly--you are liable to become an Austrian economist! Not that this is a bad thing, but you should realize there are other viewpoints. I do think Rothbard is a bit monomaniacal in his devotion to Austrian theory at the exclusion of everything else, but that doesn't prevent this from being a great book.

This book destroys the left myth that the Great Depression was caused by the free market being allowed to run rampent, and "fixed" by various government programs, mandates, and laws.

To answer one reviewer's question -- a reviewer who obviously didn't even read the book -- "How can the Great Depression have been caused by government policy when ALL of the government intervention took place AFTER the GD had already come close to peaking?"...The reality is that the Great Depression was caused by inflation and various other government intervention before it started (the buildup of malinvestments during the boom), and prolonged and prolonged and gravely deepened by various government interventions after it started. The Great Depression would have ended relatively quickly, had not the government intervened in attempting to restart another round of boom, and doing such foolish things as allowing banks to renig on their contractual obligations.

Rothbard is a hardcore free-marketer of the Austrian school of economics wing. You don't have to buy into the Austrian economics pre-scientific school of thought on business cycles to enjoy this book. Rothbard does a great job of showing that Hoover wasn't the economic non-interventionist that he is so often depicted as. Unfortunately, the book ends with Hoover's term so no critique of FDR's interventionist policies is included.

This book is so good that I read it twice.

Rothbard shows us clearly that the real causes of Economic Depressions is GOVERNMENT INTERVENTION in the economy. Of course this is understood widely nowadays (at least among those who think). But 40 years ago it was popular to believe in other causes like "overexpansion of productive capacity" or other fallacies. Rothbard convincingly flushes these other theories down where they belong.

I believe the most lasting contribution of this book is to clearly show the basics of economics, in language that anybody can understand (Ludwig von Mises is considered the greatest ecnomist of the Austrian School of Economics, but have YOU ever tried to read his "Theory of Money and Credit?". I couldn't wade through it even with a dictionary in hand. Trust me, Rothbard is a better spokesman for free-market economics, in my opinion).

There are a lot of widespread myths concerning the depression.Here Rothbard refutes them.He first explains the Austrian business cycle theory and using that he shows how the depression was a result of the Feds credit expansion during the 1920s.He also refutes the myth that Hoover was a laissez-faire conservative.Instead,Hoover pursued a strongly interventionist policy .This book both presents good theory and shows the economic history of America 1921-33.Reading that,one finds many ominous similarities between America in the late 1920s and the late 1990s.Highly overvalued stockmarket, merger mania,booming real estate market,rapid credit expansion,widespread belief in a "New Economy" etc.Should serve as a warning to investors of a coming bear market.

This is an astounding work. One cannot claim to understand the causes of the Great Depression without reading this book. The long-held and fallacious doctrine that blames laissez-faire capitalism for the boom and bust cycle is allowed no standing whatsoever. Rothbard clearly shows how the government caused and horribly sharpened the Great Depression. This is a monumental work that deserves nothing short of deep admiration.

This was my first real book on economics. Starting with this masterpiece was a little intimidating, since I hadn't even read Hazlitt's Economics in One Lesson yet.

I soon found out that Rothbard was clear, easy to understand and convincing. There is no complex economic jargon, so this book is for anyone with even a modest economic vocabulary.

The book is broken up into three parts:
-PART I: BUSINESS CYCLE THEORY
-PART II: THE INFLATIONARY BOOM: 1921-1929
-PART III: THE GREAT DEPRESSION: 1929-1933

In the first part Rothbard explains the Austrian business cycle theory and addresses many of the alternative theories and criticisms. Rothbard does an impressive job and doesn't leave much room for doubt. There is clarity in his arguments and at no point do you feel confused or lost. It seems to make sense.

Part two leaves the realm of theory behind and transforms the book into a thriller-like tragedy. We all know what happens in the end, but it is still quite intriguing to follow a story of foolish policies created by foolish policy makers. The "villains" and "good guys" are introduced here(note: Rothbard does not present it like this, but I simply have some extra imagination).

Rothbard goes through the boom with great detail, which also means that the most boring part of the book is here. It's good to know that the research has been done, but statistics and numbers aren't the most fascinating things to look at. Not that there's a lot of them, but still(yeah, I kind of forced myself to remember something even slightly bad about this book).

Part three starts by completely destroying the idea of Hoover being laissez-faire. I already knew that Hoover wasn't laissez-faire, but Rothbard shows that not only was Hoover not laissez-faire during the Depression, but he had been pushing interventionist policies since at least 1920. After this Rothbard goes through all of the harmful government policies from 1929 to 1933. From Smoot-Hawley to public works, the logical fallacies behind the policies enacted are clear to anyone, yet law after another gets passed. The last part of the book should be read at least once every few years, just as a reminder of how to not do things.

The book does not go much beyond 1933, which was my biggest complaint about the book when I read it. To remedy this, Robert Murphy's The Politically Incorrect Guide to the Great Depression and the New Deal (The Politically Incorrect Guides) should do the trick.

It would be impossible for me to give anything but five stars to this book. The flaws are minor, but the positive impact Murray had on me through this book was immense. I did not expect there to be much theory, so the first part completely blew me away.

Economics hasn't been a hobby for me for some time now. I now consider it my calling. Hopefully I'll be able to call it my career soon. On the long list of people who made me take this path, there will always be the one who made me -at the time a complete novice in economics- understand; the one who made difficult things simple:
Murray N. Rothbard