The Great Depression: An International Disaster of Perverse Economic Policies [Paperback]

Thomas E. Hall (Author), J. David Ferguson (Author)

Book Description

Publication Date: May 1, 1998

The Great Depression was the worst economic catastrophe in modern history. Not only did it cause massive worldwide unemployment, but it also led to the rise of Adolf Hitler in Germany, World War II in Europe, and the tragic deaths of tens of millions of people. This book describes the sequence of policy errors committed by powerful, well-meaning people in several countries, which, in combination with the gold standard in place at the time, caused the disaster. In addition, it details attempts to reduce unemployment in the United States by Franklin Roosevelt's New Deal, and in Germany by Hitler's National Socialist economic policies.

A comprehensive economic and historical explanation of the events pertaining to the Depression, this book begins by describing the economic setting in the major industrialized countries during the 1920s and the gold standard that linked theory economies together. It then discusses the triggering event that started the economic decline--the Federal Reserve's credit tightening in reaction to perceived overspeculation in the U.S. stock market. The policy bungling that transformed the recession into the Great Depression is detailed: Smoot Hawley, the Federal Reserve's disastrous adherence to the real bills doctrine, and Hoover's 1932 tax hike. This is followed by a detailed description of the New Deal's shortcomings in trying to end the Depression, along with a discussion of the National Socialist economic programs in Germany. Finally, the factors that ended the Depression are examined.

This book will appeal to economists, historians, and those interested in business conditions who would like to know more about the causes and consequences of the Great Depression. It will be particularly useful as a supplementary text in economic history courses.

Thomas E. Hall and J. David Ferguson are both Professors of Economics, Miami University.

Product Details

• Paperback: 216 pages
• Publisher: University of Michigan Press (May 1, 1998)
• Language: English
• ISBN-10: 0472066676
• ISBN-13: 978-0472066674
• Product Dimensions: 8.8 x 6 x 0.7 inches
• Shipping Weight: 12.6 ounces (View shipping rates and policies)
• Average Customer Review: 3.9 out of 5 stars  See all reviews (7 customer reviews)
• Amazon Best Sellers Rank: #691,421 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

7 of 8 people found the following review helpful:

5.0 out of 5 stars A Wonderful Summary, March 28, 2001

By 

R. Schenk (Rensselaer, IN USA) - See all my reviews
(REAL NAME)   

This review is from: The Great Depression: An International Disaster of Perverse Economic Policies (Paperback)

Hall and Ferguson do an excellent job of summarizing the mainstream view of economists on why the Depression happened, and those views will surprise some. Was the Depression caused by some structural defect in Capitalism? "No," say Hall and Ferguson. It was due to a combination of economic ignorance, confusion, and incompetence in the Federal Reserve System. The authors do a wonderful job of explaining how the conventional wisdom of the day, the commercial loan theory of banking, led policy makers into a series of blunders that seem incomprehensible today to anyone who knows basic economics. As for the New Deal, Hall and Ferguson argue that except for deposit insurance and gold policy, most of it was irrelevant or counterproductive and contributed only to slowing the recovery after 1933.

If you want to read only one book and still understand why the Great Depression happened, read this one.

4 of 6 people found the following review helpful:

5.0 out of 5 stars Excellent Understandable and Straightforward. Facinating!, June 22, 1999

By A Customer

This review is from: The Great Depression: An International Disaster of Perverse Economic Policies (Paperback)

This gave me a whole new perspective on the causes of the Great Depression and why it was so bad. I know nothing about economics but was still able to follow the book and what the readers were discussing. Great Job. It has also helped me to understand current economics better.

8 of 13 people found the following review helpful:

2.0 out of 5 stars An irritating mish-mash, April 10, 2001

By 

M. Mcfarland - See all my reviews
(REAL NAME)   

This review is from: The Great Depression: An International Disaster of Perverse Economic Policies (Paperback)

If you have no idea what happened to the world economy in the two decades following WW1, then this little book is a great primer. It contains a lovely chronology of events, discusses in a simplistic way how the gold standard actually worked, how the real bills doctrine impeded effective monetary loosening and how Roosevelt prolonged the depression. It's a (mostly) monetarist view and easy to understand at that.

On a second read though, 'The Great Depression' becomes very irritating; for three reasons....

The first is its changing view of the causes of decline and recovery. It starts out monetarist but ends up closer to the Austrian view that government intervention and socialism prolonged the recovery. You can't be both, although the authors try very hard.

The second problem is the use of history. Many historically minded authors have made a big issue of the vicious Versailles Peace Treaty and its role in destabilising the international payments system. Hall and Ferguson hardly mention international issues. Instead, they waffle on about Hitler's evil labour policies, but forget to mention their effect. Huge capital flows left Europe for the New World in the mid-1930s and these played a very significant role in boosting US money supply and spurring recovery.

The third problem is the book's very simplistic economics. At the heart of the problem was the issue of real exchange rate adjustment amongst Gold Standard members. The authors make no attempt to explain the extent of the adjustment problems when members faced either hyperinflation or balance of payments deficits after 1918.

Countries facing BOP deficits with newly enfranchised labour forces were in no position to use traditional means of real exchange rate adjustment - i.e. deflation - to bring their currencies and payments accounts back into line. Social unrest was everywhere. Impossible strain was placed on domestic economies as interest rates went up. And when Austrian bank, Bank Kredit-Anstalt, failed, the international payments system fell apart and asset prices collapsed. No one had the guts to raise rates to hold currencies within their trading ranges.

Hall and Ferguson gloss over the international angle as if it was irrelevant. They could at least have tried to explain why they thought it wasn't important or didn't play a central role.

All told, I'd recommend this book to anyone coming across this fascinating period for the first time. But there are much better books out there. Also, parochial books with constant references to us and ours when referring to the US and its institutions are really tiresome to non-US readers.

Two stars for the technical bits, the chronology and the details of Roosevelt's New Deal.