The Great Depression

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Amity Shlaes' brilliant and highly readable book surely must be the best analysis of the Great Depression ever. With the precision of an economist, a historian's sense of the enduring and a journalist's ear for language, she deftly parries the claims of FDR fans and defenders. She details Herbert Hoover's complicity in his successor's flawed perception of one of America's darkest hours. The Bloomberg columnist's "The Forgotten Man" will stand the test of time.

But before I address her analysis, a word about my perspective as a Depression Kid in a family of five boys living in York, Pa. I was 10 when the 1929 stock market crash hit. My father didn't think of himself as a "forgotten man."

During the Depression years he ran the machine shop at the York Corporation, where he earned $40 a week and was known as the Bible-reading foreman. We had no car or telephone, but we did have books, lots of them.

Our parents said we had a Christian duty to help the "poor and downtrodden." We gave 10 percent to our church, Mother canned peaches from our back yard for poor members and Dad oversaw the church poor fund. He sent occasional checks to the Near East Foundation for the "starving Armenians," and we twice invited a summer "fresh air" boy from Brooklyn to stay with us.

In York, a loaf of bread cost 10 cents, sugar 5 cents a pound, a Woolworth's necktie 10 cents and a toothbrush 5 cents.

In 1937 the average annual salary for public school teachers was $1,367, unemployment reached 14.3 percent, inflation was 1.5 percent and the Dow Jones high was $190. (I wrote this sentence just as the Dow reached $14,000 for the first time!)

Yet according to the "standard history," Ms. Shlaes writes in her bracing introduction, "the 1920s were a period of false growth and low morals. . . . The crash was the honest acknowledgment of the breakdown of capitalism — and the cause of the Depression. A dangerous inflation caused by speculating margin traders brought down the nation."

President Herbert Hoover "made matters worse" by his "rugged individualism" and President Roosevelt saved the day and staved off European-style revolution. "Without the New Deal, we would all have been lost."

The Depression had multiple causes, in Ms. Shlaes' view, but the deepest one was "the lack of faith in the marketplace . . . From 1929 to 1940, from Hoover to Roosevelt, government intervention helped make the Depression Great."

In 1932, she continues, FDR first used the "forgotten man" image, the man at the bottom of the economic pyramid — the old, the poor, the sick and the unemployed. From the outset, he perused "interest group politics" — "labor, senior citizens, farmers, union workers" — and created the modern entitlement system that both parties practice today, pitting Americans against one another.