A Rabble of Dead Money
The Great Crash and
The Global Depression: 1929 - 1939

Charles R. Morris
(PublicAffairs)

Part I
  • The Treaty of Versailles, "written entirely by the victors," was ostensibly one of the indirect causes of the perfervid anarchy of the 1920s, and the subsequent depression. But according to this historian, it was a sensible document, considering. Why? A mere xis years before, the Germans

      had invaded Belgium, a neutral state, and on their locust-like march though the country had wreaked atrocities against the civilians, destroyed cultural artifacts, and shipped much of Belgium's industrial machinery back to Germany. Then they fell upon France, killed a quarter of the country's young men and diligently destroyed its industrial infrastructure.

    Nor, writes Morris, did they "have any standing to object to reparations."

      They had imposed heavy reparations on France after the 1870 - 1871 war, and had recently imposed stinging indemnities on Russia and Romania following their victories on the eastern front.

  • Many blame the "banking crises." But spotting one of these "is like deciding whether Pluto is a planet or just a big asteroid." A polemic, The Monetary History of the United States blames banks for triggering and prolonging the Great Depression, but Morris states that these "were at most minor contributors." Why? Bank failures all along were a present to Americans because of the usual idiot concept of the "free market" to protect those who stored our money.

    In this country, "Between 1920 and 1933, 15,000 banks, failed, half of them before 1930, most from wretched practices of your friendly local banker: over-leveraging, too little equity, foolish loans, expanding too fast. By contrast, in Canada, during the same period, "bank failures were very rare." They had

      a deep capital base, widely spread shareholders, and a diversified customer base.
  • The "Dust Bowl Migration." Well, opines Morris, it "was real in the sense of decade-long 1930s environmental disease, due to persistent drought and the lack of soil-conserving agriculture by small farmers."

      Outmigration increased sharply, but farmers were the least likely to migrate, and those that did mostly moved to adjoining states. "Okie" migration to California was proportionally no greater than from other areas. Farmers who did move from the Dust Bowl in the main improved their economic position.

  • The greatest historic fallacy of them all? That the stock market crash caused the depression. But professionals "know that the stock market was only a tenuous proxy for the real economy which in 1930, seemed in pretty good shape."

      The 1929 unemployment rate was down to only 2.9 percent, one of the lowest ever. Radio and talking pictures were still in a high-growth mode. Air travel was on the brink of a boom . . . Corporate profits were strong, and prices were well-behaved. A reasonable scenario looked like a modest slowdown to realign the real economy, followed by pickup in the financial markets.

    The devil is in the details, especially ex post facto. Eighty-five years later, we can blame Wall Street, but too many other pots were there burbling on the stove: the most dangerous, accordingto the author, being the huge surplus in national agriculture that had responded to the food shortage during WWI. This surplus undercut and undercut repeatedly the farmer's ability to stay out of the red.

  • Finally, one of the greatest victims of them all was Herbert Hoover. He had wrought miracles in Europe during the cruellest of blockades against Germany and Austria imposed by the Allies. "Hoover had proved himself an extraordinary manager, and he displayed all of his talents in his humanitarian work - - - recruiting willing volunteers, furnishing them with precise instructions, then hard-driving both himself and his crews."

    Morris shows the price of Hover's "casual assumption of godlike powers," but when he returned to the U. S. in 1919, "he may have been the most famous man in the world." His achievements

      were real, and could be measured in millions of tons of food shipped around the globe, millions of people saved from starvation, and the near miraculous absence of scandal or fraud in all his operations. It can be measured in the grateful acknowledgements that flowed in from European potentates, and spontaneously from the people who had been his beneficiaries.