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The Forgotten Man: A New History of the Great Depression

November 1st, 2010

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In The Forgotten Man, Amity Shlaes, one of the nation's most-respected economic commentators, offers a striking reinterpretation of the Great Depression. She traces the mounting agony of the New Dealers and the moving stories of individual citizens who through their brave perseverance helped establish the steadfast character we recognize as American today.

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History Books In The Forgotten Man, Amity Shlaes, one of the nation's most-respected economic commentators, offers a striking reinterpretation of the Great Depression. She traces the mounting agony of the New Dealers and the moving stories of individual citizens who through their brave perseverance helped establish the steadfast character we recognize as American today.

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  1. J. Aubrey
    November 2nd, 2010 at 01:03 | #1


    Tariffs, tax rate increases, wage and price controls and tight money. Government vacillation and unpredictibility. That these policies undermined business confidence and blocked economic recovery was lost on Hoover, FDR and their elite advisors. Ms. Shlaes makes a compelling case that but for those policies the 1929 downturn would have self-corrected by the early 30s, rather than drag on through the remander of the decade and into the next.

    Another major theme of the book is the vast growth of government under FDR, including goverment subsidized and controlled projects (mostly utilities) that unfairly competed with the private sector. She also discusses FDR’s successful (and cynical) strategy for the 1936 campaign, including persecution and condemnation of big business and catering to various targeted voting blocks (farmers, big labor, pensioners, women and blacks). Sound familiar?

    The book is generally well written, although the focus drifts from time to time and more analysis would have been welcome. She also includes too many names and mini-resumes of peripheral players.

    The Forgotten Man (a term that morphed under FDR from the taxpayer to the unemployed) is recommended for those who want a better understanding of the economics and politics of the 30s to correct some long standing myths (e.g. depression a failure of capitalism, FDR “brought us out” of the depression) and better understand today’s economic and political issues.

  2. Steven M. Anthony
    November 2nd, 2010 at 16:35 | #2


    I purchased this work in the form of audiotapes for consumption during my travels. I found it to be a comprehensive and moderately entertaining look at the Great Depression, the political figures involved during the period and the various programs rolled out in an effort to stem the rampant economic meltdowns of the period.

    Much of the story centers on the Roosevelt administration’s development of the Tennessee Valley Authority (TVA) and its clashes with private power generators and distributors (primarily Commonwealth and Southern, headed by Wendell Wilkie). As perhaps the largest example of government intrusion into the private sector (a novelty at the time), the long running battle is a good prism through which to see the developing politics of the era.

    Much of the book also documents Roosevelt’s all out warfare with the wealthy, again focusing on the highest profile example, Andrew Mellon. Living during a time when tax rates are thought to be too high, at or near 40%, it is difficult to imagine living in an era when rates exceeded 80% at the highest income levels. It is easy to see how such confiscatory rates smothered the incentive for economic growth and investment. Largely unknown is the ineffectiveness of New Deal programs to spur economic growth or cure near 20% unemployment. Only the coming of World War II did that.

    All in all, a good overview of the politics and economy of the decade of the 30s. Recommended, especially in light of current events.

  3. Michael T Kennedy
    November 5th, 2010 at 12:07 | #3


    Amity Schlaes is well chosen to begin the contemporary reappraisal of the Depression, its causes and the role Roosevelt played. She does not support the theory, described elsewhere, that the Federal Reserve System, itself, over-reacted and worsened a financial panic into a full blown collapse. She blames a lot of the problem on Hoover, but not for the usual reasons given. He is often described as passive in the face of a crisis. She points out that this is not accurate and he acted vigorously but wrongly to deal with the problem. Macroeconomics was not understood and the fact that deflation was the problem was ignored by everyone. New for me was her opinion that Hoover and Roosevelt acted in very similar ways that worsened the problem. Balancing the budget was one misguided step. Taxes were raised at a time when no one but a few had any money and business needed capital to keep going. Roosevelt’s attacks on businessmen caused those who could afford it to pull back and avoid investing. Many of the rest failed and added to the unemployment lines. Her research added greatly to the picture of the times. I learned in grammar school about the Smoot-Hawley tariff and the harm it caused. I wonder if schoolchildren today would recognize the term ? I doubt it. Her descriptions of the Schecter Brothers and Andrew Mellon filled in the detail that history must have to be understood. I hope that economics professors are adding this to class reading lists. It can be a bit tedious in places but is highly recommended to anyone who wants to understand this period in American history.

  4. Arnold Kling
    November 6th, 2010 at 01:21 | #4


    The Forgotten Man (TFM for short) is not a polemic. It is not an argument for a particular theory or economic interpretation of the Depression. Instead, the author steps back and lets the story tell itself. She has sifted through memoirs and contemporaneous accounts in order to carry the reader back into the mindset of the 1930′s. She focuses on a diverse selection of protagonists from that period, including opponents of Roosevelt like Andrew Mellon and Wendell Wilkie as well as members of Roosevelt’s “brain trust” like Paul Douglas and Rexford Tugwell. Note that in the context of that time, “trust” meant the same thing as cartel (as in anti-trust laws). Roosevelt was claiming that with his advisers he had cornered the market on brains. If so, then after reading TFM, my sense is that there was not much value in this particular monopoly.

    I came away with three major conclusions.

    1. For better or worse, much of the country saw the Depression as something akin to a natural disaster, and people accordingly lowered their expectations for their standard of living.

    2. Economic ignorance among policymakers was much worse than I had realized. I was steeped in the myth that the reason the Depression was so bad was that only Keynes had the answer, and he had to overcome the resistance of “the classical economists,” such as Irving Fisher. But the differences between Fisher and Keynes seem small when compared to the differences between the policymakers and both economists. In physics, it would be like watching an academic debate over the meaning of quantum mechanics while policymakers are unable to grasp the simple concept of gravity.

    3. The struggle over economic policy in the 1930′s was really an episode in the long, historical conflict between business participants in the market and anti-business academics. Roosevelt gave free rein to the professors, until the start of the Second World War led him to realize that he would need the tycoons to help mobilize to defeat Hitler. I suspect that one reason that Roosevelt and the New Deal come off so well in the conventional wisdom is that history books are written by professors, not by entrepreneurs.

    I should stress that these are my own views, and that TFM is much less prone to making generalizations and drawing conclusions. Readers with a variety of backgrounds and predispositions can appreciate the book and learn their own lessons.

  5. William Whipple III
    November 7th, 2010 at 12:19 | #5


    One reviewer characterizes The Forgotten Man as a “party line polemic,” while another says it is “not a polemic.” I hold to the latter view, but am not sure this is a plus. Maybe we need a polemic (argument or controversial discussion) about “the Great Depression” to counter some of the nonsense that has been written about it.

    Amity Shlaes’s book follows a cast of characters from 1927 (Herbert Hoover takes command of the great Flood on the Mississippi) to 1940 (FDR wins reelection to a third term). The players include government planners (Rex Tugwell, Harold Ickes), capitalists (Andrew Mellon, Wendell Wilkie, Alfred Loomis), economists (Irving Fisher, John Keynes), jurists (“the four horsemen,” Felix Frankfurter, Robert Jackson), small businessmen (the Schechter brothers), labor leaders (John L. Lewis), social activists (Father Divine), and politicians (Herbert Hoover, FDR, and ultimately Wilkie).

    Many of the incidents related are unflattering to the persons involved, including both Hoover and FDR, but Shlaes does not appear to have a partisan axe to grind. Indeed, she spends more time discussing the foibles, dreams, and conflicts of the characters than assessing their accomplishments. The narrative jumps around from person to person in a manner resembling “the grapevine” segment of the Brit Hume Show on Fox News.

    The point is made (repeatedly) that the Depression went on longer than might have been expected if the Roosevelt administration had not sought to intervene in so many areas of the economy. Such a conclusion seems rather obvious, however, and it is hardly novel. If you are looking for an insightful analysis of what caused the Depression or the merits of the New Deal, you will not find it in this book.

    Still, The Forgotten Man provides many interesting and at times telling details about the leading figures of the period across the political spectrum. It is worth reading for that purpose.

  6. Jim Powell
    November 7th, 2010 at 23:04 | #6


    For offering a critical view of FDR’s policies in her terrific new book THE FORGOTTEN MAN, Amity Shlaes has been taken to task by those who say that his charisma helped lift American spirits and get us through the Great Depression. FDR certainly had charisma, but what were the effects of his New Deal policies?

    Dozens of economists, including two Nobel Prize winners, have evaluated the consequences of New Deal policies. Empirical research at many universities raises suggests that the New Deal actually prolonged the Great Depression. Consider some key questions like these:

    1. Why did FDR triple federal taxes during the Great Depression? Federal tax revenues more than tripled, from $1.6 billion in 1933 to $5.3 billion in 1940. Excise taxes, personal income taxes, inheritance taxes, corporate income taxes, holding company taxes and “excess profits” taxes all went up. FDR introduced an undistributed profits tax. Consumers had less money to spend, and employers had less money for growth and jobs.

    2. How much net benefit did the New Deal provide ordinary people who paid most of the costs of the New Deal? For instance, the biggest New Deal welfare programs were funded before 1936, when federal excise taxes on beer, wine, cigarettes, soft drinks, chewing gum, radios and other things purchased by millions of ordinary people, generated more revenue than the federal personal income tax and the federal corporate income tax combined. According to the standard reference work HISTORICAL STATISTICS OF THE UNITED STATES FROM COLONIAL TIMES TO THE PRESENT, in 1936 the federal government collected $674.4 million from the personal income tax, $753 million from the corporate income tax and $1.5 billion from excise taxes. Despite big income tax hikes, the federal excise tax continued to be the single largest source of federal revenue until after the United States entered World War II. So FDR’s New Deal was mainly financed on the backs of the middle class and poor people who bought things subject to the federal excise tax. To hear one of FDR’s “Fireside Chats,” Americans had to pay a federal excise tax on a radio and a federal excise tax on the electricity needed to run it.

    3. Why did FDR discourage investors from taking the risks of funding growth and jobs? As Robert Higgs (Independent Institute) pointed out, frequent tax hikes (1933, 1934, 1935, 1936) created uncertainty that discouraged investment, and FDR further discouraged investors by denouncing them as “economic royalists,” “economic dictators” and “privileged princes,” among other epithets. No surprise that private investment was at historically low levels during the New Deal era.

    4. Why did FDR channel government spending away from the poorest people? Research by Gavin Wright (Stanford University), Robert Tollison (Clemson University), John J. Wallis (University of Maryland), Jim F. Couch (University of North Alabama), William F. Shughart II (University of Mississippi) and others documented how political influences skewed New Deal spending away from the poorest people. The South, America’s poorest region, received significantly less than would have been the case if New Deal spending were allocated according to the amount of poverty. More New Deal spending went to political “swing” states in the West and East, where incomes were more than 60% higher.

    5. Why did FDR make it more expensive for employers to hire people? By enforcing above-market wages, introducing excise taxes on payrolls and promoting compulsory unionism, the New Deal increased the costs of employing people about 25% from 1933 to 1940 — a major reason, as Richard K. Vedder (Ohio University) and Lowell E. Gallaway (Ohio University) showed, why unemployment averaged 17 percent during the New Deal era. Demanding that employers pay above-market wages created incentives for employers to introduce more machines, go with part-timers or independent contractors or otherwise avoid expanding full-time payrolls.

    6. Why did FDR destroy all that food when millions were hungry? FDR promoted higher food prices by creating scarcity — paying farmers to plow under some 10 million acres of crops and slaughter and discard some 6 million farm animals. The New Deal food destruction program mainly benefited big farmers, since they had more food to destroy than small farmers. This policy and subsequent New Deal programs to pay farmers for not producing victimized the 100 million Americans who were consumers. As William E. Leuchtenburg (University of North Carolina) reported, “Only the war rescued the New Deal farm program from disaster.”

    7. Why did FDR make everything more expensive during the Depression? Americans needed bargains, but FDR signed the National Industrial Recovery Act to establish some 700 industrial cartel codes that forced consumers to pay above-market prices for goods and services. Moreover, FDR banned discounting by signing the Anti-Chain Store Act (1936) and the Retail Price Maintenance Act (1937). During the New Deal, Americans were actually prosecuted for cutting prices!

    8. Why did FDR break up the strongest banks? George Benston (Emory University), Eugene White (Rutgers University), Lester V. Chandler (Princeton University) and others showed how FDR’s banking laws had different consequences than what had been intended. FDR broke up the strongest banks, which had diversified with both commercial banking and investment banking. FDR’s federal deposit insurance didn’t stop bank failures. Rather, New Deal federal deposit insurance undermined the incentives of bankers to manage their businesses prudently, and it transferred the cost of bank failures to taxpayers who, among other things, had to pay the $500 billion tab for the S&L debacle during the 1980s. About 90% of depression era bank failures occurred because of unit banking laws that prevented small banks from diversifying through branches. Canada, free from branching restrictions, didn’t have a single bank failure during the Great Depression.

    9. What was the point of New Deal securities laws that made it harder for employers to raise capital and didn’t help investors to do better? Employers desperately needed to raise capital, but FDR authorized costly regulations for issuing stocks. These regulations impeded the raising of capital. As George J. Stigler (University of Chicago) and Greg A. Jarrell (University of Rochester) showed, the average rate of return from new stock issues failed to improve after the SEC was established. Since securities fraud reduces the rate of return for investors, the SEC’s failure to increase the rate of return implies either (1) that there couldn’t have been much fraud before the SEC was established, or (2) that the SEC has been ineffective. Supposedly the SEC’s primary mission has been to protect investors. Yet for decades, the SEC enforced price-fixing on Wall Street by preventing securities firms from discounting their commissions.

    10. How did the Tennessee Valley Authority become a drag on the economy? FDR taxed 98% of the American people who didn’t live in the Tennessee Valley, then used this revenue for the TVA power-generating monopoly, exempt from federal and state taxes and regulations. Like other big public works projects, the TVA mainly provided jobs for well-paid engineers, heavy equipment operators and others with technical skills. The TVA was slow to produce electricity – the first TVA dam wasn’t finished till three years after the TVA law was passed, most TVA dams were finished after the Great Depression was over, and many TVA dams provided power for war-related government projects, not poor farmers. To the extent that the TVA-subsidized electricity affected poor farmers, it gave them an incentive to remain in farming. Battelle Memorial Institute senior scientist William U. Chandler reported that non-TVA Southern states such as North Carolina and Georgia experienced faster growth of jobs and incomes than TVA states, because there was a faster exodus out of farming and into manufacturing and services, which offered higher incomes. In any case, to improve their lot poor farmers needed tools like tractors and hay bailers, powered by internal combustion engines rather than TVA electricity. As for flood control, the TVA seems to have flooded more acreage (behind the dams) than it protected from flooding (below the dams). According to economist John Moore, the TVA flooded an area about the size of Rhode Island. Thousands of people, including black tenant farmers, were forced out of their homes.

    11. Why did FDR disrupt companies employing millions? In 1938, FDR authorized an unprecedented barrage of antitrust lawsuits against about 150 employers and industries. There were lawsuits against the milk, oil, tobacco, shoe machinery, tires, fertilizer, railroad, pharmaceuticals, school supplies, billboards, fire insurance, liquor, typewriter and movie industries, among others. But the antitrust crusade was a flop. The government won few cases, and they dragged on as long as 13 years. FDR’s antitrust crusade disrupted a depressed economy, making it harder for employers to recover and provide more jobs.

    More than 6 decades have passed since FDR died, and it’s past time to consider the New Deal in light of the consequences of his policies.

    There’s a substantial economics literature about the consequences of New Deal policies, steadfastly ignored by political historians who continue to build their narratives with personalities, speeches, correspondence and other traditional sources, and ignore evidence from outside their field, even when writing about a major economic event like the Great Depression.

    In THE FORGOTTEN MAN, Shlaes has dramatically connected findings about New Deal policies with the lives of ordinary people during the Great Depression.

    Many books have showed what it was like to suffer from unemployment, drought and other aspects of the Great Depression, but Shlaes – telling her story like a good novelist — is perhaps the first to show what it was like to suffer from the era’s misguided policies.

    The lessons are particularly important now that presidential candidates are urging us to support more big, complex, costly government programs which, like the New Deal, are likely to be loaded with unintended consequences affecting us all.

    Bravo, Ms. Shlaes!

    – Jim Powell, author of FDR’S FOLLY

  7. Beth Fox
    November 10th, 2010 at 01:18 | #7


    “The Forgotten Man” would be categorized as a great work of non-fiction in any year. This year, with a volatile stock market, a contraction of credit, and cries for the federal government to “do something,” it is a must-read. The indispensible history lesson is that even well-intentioned government programs can make a recession worse.

    Why did the Great Depression last so long? We’ve all heard of the Smoot-Hawley tariff, but that was not the only example of bad policy in the Hoover years. Hoover is often portrayed as a “let them eat cake”-style, do-nothing President. In fact, Hoover was no Coolidge Republican but a progressive of a different stripe. Through his bumbling efforts to half-heartedly address economic problems (with laws that created different ones), Hoover bears a great deal of responsibility for the early years of the Depression. Read about the hour of the “vallar” and other scrip, when deflation was so terrible that people simply ran out of currency.

    The New Deal programs are usually presented as necessary to get the country back on its feet and the New Deal as a whole is often given credit for preventing a turn to fascism or communism in the United States. In fact, the programs lengthened and deepened the Depression and led to a self-fulfilling prophesy: the programs prevented growth in the economy; as Americans became poorer, they suported more government programs; rinse and repeat. The programs were also extremely intrusive. Read the eye-popping chapters on the Schechter chicken case, in which the Supreme Court held the NRA to be unconstitutional. We were taught in school that this case was about “sick chickens”; in fact, it was about the customer’s having the right to pick his own chicken while an NRA code required him to take the first one out of the coop!

    The problems with the New Deal were two-fold. First, many of its proponents believed in a government-planned economy and attempted piecemeal to put it into place. This led to a waste of money on projects like the collective farm Casa Grande. The stringent taxes (including the tax on “undistributed profits” — those that a business would use to grow), coupled with increasing wages, led to a steep fall in business investment. Second, however, was that the competing factions within the Roosevelt team (and the mercurial positions of the President himself) led to uncertainty — no one knew what program was coming next or how to plan for it. This uncertainty itself prevented anyone from investing in business.

    One additional note: This work will also be of great value to anyone interested in the growth of public utilities, the battle between government-owned and private utilities, and the electrification of the South.

    In its initial conception, when men A and B (politicians) discuss a way to help a suffering X, “The Forgotten Man” is C — the man whose money is taken for the effort. The 1930s-era men forgotten by history (foremost among them, Wendell Wilkie) come alive in this absorbing work. Amity Shlaes has created a fair-minded, compulsively readable, history of the Great Depression that we and our leaders should learn from today.

  8. Thomas M. Loarie
    November 10th, 2010 at 08:17 | #8


    I came to know Amity Shlaes in 1994 when Peter Drucker advised me to submit an unsolicited Op-Ed I authored on health care reform to her at the Wall Street Journal. At the time, she was a member of the paper’s editorial board, in charge of the Op-Ed page. She was great to work with.

    As a result, I have had a hankering to read her “The Forgotten Man” since it was first published in 2007. While I regret that I did not read this sooner, the economic events since mid-2008 have made her book much more relevant and have enabled it to become one of the “must read” books over the past two years. Amity has also found her voice on national TV drawing parallels between the 1930s and today.

    “The Forgotten Man” covers the period between 1927 and 1940, and challenges popular but misplaced beliefs about Hoover, Roosevelt, and the New Deal. A fresh historical review of the New Deal is particularly important with government expansion via increased government spending, government funded “job creation,” Keynesian economics, and increased industry regulation, being in play today. What is the underlying relationship between government and jobs? A close look shows it to be less impressive than what many want us to believe. “Government created jobs were scripted for political ends not economic ones.”

    “Hoover and Roosevelt both preferred to control events and people. Both underestimated the strength of the American economy. And both overestimated the value of government planning.” Consider these statements:

    * Washington seems oblivious to the pain the nation was suffering.

    * Officials in the capital seemed arrogant.

    * The president has recently passed taxes.

    * The president has made war on business.

    * The president is ministering to groups that rewarded him with votes.

    These came when Americans were going through the “Depression within the Depression” in 1937…not too dissimilar from headlines today. The “forgotten man” then, as now, is the taxpayer who is not feeding at the public trough but is being squeezed as he/she forced to turnover an increasing part of his/her paycheck to subsidize the feeding frenzy.

    “The Forgotten Man, ” while loaded with depth and detail, is an excellent read. Once I picked it up, I could not put it down.

  9. Professor Donald Mitchell
    November 11th, 2010 at 15:54 | #9


    Prior to FDR becoming president, federal government actions seldom had much effect on the economy or the nation’s culture. The exceptions were when the federal government waged war, tampered with the currency or the money supply, or indulged in social experiments (like Prohibition). Prior to Hoover, there was usually a social consensus that the government that did the least was best.

    Amity Shlaes’ anecdotal history of the Great Depression highlights the dangers that occur when government begins to intervene in the economy and social structure in too many ways, too quickly, and too intrusively.

    One of the key mysteries of the Great Depression was why the U.S. economy was hit so much harder than the British one. Some economists argue that a more established economy will experience fewer perturbations during a global recession or depression because those concerned about safety will seek out the oldest financial markets. Ms. Shlaes suggests that the Americans meddled too much and scared off investments.

    The book’s title is drawn an example of flawed government legislation described by William Graham Sumner in 1883 where two parties seek to help a third party in a way that requires a fourth party to participate . . . but without considering the effect on the fourth party — the forgotten man who “always pays.” Interestingly, the book points out the many different people who were identified by politicians of the era as the forgotten man.

    Ms. Shlaes’ story focuses on the class warfare that FDR conducted against business executives, wealthy people in general, and shareholders . . . and how that class warfare encouraged those groups to behave in ways that made the depression deeper and longer lasting than it would have been without the class warfare.

    The story of the Great Depression is told by following the lives of a number of people who were prominent as government leaders (such as Calvin Coolidge, Herbert Hoover, and FDR), members of government (such as FDR’s brain trust and Felix Frankfurter), industrial and financial leaders (Andrew Mellon, Samuel Insull, and Wendell Willkie), Supreme Court justices, those involved in key law suits that challenged the New Deal, religious and social leaders (Father Divine), and those who addressed the social ills of the time more directly (Bill Wilson’s founding of Alcoholics Anonymous). This approach makes for good reading, but light understanding.

    Anyone wanting to attach causes to effects will be disappointed in the book. While many connections are suggested, the analysis to back up those connections is missing. Fans of FDR will feel like he is unfairly expected to be perfect. Those who are concerned about giving the most people a sense of being treated fairly will feel like that aspect of the book is underdeveloped.

    Did FDR make mistakes? Yes. Did Herbert Hoover make mistakes? Yes. Did the Federal Reserve make mistakes? Yes. Did Congress make mistakes? Yes. But you knew that already.

    The main benefit of this book is that you’ll get to know the supporting cast from those times (especially those who were initially very impressed by the Soviet Union) much better than you would have otherwise. That will enrich your appreciation of the mental set and tenor of the times.

    If you would like to know more about the history of public electrical power, you’ll also find this book to be a helpful resource,

  10. David Thomson
    November 11th, 2010 at 16:29 | #10


    Amity Shlaes has written an enormously important book. She offers abundant evidence that both the Republican Hoover and the Democrat Roosevelt unwittingly worsened the Great Depression. They opted for policies preventing the economic system from self-correcting. These two American leaders foolishly relied on the advice of elites infatuated with the Soviet Union. They essentially thought that the graduates of our best schools should manage the country. To be blunt, the elites were supposed to be our benevolent dictators.

    Pay particular attention to Shlaes analysis of the Schechter brothers’ confrontation with intellectual thugs associated with Harvard University. The author never mentions the vastly overrated works of Arthur M. Schlesinger, Jr. Nonetheless, The Forgotten Man is something of a direct attack on the late historian’s less than admirable scholarship. Did Franklin D. Roosevelt save our nation? He admittedly may have done so in our fight against the fascists during WW II. Roosevelt’s attempts to manage the American economy, however, almost destroyed our democratic institutions. The road to hell is sadly often paved with good intentions. We should learn form history—and never let this happen again. Regular citizens must be willing to check and balance the behavior of those most inclined toward arrogant ego-tripping and power seeking. The Forgotten Man deserves three cheers. You should obtain a copy immediately.

  11. Newt Gingrich
    November 11th, 2010 at 23:05 | #11


    Amity Shlaes: The Forgotten Man: A New History of the Great Depression HarperCollins, 2007, 433pp

    This is a remarkable book which will forever change your understanding of the Great Depression, Franklin Delano Roosevelt’s role and the lessons to be learned from government intervention.

    Amity Shlaes makes a compelling case that Hoover and Roosevelt actually lengthened the Depression. They did this, Shlaes argues, by following bad monetary policy, which further deflated the currency, and by raising tariff barriers, which broke up world trade and reduced economic activity everywhere.

    Shlaes makes the best case I have seen that business confidence is the key to economic expansion and that each step of the New Deal was a further blow to business confidence.

    She also explains the view of the pre-government control entrepreneurs and investors who had created an extraordinarily successful country prior to 1929.

    This is a superb book well worth reading, studying and then thinking about for a long time.

  12. Aging Boomer
    November 12th, 2010 at 13:38 | #12


    The revisionist view of the Depression, that it was not a crisis of capitalism so much as a crisis of perverse government, has long been persuasively argued and, at least in conservative circles, accepted. Contraction of the money supply instead of expansion, raising tariffs instead of lowering them, and perverse wage and tax policy all worked together to prevent the kind of rebound typical of previous recessions. What this book adds is the human face of this failure. I grew up in an Arthur Schlesinger, Jr. world. I was raised to think of the New Dealers as geniuses and saints. The school books of the 1950s, and college professors of the 1960s, taught me so. That myth is forever shattered by this book, and its depiction not just of the odd cast of characters who made the New Deal, but of the utter intellectual chaos and self-contradiction that underlay it. The New Deal was one failed improvisation after another. (One must remember, however, how much of the responsibility lay with Hoover and his own failed interventions, an aspect of the times that Shlaes emphasizes.)

    Much of the entrenched bad policy that bedevils us today had its origins under FDR. Not even the great Ronald Reagan (whom I now see as channelling Andrew Mellon!) could do more than ameliorate it. Yet this sad story makes a great read. The personalities involved, the very texture of the 1930s, come delightfully alive in this book. It remains a mystery how a President as inept and unprincipled, as fundamentally disorganized, as FDR could have defeated Hitler and the Japanese. Or perhaps it’s not such a mystery. Some of the qualities that made for a disastrous domestic policy may have served him well as Commander in Chief. The “fog of war” is better suited to the improvisatory approach. Perhaps Shlaes can address this in a book on the 1940s. She, at least, will not succumb to hagiography despite the wartime successes.

    The audio version of this book, by the way, is very good, with an excellent reader.

  13. Reading Fan
    November 13th, 2010 at 00:55 | #13


    I could hardly even imagine this question being asked before reading this book. My parents and their generation idolized FDR, who they said saved us from the Depression and lead us and the world to victory in WWII. He was `against big business’ and `for the little guy’. It was like a mantra I heard as a kid every time FDR’s name came up.

    This book, however, paints another picture. We see an FDR who stifled business with regulation and law suits to effectively extend the Depression, who tried to pack the courts to get his agendas passed, who was blatantly unfair in his attacks on business or what this book calls `the forgotten man’,

    It almost felt like waking up from brain-washing. It gave me the same feeling I had about Churchill after reading Pat Buchanan’s `The Unnecessary War’. According to the book, Churchill was also a first-rate warmonger and a leading reason for the demise of the British Empire and the post-WWII placement of countless millions of Europeans behind the Iron Curtain. I’ve also had the experience of being released from a common form of religious brain-washing, and this felt similar.

    I still think FDR was a great man. He was not afraid to take charge, and, In particular, his sense of optimism inspired the nation and the world during the hardest times of the 20th century. I have been awed by his sense of confidence and responsibility and unshakable confidence.

    But I like the balance I get after reading this book.

    My recommendation: read and make up your own mind.

  14. Robert Lee
    November 13th, 2010 at 06:12 | #14


    This book is very informative on how and why the U.S. had gotten into a depression and why it lasted so much longer for us than any other country at that time. It informs you of things you were never told by your teachers and you will never know unless you read this book. It is backed up by facts, and has extensive footnotes. It is a little difficult to read in some areas, but I made it through it in about a month, and I’m a very slow reader. I would recommend this book to any and all that want to know about the depression and the reasons why we ended up there in the first place, and what kept us there.

  15. C. Perelli-Minetti
    November 14th, 2010 at 10:09 | #15


    This is a fascinating book. Most serious historical writing about the Crash, the Depression and the New Deal has been either an essentially adulatory hymn to Roosevelt and his team (think Arthur Schlesinger, Jr.) or critical from a leftist perspective arguing the New Deal was too conservative (think Gabriel Kolko). Criticism of Roosevelt and the New Deal by contemporaries, to the extent it’s read much anymore, has tended to seem overwrought (think H.L. Mencken on ‘Roosevelt Minor’). Writing by economists has been better, but less approachable by the ordinary educated reader.

    Shlaes provides a much needed perspective, a heavily anecdotal history of the run up to the Depression and the Depression which emphasizes the ideas about political philosophy and political economy held by, and motivating the actions of, the key players from Coolidge, Mellon, and Hoover, through Roosevelt and his Brain Trusters (including the execrable Tugwell) and executives and lawyers like Insull and Wendell Wilkie.

    What I got from the book was a sense, for the first time, of why the incredible outrage that the New Deal generated in many people was fully justified: the capriciousness of both Roosevelt and his minions, their lust for power, the ineffectiveness of most of their nostrums, and, their indifference to the effect on actual citizens (as opposed to their idealized groups of downtrodden whom they hoped to recruit to keep them in power) that borders on Lenin’s guffaw when talking about murdering kulaks (recounted by a horrified Bertrand Russell in his essay Eminent Men I Have Known in his 1950 Unpopular Essays). Those who realized what Roosevelt and his wunderkinder were doing were choleric at their own helplessness in stopping him or making people understand how counterproductive the New Deal really was.

    When I first read Ayn Rand’s Atlas Shrugged and The Fountainhead, I thought the portraits of the professors and government types ranged against Rand’s heroes were almost cardboard caricatures, which was confirmed by my graduate school reading of historical scholarship on the New Deal. Now, after hearing Shlae’s portraits, however, I am struck by how much like her cardboard characters the New Dealers actually were, based on their own words and recollections.

    One caution: this should not be the only book you read on the New Deal. It’s relatively short and not comprehensive. For the reader who has a solid working knowledge of the Depression and the New Deal (say the equivalent of a fresh, but careful, reading to the appropriate chapters in Morison, Commager aand Leuchtenburg’s The Growth of the American Republic which is very favorable to the New Deal), Shlaes makes her argument by letting the facts and the protagonists speak for themselves. And a damning portrait it is.

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