The Great Depression Summary & Analysis
Life After the Crash
The Great Depression plunged the American people into an economic crisis unlike any endured in this country before or since. The worst and longest downturn in our economic history threw millions of hardworking individuals into poverty, and for more than a decade, neither the free market nor the federal government was able to restore prosperity.
The Depression provided the impetus for President Franklin D. Roosevelt's New Deal, which forever changed the relationship between the American people and their government, and which is usually considered to be one of the most significant periods of political reform in American history.
In retrospect, it became easy to view the New Deal as the natural response to the Depression. At the time, however, the New Deal was only one of many possible responses to an American capitalist system that had seemingly lost its way.
By the middle of the 1930s, as the American people endured half a decade of misery with no end in sight, some began to flirt with much more radical alternatives to the liberal reformism of the New Deal.
Communists agitated for revolution, while Share Our Wealth enthusiasts demanded class-based wealth redistribution without endorsing the communists' ideological precepts. In California, a large minority voted in favor of author Upton Sinclair's utopian plan to "End Poverty in California" through state-organized cooperative production by the unemployed.
Also beginning in the Golden State but soon spreading across the nation, millions of people came to believe that an old-age pension plan crafted by an unemployed doctor would get the country working again. Meanwhile, on the other end of the political spectrum, the country's most popular radio personality, Father Charles Coughlin, was moving from support for the New Deal to bitter denunciations of it and openly flirting with fascism.
These were all radical alternatives to both the pre-Depression status quo and to the New Deal order. Most of them—thankfully—never took deep root in American society. Some were incorporated, in watered-down form, into New Deal reforms. All are historically significant because the mere fact that they were taken so seriously reveals the unparalleled depth of the crisis that struck the nation's established order during the Great Depression.
For perhaps the only time in our history, American capitalism broke down so badly, and for so long, that radically different ways of organizing society became not only thinkable, but for some, desperately desired.
Ben S. Bernanke
Few periods in history compare to the Great Depression. Stock market crashes, bread lines, bank runs, and wild currency speculation were worldwide phenomena--all occurring with war looming in the background. This period has provided economists with a marvelous laboratory for studying the links between economic policies and institutions and economic performance. Here, Ben Bernanke has gathered together his essays on why the Great Depression was so devastating.
This broad view shows us that while the Great Depression was an unparalleled disaster, some economies pulled up faster than others, and some made an opportunity out of it. By comparing and contrasting the economic strategies and statistics of the world's nations as they struggled to survive economically, the fundamental lessons of macroeconomics stand out in bold relief against a background of immense human suffering. The essays in this volume present a uniquely coherent view of the economic causes and worldwide propagation of the depression.