Forgotten Man, The (52 page)

Gene Smiley’s
Rethinking the Great Depression
(Chicago: Ivan R. Dee, 2002) is also highly useful. Barry Eichengreen’s
Golden Fetters
(New York: Oxford University Press, 1995) assigns blame to the gold standard. Thomas E. Hall and J. David Ferguson’s
The Great Depression
(Ann Arbor: University of Michigan Press, 1998) is admirably clear. In the camp arguing that inflation was the problem, the best-known book is Murray Rothbard,
America’s Great Depression
(Auburn, Ala.: Mises Institute, 1962). Benjamin Anderson’s
Economics and the Public Welfare
(New York: D. Van Nostrand, 1949) also stands out, especially for its analysis of the tax problem. As early as 1949, the year this book was first published, Anderson provocatively titled chapter 31 “The New Deal in 1929–1930.” Anderson’s blow-by-blow account of the 1937–38 recession is especially important. (The difference between the downturn of 1921 and 1929 is noted in Don Lescohier’s article in David Shannon’s anthology,
The Great Depression.
)

Economists and historians likewise differ on the costs of the Smoot-Hawley tariff. Some argue that the Fordney-McCumber tar
iff of the early 1920s did not weigh down the U.S. economy and believe others exaggerate the damage of Smoot-Hawley. I agree with economist Charles Kindleberger on this, who argues that the Smoot-Hawley Act was damaging per se but also because it made clear that, when it came to the world economy, “no one was in charge.” Overall the best economic guide to the crash and early Depression years is Michael A. Bordo et al.,
The Defining Moment
(Chicago: University of Chicago Press, 1998), a volume of papers presented at a National Bureau of Economic Research conference in 1996. On the effect of public spending after the crash and later, Herbert Stein’s
Fiscal Revolution in America
(Washington, D.C.: AEI Press, 1990) and his
Presidential Economics
(New York: Simon & Schuster, 1984) are the classics.

Alfred Loomis
More on Loomis’s philosophy and movements in the market can be found in Jennet Conant’s insightful biography,
Tuxedo Park
.

Irving Fisher…argued that stock prices were too low
Fisher’s relationship with Sumner was a strong one. As Fisher’s son Irving Norton later noted in
My Father, Irving Fisher
(New York: Comet Press, 1956), Fisher dedicated his book
The Nature of Capital and Income
to Sumner, writing, “To William Graham Sumner, who first inspired me with a love for Economic Science.” Nobel Prize winner Edward C. Prescott outlined the increasingly accepted argument that stocks were not outrageously high in 1929 in a 2003 paper coauthored with Ellen McGrattan, “The 1929 Stock Market: Irving Fisher was Right,” Research Department Staff Report 294, Federal Reserve Bank of Minneapolis.
the actual money supply available dropped
The figures are from Hall and Ferguson,
Great Depression.

“Mr. Hoover’s Economic Policy”
Tugwell’s article is discussed in Bernard Sternsher,
Rexford Tugwell and the New Deal
(New Brunswick, N.J.: Rutgers University Press, 1964).

“much-needed construction work”
The Roosevelt letter is quoted in
The Hoover Administration: A Documented Narrative.
The con
struction data are from “Public Construction Highest in Five Years,”
New York Times,
April 21, 1930.

Meanwhile, the horizon darkened further
The unemployment estimate comes from Vedder and Gallaway,
Out of Work
. As
Time
magazine reported, states were crucial in unemployment data collection in those days, but only ten states compiled numbers.

Smoot-Hawley raised the average tariff
Douglas Irwin points out that Smoot-Hawley returned tariffs to turn-of-the-century levels in National Bureau of Economic Working Paper 5895, “From Smoot-Hawley to Reciprocal Trade Agreements,” 1997. The 40 percent drop in trade is mentioned there.

Bankers Athletic League
“Bank of U.S. Five Wins League Title.”
New York Times
, February 25, 1930, reports the basketball match. On December 12, 1930, the paper reported the story in “Bank of U.S. Closes Doors.” More of this material can be found in Milton Friedman and Anna Schwartz,
A Monetary History of the United States, 1867–1960
(Princeton, N.J.: Princeton University Press, 1971), and Meltzer’s
History of the Federal Reserve.

“Let it fail”
The
New York Times
of Dec. 21, 1930, describes the demonstration at Freeman Street. The remark is recorded in Meltzer,
History of the Federal Reserve
. See “Throngs at Bank,”
New York Times
, December 23, 1930.

4

The Hour of the Vallar

One late summer day
Marriner Eccles’s own memoirs,
Beckoning Frontiers
(New York: Alfred A. Knopf, 1951), and the descriptions of his biographer, Sidney Hyman, helped here. Descriptions of the “money drought” come out of contemporary papers; a good summary of the scrip network appeared in
Time
magazine’s January 9, 1933, issue, in an article titled “For Money.” Also useful is Wayne Parrish and Wayne Weishaar,
Men without Money: The Challenge of Barter and Scrip
(New York: G. P. Putnam’s Sons, 1933). Paul Douglas men
tions the Hyde Park Co-op’s founding in his memoirs, but the story is also detailed on the Co-op’s website,
http://www.coopmarkets.com/ history.htm
.

“households, farmers, unincorporated businesses, and small corporations”
Ben Bernanke, especially, studied the damage when banks could or did not lend; the quote is from his
Essays on the Great Depression
(Princeton, N.J.: Princeton University Press, 2004).

“There will be this situation”
U.S. Senate hearings before a subcommittee of the Senate Banking and Currency Committee on S. 2959, 72
^nd
Cong., 1
^st
sess., January 1932. Much of this material can also be found in Chandler,
America’s Greatest Depression
.

Other components of the downturn
Douglas Irwin in
The Defining Moment.

National unemployment…was something like 16 percent and rising
The data on unemployment are from the U.S. Department of Commerce annual figures, cited in Chandler,
America’s Greatest Depression. interest in the Soviet effort was mainstream
Peter Filene does a valuable job of evaluating and quantifying U.S. interest in Soviet Russia in his
Americans and the Soviet Experiment.

The energized professors wanted to fashion for Roosevelt a dramatic message
In regard to Franklin Roosevelt’s brain trust, there is a rich body of material to draw from. Tugwell wrote multiple memoirs, including one of his rural childhood,
The Light of Other Days
(New York: Doubleday, 1962). Adolf Berle’s role comes clear in
Navigating the Rapids
(New York: Harcourt Brace Jovano-vich, 1973). Scholars Jordan Schwarz and Bernard Sternsher beautifully capture this period in their books. Michael Namorato and Sternsher cover Tugwell. Of all the members of the brain trust, Ray Moley feels the most modern. Much of his story comes out in
After Seven Years
(New York: Harper and Brothers, 1939), the book he wrote upon breaking with Roosevelt. Stuart Chase’s
New York Times
obituary gives him the credit for the phrase “New Deal,” but it was in the air at the time.

“I turned the tables”
“Roosevelt Confers on Russia Policy,”
New York Times,
July 26, 1932.

“backbone of the nation”
Some of the text of the address was reprinted in “Mills’ Address Closing Republican Campaign,”
New York Times,
September 11, 1932; more of the text elsewhere.
puff piece in the
New York Times “Capper and Wallace Disagree on Effect of Hoover’s Speech,”
New York Times,
October 6, 1932.

Over lunch, Eccles asked
Eccles describes the lunch meeting in
Beckoning Frontiers. news that Stalin was moving farther forward with the collectivization of agriculture
“50,000 Soviet Reds Will Direct Drive to Socialize Farms,”
New York Times,
January 30, 1933.

5

The Experimenter

They met in his bedroom
This scene comes from Henry Morgenthau’s diaries, which were pulled together by the historian John Morton Blum as
From the Morgenthau Diaries
(Boston: Houghton Mifflin, 1959–67). I first read the story of President Roosevelt’s gold experiment in John Brooks’s outstanding
Once in Golconda: A True Drama of Wall Street
(New York: Harper and Row, 1969). Ickes, Tugwell, and others also commented on the experiment in their writings about the period.

Some of the projects were mere extensions of Hoover’s efforts
Moley describes the cooperation in
Twenty-seven Masters of Politics
(New York: Ticknor and Fields, 1991).
signing a bill that included deposit insurance
Paul Mellon describes the deposit insurance discussion. As Irving Norton Fisher notes in
My Father, Irving Fisher,
1956), Roosevelt went back and forth on the insurance more than once. “I think it is true that FDR is ready to change his mind easily. I believe in this for myself, but is very worrisome to have a President do it. He seems now to be wobbly about Bank Deposit Guarantee, because New York bankers via [Treasury Secretary] Woodin have questioned it again.”

Columbia’s president…had been flatteringly reluctant
Tugwell describes the interaction with Columbia in
The Diary of Rexford G. Tugwell, 1932–1944
(New York: Greenwood Press, 1992).

“no president ever took over a nastier…mess”
Warburg’s reaction is described in his own
Hell Bent for Election
(Garden City, N.Y.: Doubleday Doran, 1935) and also in Brooks,
Once in Golconda.
Fisher’s notes about his meeting with Roosevelt are in Robert Loring Allen,
Irving Fisher: A Biography
(Cambridge, England: Blackwell, 1993) and his son’s memoir,
My Father, Irving Fisher.

“culmination of my life work”
Fisher’s son reprints Fisher’s letter to his wife in
My Father, Irving Fisher.

“Congratulate me”
John Brooks relays this incident, but so does Warburg; for an economic description of events, Peter Temin’s
Lessons from the Great Depression
(Cambridge: Massachusetts Institute of Technology, 1989) is especially clear.

The news about homeowners continued to be bad
Ben Bernanke, “Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression,”
American Economic Review
73 (1983).

6

A River Utopia

The Tennessee Valley Authority
On the early TVA, Roy Talbert Jr.,
FDR’s Utopian: Arthur Morgan of the TVA
(Jackson: University Press of Mississippi, 1987), proved useful.

TVA’s first rate schedule
“Muscle Shoals Electric Rates,”
New York Times,
Sept 15 1933.

“I recall that we were two exceedingly cagey fellows”
To get a feel for Lilienthal, the reader need only dip into
The Journals of David Lilienthal
(New York: Harper and Row, 1964). The description of his early meeting with Willkie is contained in an appendix to the first volume.
more than seven dams as large as Dnieprostroi
These facts are drawn from David Lilienthal’s
Democracy on the March
(New York: Harper and Brothers, 1944).

7

A Year of Prosecutions

Sam Insull and Andrew Mellon
The key work on Samuel Insull is Forrest McDonald’s
Insull
(Chicago: University of Chicago Press, 1962). More recently author John Wasik has usefully explored Insull’s contribution to technological innovation in
Merchant of Power
(New York: Palgrave Macmillan, 2006). An unpublished memoir by Burton Berry, the State Department official who traveled home with Insull, gives insight into Insull’s state of mind. Insull’s papers are at Loyola University. The material on Mellon’s prosecution is drawn mostly from the newspapers of the period; on the justice of the prosecution, Hoover had some comments to make as well in his memoirs.
The Diary of Rexford G. Tugwell
, edited by Michael Namorato, describes the period in which he was closest with Roosevelt.