THE FORGOTTEN DEPRESSION

Financial journalist Grant (Mr. Speaker! The Life and Times of Thomas B. Reed, the Man Who Broke the Filibuster, 2011) examines an economic trough that ended without government intervention.

In November 1919, the Dow Jones Industrial Average stood at 119.62. In August 1921, it was 63.9, a decline of nearly half. Eighteen months after it began, writes the author, the depression of 1920-1921 was “over and done with.” It is a matter of libertarian faith that the Great Depression was prolonged rather than alleviated by Keynesian economic policy, and Grant’s intent is clear: The invisible hand reigns supreme, the market knows what’s good, and government meddling usually ends badly. All those points are arguable, but ideology aside, Grant’s look at this forgotten episode, which gave us the grimly jaunty tune “Ain’t We Got Fun,” has much to commend it even as it raises questions. As he observes, the governments of Woodrow Wilson and then Warren G. Harding did not “socialize the risk of financial failure or attempt to steer and guide the national economy by manipulating either the rate of federal spending or the value of the dollar.” But could this model have been followed in the more complex financial meltdown of 2008? Grant earns points for finding something at all good to say about the notoriously corrupt Harding administration, and while his narrative sometimes labors under the weight of facts, figures and financial terminology, his account of how industry reckoned with the downturn—in part by lowering wages, in part just by waiting it out—makes for interesting reading indeed, at least for numbers wonks.

A solid effort at portraying the muted spell that opened the Roaring ’20s and at arguing for more trust in the self-healing properties of the business cycle.