Story

The Big Picture Of The Great Depression

AH article image

Authors: John A. Garraty

Historic Era:

Historic Theme:

Subject:

August/September 1986 | Volume 37, Issue 5

Back in 1955 John Kenneth Galbraith called the Great Depression of the 1930s “the most momentous economic occurrence in the history of the United States,” and thirty-odd years later that judgment, recorded in Galbraith’s best seller, The Great Crash , still holds. Since then there have been more recessions, some quite severe, but nothing like what happened in the thirties. As dozens of economists and historians have shown, we now know, in theory, how to deal with violent cyclical downturns. We have learned what we should do to manipulate what Lester V. Chandler of Atlanta University has called “the determinants that influence the behavior of employment, output, and prices.”

Yet fears of another terrible collapse persist, even among the experts. And the higher the stock market soars, the greater the underlying fear. In The Great Crash Galbraith spoke of “fissures” that “might open at…unexpected places,” and Chandler warned of some sort of “political deadlock” that might prevent the government from doing the things that would revive a faltering economy.

These fears are not without foundation. The American economy is complex and influenced by forces beyond the control of economists or politicians. More and more, economists are becoming aware of what historians have always known: that they can do a good job of explaining why the economy is the way it is and how it got to be that way, but that knowing exactly what to do to make it behave in any particular way in the future is another matter entirely.

 

The Great Depression of the 1930s was a worldwide phenomenon, great not only in the sense of “severe,” but also in the sense of “scope.” While there were differences in its impact and in the way it was dealt with from one country to another, the course of events nearly everywhere ran something like this: By 1925 most countries had recovered from the economic disruptions caused by the Great War of 1914-18. There followed a few years of rapid growth, but in 1929 and 1930 the prosperity ended. Then came a precipitous plunge that lasted until early 1933. This dark period was followed by a gradual, if spotty, recovery. The revival, however, was aborted by the steep recession of 1937-38. It took a still more cataclysmic event, the outbreak of World War II, to end the Great Depression. All this is well known.

The effects of the Great Depression on the economy of the United States, and the attitudes of Americans toward both the Depression and the politics of their government, did not differ in fundamental ways from the situation elsewhere. This, too, scarcely needs saying.

However, there has been a tendency among historians of the Depression, except when dealing with specific international events, such as the London Economic Conference, and with foreign relations generally, to concentrate their attentions on developments in a single country or region. The result has been to make the policies of