Dead Money and ModernityAmerica's Great Depression

As the calamitous year 1929 began, Calvin Coolidge was in his final months as president of the United States. In January, he addressed the officials charged with drawing up the federal budget, and he used the opportunity to pass on what he considered sturdy economic principles learned from past trials. In particular, he suggested that it had been "wise governmental policies, and particularly wise economy in Government expenditures with steady reduction of the national debt," that had restored the country from what he called "the great depression of 1921." Everything about Coolidge's comments would sound, a decade later, utterly outmoded: his easy confidence in austerity's ability to remedy economic crisis; his use of the noun economy to indicate government's thrifty husbandry; and, perhaps above all else, Coolidge's use of the phrase "the great depression" to refer to anything other than the economic collapse that the country, and the world, would soon endure.¹

Such was the magnitude of the great slump that followed 1929 that it transformed Americans' sense of history, their sense of where they stood in time. They began to see themselves as living in an extraordinary epoch disconnected from the past, as if the present had somehow fallen out of the progressive march of history they had once taken for granted. Indicative of this new exceptionalist consciousness, Americans soon took to using the phrase "the great depression" to almost exclusively refer to their own present-day predicament, no longer to the economic downturns of the past like the one Coolidge had reflected on. With time, as the crisis stretched on, Americans began to speak of "the Great Depression" as an almost mythological being, maintaining its godlike "grip" on all the world: one early example was a Christmas letter written in 1931 to the Detroit Free Press, which vividly described "the clutches of that deplorable condition that will be historically known as the Great Depression." Even as Americans were still figuring out what to call their "deplorable condition," conspiracy theories began to mushroom about what—or who—had caused it all, as when, also in the final days of 1931, demagogic congressman Louis T. McFadden denounced German-born Jewish banker Paul Warburg as "the man who engineered the great depression."²

Neither Warburg nor anyone else, of course, had "engineered" the Depression, and McFadden himself was eventually denounced as a Nazi-sympathizing antisemite; the Detroit Christmas letter-writer, however, was proven correct with time. Many decades later, historians and the public alike still understand the period following 1929 as a discrete historical period and still refer to it as its contemporaries decided to, as the Great Depression. Considering how contentious of a matter periodization is, both in the moment and in historio-graphical reflection, it shouldn't be taken for granted that this would be so. Yet as a historical period, the Depression era stands out in modern history, not only because of the traumatic world war it spawned, but because of its own immense scope. A comprehensive catastrophe, the Great Depression was not only an economic slump, it was a period of political breakdown, social disruption, intellectual illusion, and environmental disaster. Global both in the sense that it hit every country on earth and that its consequences were felt by investment bankers and fruit pickers alike, the Great Depression was nothing less than, in the words of Eric Hobsbawm, "the most traumatic episode in the history of capitalism."³

The most traumatic episode in the history of capitalism, yes, and yet what economic historian Peter Temin wrote of the Great Depression in 1975 remains true: that "it is surprising how little we know about its causes." Part of why this is so has to do with the difficulty of...