Economics and the Public Welfare: A Financial and Economic History of the United States, 1914-1946

This book is primarily a financial history of the years 1913-46, although, as the title suggests, it covers a wider range. Several chapters are devoted to foreign financial developments and to political changes that affected financial conditions. From 1920 to 1939 the author was economist for the Chase National Bank in New York and wrote the often brilliant Economic Bulletin's published by that bank. He has drawn extensively on them in writing this book. As a Chase Bank officer he had a "front seat" at numerous events of national and international moment and he knew personally many political and financial leaders. The book thus has an autobiographical and journalistic tone too. Anderson had definite cogent positions on the causes of various crises, on the validity of certain economic theories, and on the reasons for some of the world's ills. He backs these vigorously with logic, history, personal anecdotes, and statistics. For example, he says that the New Deal really commenced about 1924 (p. 115) when open market operations were used to create credit and help several European nations return to a gold standard. This was the first significant resistance to forces that might bring the economy towards an economic equilibrium (pp. 220- 21). Such resistance, Anderson contends repeatedly, is the cause of many of economic ills. The 1924 and 1927 open market buying operations created large bank reserves and set in motion the speculative forces culminating in the 1929 debacle (pp. 128, 136). Incidentally, one of the leading causes of trusts, he says, is easy credit and boom conditions which make combinations more desirable and easier to achieve. Two great booms coincided with chief periods of trust formation: 1898-1903 and 1927-29 (pp. 497, 503). Any chances of early recovery from the 1929 panic were dashed by the enactment in 1930 of the Smoot-Hawley tariff (pp. 224, 270). The strict rules governing margins and short sales in the 1930's made the stock market dangerously thin at times; the greatest single decline took place under the New Deal in 1937, not in 1929 (pp. 438, 454-55). Our modern low interest rate pattern was the result of excess reserves of the early 1930's (p. 412), and was preserved by still greater excess reserves; it was not caused by the implementation of Keynesian theories. The panic of 1937 was caused by large-scale strikes leading to wage and price increases which businessmen interpreted as likely to reduce profits (pp. 444-46). American unit banking is not inferior to branch banking (Chap. 44). The book bristles with provocative challenges and interpretations, always well supported. Beneath them all there runs the thesis of equilibrium economics (pp. 59, 301, 407 n.). The New Deal, Anderson cites figures to show, failed to solve the unemployment problem and slowed down capital growth. He concludes that such government planning "robbed us of production we might have had and the consumption which we might have enjoyed had we had t

This book was originally written in 1949. That's an important fact to consider when reading it. This makes Mr. Anderson the first historian to publicly state the fact that Hoover authored the New Deal. This is a very trenchant examination of the economics of the period between the start of WWI and the end of WWII, and that includes the Roaring 20s and the Depressed 30s. Since this is a book of economics, it was ignored by historians. Shame, since they're the ones perpetuating the myth that Hoover and FDR were of opposite kinds when the truth is they were merely different by a matter of degree. This book details the true economic situation during that time, but it was the sections on Hoover that really caught my eye, all the massive public works programs and cartelization of the economy that show that the myths are wrong.