The Great Depression: America, 1929–1941
The Great Depression: America, 1929–1941 () is a 1984 history of the Great Depression by acclaimed historian Robert S. McElvaine. In this interpretive history, McElvaine discusses the causes and the results of the worst depression in American history, covering the time from 1929 to 1941. He examines the causes of this cataclysmic event, its impact upon the American people, and the political, governmental, and cultural responses to it. He comes down firmly in favor of the "demand-side" argument that maldistribution of income in the 1920s having left the bulk of potential consumers with too small a share of national income to buy all that mass production was putting on the market was the principal cause of the collapse. Building on his innovative use of letters written by "ordinary" Americans during the Depression that were collected in his first book, "Down and Out in the Great Depression", McElvaine takes readers into the experience of Depression victims to an extent never before achieved.
Causes of the Great Depression
In the Cole-Ohanian model there is a slower than normal recovery which they explain by New Deal policies which they evaluated as tending towards monopoly and distribution of wealth. The key economic paper looking at these diagnostic sources in relation to the Great Depression is Cole and Ohanian's work. Cole-Ohanian point at two policies of New Deal: the National Industrial Recovery Act and National Labor Relations Act (NLRA), the latter strengthening NIRA's labor provision. According to Cole-Ohanian New Deal policies created cartelization, high wages, and high prices in at least manufacturing and some energy and mining industries. Roosevelts policies against the severity of the Depression like the NIRA, a "code of fair competition" for each industry were aimed to reduce cutthroat competition in a period of severe deflation, which was seen as the cause for lowered demand and employment. The NIRA suspended antitrust laws and permitted collusion in some sectors provided that industry raised wages above clearing level and accepted collective bargaining with labor unions. The effects of cartelization can be seen as the basic effect of monopoly. The given corporation produces too little, charges too high of a price, and under-employs labor. Likewise, an increase in the power of unions creates a situation similar to monopoly. Wages are too high for the union members, so the corporation employs fewer people and, produces less output. Cole-Ohanian show that 60% of the difference between the trend and realized output is due to cartelization and unions. Chari, Kehoe, McGrattan also present a nice exposition that's in line with Cole-Ohanian. .