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
Before the "Keynesian Revolution", such a liquidationist theory was a common position for economists to take and was held and advanced by economists like Friedrich Hayek, Lionel Robbins Joseph Schumpeter, Seymour Harris and others. According to the liquidationists a depression is good medicine. The function of a depression is to liquidate failed investments and businesses that have been made obsolete by technological development in order to release factors of production (capital and labor) from unproductive uses. These can then be redeployed in other sectors of the technologically dynamic economy. They asserted that deflationary policy minimized the duration of the Depression of 1920–21 by tolerating liquidation which subsequently created economic growth later in the decade. They pushed for deflationary policies (which were already executed in 1921) which – in their opinion – would assist the release of capital and labor from unproductive activities to lay the groundwork for a new economic boom. The liquidationists argued that even if self-adjustment of the economy took mass bankruptcies, then so be it. Postponing the liquidation process would only magnify the social costs. Schumpeter wrote that it