Since 1936, history has been written by historians supportive of Franklin Roosevelt’s policies. The policies of Warren Harding and Calvin Coolidge have been ridiculed and the ridicule continues. A recent excellent book on the first US ambassador to Hitler’s Germany repeats a common slur against Coolidge. He is said to have replied to a question about the World War I allies’ difficulty in repaying war loans by saying, “They hired the money, didn’t they ?” In fact, he did not say that. His administration tried to modify loan terms with the Dawes Plan but the reparation demands that led to the loan repayment difficulties were the direct responsibility of the French and Woodrow Wilson who had little interest in economics. The French thought they could make Germany pay the costs of the war and the damage to northern France. In fact, they had no idea of the laws of economics which required an active economy to generate the funds to allow Germany to recover. Keynes polemic book, “The Economic Consequences of the Peace”, was his attempt to ingratiate himself with his Bloomsbury friends but it was disastrous for the world economy in the 1920s. It suggested that the TReaty of Versailles was a Carthaginian Peace intended to destroy Germany. Hitler would make use of this impression a few years later and Britain justified appeasement with the same argument. In fact, the Treaty of Versailles was destructive and led to great economic harm. It is likely that the Versailles Treaty had the same effect in 1929 as the 1870 Prussian defeat of France had in the Panic of 1873.
There are those who blame the Federal Reserve for the Depression. It is likely that it is to blame for the nearly 100% inflation since 1928 but the Depression was most probably due to the progressive policies of Hoover and Roosevelt. High tariffs contributed but the hostile anti-business climate of the early New Deal plus the fascist policies of the early Roosevelt administration were the most proximate cause. Farmers slaughtered hogs and chickens rather than sell them at prices below cost, as required by the New Deal when people were hungry. The Wagner Act encouraged strikes and kept wages above the market rate while unemployment exceeded 25%.
Reading the revisionist literature is the best antidote to the leftist historians, who had no idea how an economy worked. I recommend Amity Schlaes’ book, “The Forgotten Man,” which will be followed by an entire literature setting the historical record straight.