240 THE BiG DROP
■ The Forgotten Man — A New History of the
Great Depression
The Great Depression in the United States is conventionally
dated from 1929 to 1940. It began with the stock market
crash in October 1929, and only ended when the U.S. mas-
sively restructured its economy to produce war material, first
for our allies, particularly the U.K., in 1940, and later for our
own forces after the U.S. entered the Second World War in
December 1941.
Like any dating scheme, these dates are somewhat arbi-
trary. The U.S. depression was part of a larger global depres-
sion that was visible in the U.K. in 1926, and in Germany in
1927, and that was not fully resolved until the new internation-
al monetary arrangements agreed at Bretton Woods in 1944
and implemented in the post-war years. But the core period,
1929–1940, covering President Hoover’s single term, and the
first two terms of President Franklin Roosevelt, are the object
of intensive interest by historians and scholars to this day.
The term “depression” is not well understood and is not
in wide use today. Economists prefer terms like “recession,”
which means two or more consecutive quarters of declining
GDP with rising unemployment, and “expansion” which covers
periods of rising GDP between recessions. Economists like the
fact that recession is mathematically defined and measurable,
whereas depression is subjectively defined and somewhat in
the eye of the beholder. Policymakers avoid using words like
depression for fear that the public may become depressed and
stop spending — the opposite of what is desired. As a result,
the word depression has been more or less swept under the
rug of economic discourse today.
This is unfortunate because the term depression is useful
in economic analysis. Depression does not imply long periods
of declining GDP. It is possible to have rising GDP, falling un-
employment and rising stock prices in a depression. Indeed,