In the mono-causal world of popular mythology, the US stock market crash of October 1929 caused the subsequent economic and financial collapse while the New Deal, launched in the form of an epochal “100 Days” programme by newly-elected president Franklin Delano Roosevelt (FDR) on taking office in March 1933, reversed the prior collapse in output and employment. The reality of this period, however, is very different.

Nobody who has assessed the evidence would now credit Wall Street’s “Great Crash” with anything other than a marginal role in precipitating what Friedman and Schwarz christened “The Great Contraction” in their magisterial 1963 “Monetary History of the United States”.

Similarly, the idea that the New Deal brought an end to the Great Depression is wholly debunked by the data. US GNP collapsed by a cumulative 25% between 1929 and 1933 before increasing by a cumulative 12% between 1933 and 1937 but then suffering renewed contraction on a massive scale in 1937/38. Indeed, it was only in the early 1940s, after the US had entered WW2 and placed the economy on a war footing, that the 1929 cyclical peak of output was surpassed.

George Selgin, in his latest book “False Dawn”, doesn’t seek to address the issue of what caused the Great Contraction of 1929-33. Instead, Selgin brings to bear an exacting focus upon what happened from early 1933 onwards, taking the story right through to the late 1940s. In so doing, Selgin’s assessment is extremely helpful to anybody desirous of learning more about this critical period for America’s economic fortunes. While he presents no original research of his own, he pulls together the current very substantive corpus of academic literature in undertaking a chapter-by-pithy-chapter analysis of all the post-1933 policy initiatives. Importantly, therefore, his work is, on one level, one of synthesis – but an approach which performs an extra-ordinarily useful service to the non-specialist reader.

This, however, is not to fault his analysis which is of the highest quality. Indeed, Selgin takes us an impressively comprehensive journey through the years in which FDR occupied the White House. He begins with the critical macro-economic bases for stabilisation and subsequent recovery: first, the resolution of the US banking crisis via the extended Bank Holiday, introduction of deposit insurance and the lending activities of the Reconstruction Finance Corporation and, second, the escape of the US dollar (and, crucially, the Federal Reserve) from its “golden fetters”. Selgin then focuses the various “institutional” initiatives launched by FDR – notably the measures to support the beleaguered agricultural, industrial and housing sectors – and the controversial issue of their effectiveness. Subsequently, he discusses the relative contributions to economic recovery made by fiscal and monetary policy ( with the reflationary thrust of the latter being massively boosted by increasing inflows of gold fleeing Europe and the existential threat posed by Hitler. He then moves on to analyse the causes of the massive setback to recovery constituted by the “Roosevelt recession” of 1937/38 with an impressively adept rendition of the (still-lively) controversy over the relative contributions of various developments and, crucially, policy errors.

Other aspects of his analysis deserve mention too: his demonstration that the views of John Maynard Keynes had much less effect upon US policy than many of Keynes’ s acolytes subsequently supposed; his emphasis upon chronic policy uncertainty and entrepreneurial angst about FDR’s  business-unfriendly “reform” agenda with depressed “animal spirits” inhibiting any revival of capital investment; the importance of mid-term elections in dictating the progress, or otherwise, of FDR’s “reform” agenda ( the 1938 Congressional elections brought about large-scale losses for the Democrats).

Especially insightful is the final section of the book entitled “After the New Deal” which focuses in particular upon the question of why the widely-feared post-WW2 downturn failed to materialise. Instead, pent-up consumer demand was unleashed and business investment, chronically depressed throughout the late 1930s, boomed.  This section also contains a fascinating chapter (entitled “The Fate of Rosie the Riveter”) about the behaviour of female employment (which, of course, made an indispensable contribution to the war effort), especially after the cessation of hostilities.

It’s intriguing, too, to note the resonance of present-day parallels. Clearly, knowledge of what had produced the Great Depression (a global phenomenon but one in which the US constituted the epicentre) played a pivotal role in generating the critical policy responses as the global economy evinced clear signs of a 1930s-style meltdown in 2008/09. And memory of the traumatic 1937/38 recovery setback fuelled calls to avoid extreme fiscal and monetary tightening post-2009 on both sides of the Atlantic. Indeed, in 2009 Cristina Romer, chair of the Council of Economic Advisers and a prominent historian of the 1930s, specifically warned about this. What is less known, though, is how and why FDR deliberately “torpedoed” the effort at international co-operation made by the 1933 World Economic Conference, the Supreme Court’s 1935 definitive ruling that the establishment and operation of the cartelising National Recovery Administration was unconstitutional and the afore-mentioned importance of mid-term elections in influencing FDR’s freedom of action.

Overall, this is an excellent book – impressively readable, copiously well-informed and cogently argued. It is highly recommended to anyone who desires a clear and succinct picture of how US policy makers tackled the worst macro-economic disaster of the 20th century.