On December 13, 1931, there was a traffic accident in New York City. A man exited a cab on the Upper East Side and was crossing Fifth Avenue when he was hit by a car traveling around 35 miles an hour. The force of the impact threw the man to the pavement. He struck his head. Two of his ribs were cracked. A crowd formed around him; one of the witnesses hailed a taxi to take the man to the hospital. When he was admitted to Lenox Hill the doctors noted that he was bruised and battered but would make a full recovery. He had cheated death.

The patient remained in the doctors’ care for eight days. While he was there the driver who had struck him visited. The patient made it clear that the accident had been his own fault; the driver, an unemployed mechanic, had nothing to fear. The incident had occurred because the patient, an Englishman, had looked left as he crossed the street when he should have looked right. The grateful driver left the hospital carrying an autographed copy of the patient’s latest book. The New York Times wrote about the meeting the next day. The headline read, “Churchill Greets Driver Who Hit Him.” 

I’ve spent the last several weeks reading all sorts of newspaper and magazine articles from December 1931. But I keep coming back to the reports of Winston Churchill’s near-fatal mishap. The contingency of the episode is what’s striking: After all, if the car had been traveling just a little bit faster, the history of the twentieth century would have been irrevocably altered. Churchill himself was shocked that he had survived the ordeal. “I do not understand,” he wrote in an article for the Daily Mail dictated from his hospital bed, “why I was not broken like an egg-shell or squashed like a gooseberry.” 

The story also brings to life the granularity of history. It’s easy to think of historical epochs as smooth units with a few overarching characteristics. In the popular imagination the Great Depression began with the crash of ’29 and persisted, without interruption, until America entered World War II in 1941. The Great Depression calls to mind Hoover’s supposed passivity, Roosevelt’s New Deal, the Dust Bowl, and Father Coughlin. We limit the story to America. We don’t think of the figures in one historical context as active in another.

But of course things are more complicated than the CliffsNotes versions of history we carry around in our heads. Rather than one big crisis that unfurled over time, the 1930s was a series of rolling crises that coincided with and were shaped by one another. There was not only one thunderclap. There were several. There were moments during the Great Depression, for instance, when the economy improved​—​only to have the floor fall out from underneath it. There were false springs that quickly turned into harsh winters.

I went looking through the sources from December 1931 because I wanted to see if there were parallels between then and now. Why that particular month? Because it was two years into the Great Depression, just as we are two years into the Great Recession. Needless to say, historical analogies are imperfect. No two eras are alike. But it’s nonetheless true that certain themes connect our time with Churchill’s. In both eras the crises were global in scope. In both eras the world’s financial and political order came under vicious attack. In both eras the question facing elites was whether they could prevent the threatening storm from making landfall. The political class of the 1930s was unable to meet that challenge. And the political class of today?

We’ll see.


At first blush, there are several affinities between the domestic political situation in December 2010 and that of December 1931. In both months the president’s party had just lost control of the House of Representatives while retaining a slim majority in the Senate. Both Decembers saw fights over taxes, with tax rates rising in the 1930s but staying the same today or in some cases being lowered. Both months witnessed debates over the repeal of controversial social legislation​—​prohibition in the 1930s, Don’t Ask, Don’t Tell in our time.

What’s more, the presidents in both Decembers shared a couple of qualities. Obviously, Barack Obama is not Herbert Hoover. But both men were criticized for being detached, overly logical, aloof. Both men, moreover, were celebrities when they took office. Hoover, the great engineer, was known for his feats as director of aid to Europe after World War I and as secretary of commerce under presidents Harding and Coolidge. Obama was known for being Obama.

Both Hoover and Obama were activist presidents who believed in a progressive social philosophy. This is not to say that Hoover would have been comfortable blogging for an early-’30s version of the Huffington Post. Throughout his presidency, he opposed direct relief to the poor and unemployed. He was a reluctant economic interventionist. But the idea that Hoover was a lazy bystander is false. He was in the news all the time. The scope of his initiatives grew as the Depression went on. In his message to Congress in December 1931, for example, he called for a tax increase and the creation of the Reconstruction Finance Corporation to spur lending.

On December 27, the New York Times reported that Hoover also wanted to “increase the capitalization of the Federal Land Bank System, enlarge the discount facilities of the Federal Reserve System, revise the banking laws to afford greater security to depositors, and increase taxation which he regards as necessary in the existing financial emergency.” The reaction to Hoover’s plan revealed that snark is not unique to postmodernity. “The president says that we must cushion the shock for our credit institutions (with government cush) so that industry can start moving again,” Howard Brubaker quipped in the New Yorker. “He is a great believer in federal aid for the unemployers.” 

While the president haggled with Congress over the details of his revenue package, he was also wrestling with the problem of European war debts. Throughout December 1931, European statesmen were trying to resolve the issue of German reparations in light of the Great Depression. Early in the month, Hoover called for reinstatement of the Versailles-era War Debt Board. A headline in the December 29 Times read, “Hoover Ready to Act if Debt Conference Links Our Interests.” In the headlines of the time, international politics regularly commingled with domestic news​—​just as it does in 2010.


And yet it would be wrong to overstate the commonalities between the Great Depression and the Great Recession. The differences are just as significant​—​if not more so. Most important of all is the difference in magnitude. There really is no comparison between the Depression and other modern financial panics. According to the National Bureau of Economic Research, the initial contraction lasted a whopping 43 months, from August 1929 to March 1933. During that time American output fell by close to 30 percent. The Great Recession, by comparison, lasted 18 months from December 2007 to June 2009. During that period U.S. gross domestic product contracted by about 4 percent. 

In 1931, moreover, the U.S. unemployment rate was 15.9 percent. It would peak in 1933 at 25 percent. During the Great Recession, unemployment rose to 10.1 percent in October 2009 and stood at 9.8 percent in November 2010. What these percentages don’t convey, however, is the qualitative difference in unemployment then and unemployment now. There were no “automatic stabilizers” in the early 1930s. There was no unemployment insurance or deposit insurance or Social Security or Medicare or welfare or federal home lending. The millions of unemployed could not depend on federal aid. The poverty was real and omnipresent and debilitating. “Many old businesses are going to the wall,” Youngstown lawyer Benjamin Roth wrote in his diary on December 10, 1931, “and many of them lived thru 5 previous panics but never saw anything like this.” 

The paradox is that, while Americans in the Depression were worse off than Americans today, they were nonetheless more optimistic. Jodie T. Allen of the Pew Research Center recently looked at public opinion during the Depression years and found that “despite their far higher and longer-lasting record of unemployment, Depression-era Americans remained hopeful for the future.” The Gallup organization began conducting regular surveys in 1935, so we have no polling data showing how people felt in December 1931. But if survey findings from later in the Depression are any indication, the country was filled with cockeyed optimists. Half of Depression-era Americans, Allen writes, expected the economy to improve in the next six months. Close to two-thirds told pollsters that their economic opportunities were at least as good or better than their fathers’.

The sunniness shows up in other sources as well. “Magazines and newspapers are full of articles telling people to buy stocks, real estate etc. at present bargain prices,” Benjamin Roth wrote in his diary on July 30, 1931. “They say that times are sure to get better and that many fortunes have been built this way.” On December 19, 1931, the Times gleefully reported: “A wave of buying enthusiasm swept over the security markets yesterday, producing the broadest recovery in more than two months.” 

Even Hoover was in on the act. He was ridiculed for his glass-is-half-full pronouncements, but that doesn’t mean his mentality was unrepresentative. In March 1930, for instance, he assured the country that the crisis would end within two months. “So earnestly did Hoover believe in the importance of confidence,” writes Richard Hofstadter in The American Political Tradition, “that he journeyed from Washington to Philadelphia in the gloomy fall of 1931 in part because he felt that his attendance at a World Series game would be a public demonstration of his own serenity.” 

Where did all these positive thinkers go? Today’s America is a pessimistic country. Turn on the news and you can’t help thinking that the world is going to pot. Our media continually remind us that we are stupid, lazy, fat, and materialistic. Somebody needs to hand President Obama a Zoloft, because he always seems disappointed and unhappy. Jodie Allen reports that in October 2010 only 35 percent of the public expected the economy to be better within a year. Large majorities believe the country is headed in the wrong direction. In the December 2010 Gallup poll, Congress’s approval rating reached a record low. The specter of American decline is pervasive. America is a far richer, more stable, and more powerful country in 2010 than it was in 1931. But it is less confident. It is more uncertain.

The final difference between the Depression era and the recession era is political. The America of the 1930s was more open to government intervention in the economy than the America of 2010. Government functions we take for granted now were radical innovations then. Study the numbers from 1936 and 1937 and you find that large majorities supported free health care for the poor, subsidies for childbirth and postnatal care, public health programs to combat diseases like syphilis, and easy money for farmers. Large majorities wanted the government to regulate the food and drug industries, ban child labor, limit wartime business profits, and even take over the electric and munitions industries. A plurality wanted to see more power concentrated at the federal level. 

Perhaps the public was willing to entrust more authority to the federal government because Washington was still so small. Perhaps the economic straits were so dire that the public would try anything that might work. Whatever the reason, it’s worth noting that the big march on Washington in December 1931 wasn’t a Tea Party. It was a march for workers’ rights sponsored by the American Communist party.

According to the New York Times of December 7, 1931, “Herbert Benjamin, of New York, a leader in the march, brought more than 3,000 persons to their feet at a mass meeting at the Washington Auditorium when he asserted the Communist party was the only group left to organize and run the affairs of the United States.” Not long after, in the spring of 1932, the Bonus Army, some 43,000 strong, marched on Washington demanding a government payout of veterans’ benefits in advance of the promised date. 

The Great Depression was a profound challenge to the legitimacy of democratic capitalism. The idea that the system had failed was widespread. Other ideologies were seductive. Walter Duranty reported on the successes of the Soviet “experiment” on the front pages of the Times. In December 1931 Mussolini’s Fascists had ruled Italy for almost a decade. Today, Times columnist Tom Friedman may laud the virtues of Chinese authoritarianism. But Hu’s Beijing is much less threatening than Stalin’s Moscow, and Friedman is no true believer. The most energetic ideological enemy of democratic capitalism today, Islamic jihadism, has no broad constituency. The advanced economies all agree on a modified form of capitalism that contains a degree of support for the weakest members of society. In recent months, moreover, politics has shifted rightward throughout the free world. In Europe and the United States the emphasis is on restraining the state, not expanding it.

We are, in other words, generally better off than our counterparts in the 1930s. We are also more secure​—​the democracies, after all, had disarmed after the First World War. It’s therefore tempting to let out a collective sigh and stop fretting. It’s appealing to remember how much worse things were in the 1930s, and then get on with our lives.

But not so fast. For when you step back and take in the big picture, it becomes apparent that the world is facing dilemmas similar to those it faced in the 1930s. The international order may be once again on the brink of profound crisis. The challenges may not be as apparent or seem as dire. But they are there nevertheless. And they are dangerous.


The 1930s witnessed the unraveling of the institutional arrangements that had organized global business and international relations since November 11, 1918. One of the consequences of the Depression was that the global monetary system, the gold standard, fell apart. At the same time, the ideal of collective security, embodied in the League of Nations and the disarmament movement, was shattered in the Manchurian plain and in the deserts of Ethiopia.

The same currents are at work right now. You don’t have to be an expert to notice that the “Bretton Woods II” system of fiat currencies anchored by the American dollar and accompanied by the euro is under severe strain. So is the post-World War II alliance structure of the United Nations and NATO. The former institution has proven irrelevant, while the latter is divided over Russia, Afghanistan, the admission of new members, and the organization’s future. No country, meanwhile, has figured out how to deal with the problem of nuclear proliferation in Iran and North Korea. 

The breakup of the euro or the end of the dollar’s status as international reserve currency would wreak havoc on the global economy. A war on the Korean peninsula that involved China, Japan, and the United States, or the first successful test of an Iranian bomb, would have a similar effect on global security. If both things happened simultaneously, there would be a sea change in world politics. It’s hard to see how any incumbent president could survive the turbulence. After all, as Hofstadter wrote of our thirty-first president, “What ruined Hoover’s public career was not a sudden failure of personal capacity but the collapse of the world that had produced him and shaped his philosophy.” It would be folly to think that such a collapse is impossible in the twenty-first century. Which is why it’s worth looking more closely at the two aspects of the current crisis that bring to mind Auden’s “low dishonest” decade.


MONEY. The post-World War I gold standard was never that strong. Nevertheless, it didn’t begin to unravel until the spring of 1931, when several large European banks declared insolvency as a result of the crushing burden of war debt. On May 11, more than a year after the U.S. stock market crash, Austria’s Creditanstalt announced that it was bankrupt. The result was a continental banking panic. Austrian and German banks simply couldn’t find capital. Soon after Credit-anstalt, the Danat bank of Germany went under. From there the contagion spread. It wasn’t long before speculators set their sights on the pound sterling. “Faced with the heavy demands of speculators for gold and a widespread loss of confidence in the pound,” Ben Bernanke noted in a 2004 speech, “the Bank of England quickly depleted its gold reserves.” 

On September 21, 1931, Britain and its empire went off the gold standard, thereby devaluing its currency. Other nations quickly followed. Japan announced it was abandoning gold on December 13. “This makes a total of 15 countries that have gone off the gold standard,” Benjamin Roth wrote that week in his diary. “France and U.S. are the only 2 large countries remaining on the gold standard. .  .  . There is very little danger that U.S. will follow suit.” 

Roth was incorrect. FDR took the United States off the gold standard in 1933; France abandoned it in 1936. The arrangement of floating currencies lasted until the Bretton Woods conference in July 1944, when a new monetary regime was adopted involving fixed exchange rates pegged to gold. But Bretton Woods could not withstand the pressures of American deficit spending. Richard Nixon closed the gold window on August 15, 1971, nullifying Bretton Woods and inaugurating another era of floating exchange rates that persists to this day.

How long this era will continue is open to question. We seem to have entered another period of monetary instability, the outcome of which is far from certain. Once again, European sovereign debt is threatening financial institutions and the global economy. But that debt doesn’t stem from defense spending. It’s the result of overly generous welfare states and giant government bailouts. Greece, Ireland, Portugal, Spain, Italy, Belgium​—​the markets are pulling at the seams of all these nations. Try as they might, the EU and European Central Bank have been unable to stop the bleeding. And the austerity measures imposed by governments seeking to satisfy creditors have sparked domestic upheaval.

America’s position isn’t much better. Over the last 30 years the government has been able to take on a lot of debt because the dollar is the world’s reserve currency. But the dollar’s status is not a Mosaic commandment. The Federal Reserve’s policy of quantitative easing​—​i.e., money creation​—​has undermined its institutional credibility, occasioned heated protests from foreign governments, and introduced uncertainty in international trade and capital flows. Competitive devaluation is the result. And all for what? The policy has already failed to achieve its stated goal of keeping yields low, and the economy seems to be slowly recovering anyway. All the money Ben Bernanke is creating has to go somewhere​—​which sets us up for another bubble.

It’s comforting to think that circumstances will persist forever. But they don’t. For decades, America has been able to have its economic cake and eat it too. What the ’30s show, however, is that global monetary arrangements cannot continue indefinitely in the absence of consensus and confidence. And these are precisely the qualities that we lack today.

BOMBS. It’s become a cliché to view the diplomatic history of the 1930s through the lens of Munich. But Nazi Germany’s annexation of Czechoslovakia was only one of many instances during the ’30s when democracies failed to act in the face of belligerence. In September 1931, the same month that Britain left the gold standard, the Japanese annexed Manchuria in northern China. No one stopped them. 

A newspaper reader in December 1931 couldn’t have helped noticing the Japanese advance. “Big Japanese Force Reaches Manchuria As New Drive Opens,” read the headline in the December 28 New York Times. “Japanese Capture Four Towns in Drive Toward Chinchow,” the paper reported the next day. The articles dutifully recorded Secretary of State Henry Stimson’s protests. The League of Nations passed condemnations. But the Japanese did not leave Manchuria. They did not give up their dreams of a “Greater East Asia Co-Prosperity Sphere.” They marched on​—​until finally they were met with force.

Nor was Japan the only enemy gaining strength. Read through the periodical literature of 1931, and you may be surprised at how famous Adolf Hitler already was. The Nazi movement and its leader were internationally recognized. His ideology and dreams were understood. Hitler did not simply spring onto the scene in 1933. In December 1931, one of the last Weimar chancellors, Heinrich Brüning, tried to expel Hitler from Prussia. But the Austrian was undaunted. On December 7 he gave a front-page interview to the New York Times. “Herr Hitler declined to reveal to his interviewer the National Socialists’ economic program,” the correspondent wrote, “but intimated that there would be many changes in the laws of Germany if his party were swept into power.” 

Japanese imperialism, German Nazism, Italian Fascism, Soviet communism​—​all these actors were on the stage in December 1931, behaving badly and paying no price. The democracies, meanwhile, were busy arguing with one another over armament quotas. They persisted in the delusion that war was an anachronism. They were determined never to repeat Verdun and the Somme. They could not conceive that others might disagree.

Are things so very different today? Iran’s megalomaniacal dictatorship marches toward nuclear weaponry. North Korea shells its neighbor with impunity. Jihadists execute terrorist attacks throughout the world. China expands its reach. We know who the troublemakers are and where the challenges to American primacy and global stability come from. But we have our own distractions. We have the fantasy of abolishing nuclear weapons, of “resetting” relations with Vladimir Putin’s Russia, of reconciling the irreconcilable in the Middle East, of achieving rapprochement with “the Muslim world.”

A few people in December 1931 recognized the growing danger. The patient at Lenox Hill Hospital was one. Another was the New Yorker correspondent Mary Heaton Vorse, who wrote from Germany, “No one knows what is going to happen. No one knows​—​but everyone knows that cataclysm is at hand.” Vorse was somehow able to divine the next 14 years of world history by sitting in a nightclub. “The next act will be starker,” she concluded. “It will be steel instead of rococo marble.” 

The lesson of the 1930s is not only that aggression ought not to be appeased. It’s that aggressors keep pushing until they encounter resistance. And by the time that happens, it may be too late to prevent the deluge.


What unites our two eras, in the end, is their unpredictability. This, and the fact that people in one time had no better idea of what might happen than people in the other.

Picture Churchill as he lay stricken on Fifth Avenue. “Perhaps it is the end,” he recalled thinking. He did not have the luxury of knowing, as we do, what would happen next. He did not know how well he would recover​—​or if he would recover at all. He was ignorant of the challenges that awaited him. For people alive in the 1930s, each day brought a tangle of developments that were difficult to interpret and impossible to analyze from the detached perspective of historical study. There was no guide for the perplexed. There was no cheat sheet that told them what to do. There was no way of knowing when the crisis was “over” because there was no way of knowing what tomorrow would bring.

Our leaders don’t have to worry about mass unemployment on the scale of the 1930s. But they do have to worry about structural deficits of perilous magnitude, debt burdens, sovereign default, and currency wars. Our leaders don’t have to worry about Japanese expansion or the rise of Adolf Hitler. But they do have to worry about nuclear weaponry falling into the hands of apocalyptic theocrats, and a nuclear-armed Hermit Kingdom that may choose war over dissolution. The stakes during one era may have been greater than the other. Time will tell. But that doesn’t mean the challenges are dissimilar. To the contrary: A difference in degree is not a difference in kind.

Of course, we have one thing that Americans in the ’30s did not. We have their history. We have their words. We’d do well to heed them. “Nature is merciful and does not try her children, man or beast, beyond their compass,” Churchill wrote from his hospital bed in December 1931. “It is only where the cruelty of man intervenes that hellish torments appear. For the rest​—​live dangerously; take things as they come; dread naught, all will be well.”


Matthew Continetti is opinion editor of The Weekly Standard and author, most recently, of The Persecution of Sarah Palin (Sentinel).