By LAWRENCE W. REED | Jan. 1, 1998
Many volumes have been written about the Great Depression of 1929-1941 and its impact on the lives of millions of Americans. Historians, economists and politicians have all combed the wreckage searching for the “black box” that will reveal the cause of the calamity. Sadly, all too many of them decide to abandon their search, finding it easier perhaps to circulate a host of false and harmful conclusions about the events of seven decades ago. Consequently, many people today continue to accept critiques of free-market capitalism that are unjustified and support government policies that are economically destructive.
How bad was the Great Depression? Over the four years from 1929 to 1933, production at the nation’s factories, mines and utilities fell by more than half. People’s real disposable incomes dropped 28 percent. Stock prices collapsed to one-tenth of their pre-crash height. The number of unemployed Americans rose from 1.6 million in 1929 to 12.8 million in 1933. One of every four workers was out of a job at the Depression’s nadir, and ugly rumors of revolt simmered for the first time since the Civil War.
“The terror of the Great Crash has been the failure to explain it,” writes economist Alan Reynolds. “People were left with the feeling that massive economic contractions could occur at any moment, without warning, without cause. That fear has been exploited ever since as the major justification for virtually unlimited federal intervention in economic affairs.”
Old myths never die; they just keep showing up in economics and political science textbooks. With only an occasional exception, it is there you will find what may be the 20th century’s greatest myth: Capitalism and the free-market economy were responsible for the Great Depression, and only government intervention brought about America’s economic recovery.View Source
A Modern Fairy Tale
The Great, Great, Great Depression
Phase I: The Business Cycle
Central Planners Fail At Monetary Policy
The Bottom Drops Out
Buddy Can You Spare $40 Million?
Phase II: The Disintegration of the World Economy
The Greatest Spending Administration In All Of History
You Tax Me, I Tax You
Free Markets or Free Lunches?
Phase III: The New Deal
Nothing To Fear But Fear Itself
New Dealing From The Bottom Of The Deck
Blue Eagles, Red Ducks
The Alphabet Commissars
An Astonishing Rabble of Impudent Nobodies
Signs Of Life
Phase IV: The Wagner Act
An Unfriendly Climate For Business
Whither Free Enterprise
Postscript: Have We Learned Our Lessons?