Events
Great Depression
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The Great Depression was a severe worldwide economic downturn that began with the United States stock market crash of October 1929 and continued through most of the 1930s, producing mass unemployment, widespread bank failures and a sharp contraction in industrial production and international trade. Its causes and the reasons for its severity and length remain genuinely disputed among economists: accounts differ on how much weight to place on a prior collapse in private spending, a contraction in the money supply that the Federal Reserve did not prevent, and a credit fueled boom and subsequent correction in the years before the crash, and the disagreement between these accounts runs through the entries for the Keynesian, Monetarist and Austrian schools of thought in this atlas. The Great Depression reshaped economic policy making for decades afterward and directly informed the design of the postwar Bretton Woods international monetary system.
Its severity is well attested; the WEIGHTING of its causes among a prior collapse in private spending, a Federal Reserve driven contraction of the money supply, and a credit fueled 1920s boom and correction is genuinely disputed among the Keynesian, Monetarist and Austrian schools; see the Dissent notes on this fact.
Facts
Event DateBlack Tuesday is the conventionally cited onset date; the Depression itself unfolded over the following years. LocationUnited States and worldwide 1 Cross-Tradition Connections
Associated With
NBER's Business Cycle Dating Committee retrospectively dates the Great Depression's peaks and troughs; the committee holds no government mandate but its determinations are the field's de facto standard.
Why this is disputed. Popularly treated as the opening event of the Great Depression; historians and economists debate how much of the following downturn the crash itself caused as opposed to structural weaknesses already present.
Rejected Here
Why this is disputed. Austrians reject both the Keynesian and Monetarist accounts, holding the Depression as the inevitable correction to the Federal Reserve's credit expansion during the 1920s boom.
Why this is disputed. Monetarists reject the pure demand-collapse account, holding the Federal Reserve's own contraction of the money supply as the primary cause.
Associated With School
Why this is disputed. Keynesians read the Depression as a demand collapse from a loss of confidence, a reading Monetarists and Austrians each contest on different grounds; see the entity's own description for the three-way dispute.
Sources
1. Encyclopaedia Britannica
Encyclopaedia Britannica, Inc.Great DepressionQuote, Great Depression
The Great Depression was the worst economic downturn in the history of the industrialized world
2. Wikipedia
Wikimedia FoundationWall Street Crash of 1929Quote, Wall Street Crash of 1929
On October 29, 1929, 'Black Tuesday' hit Wall Street as investors traded some 16 million shares on the New York Stock Exchange in a single day
2. Wikipedia
Wikimedia FoundationAssociated With: Wall Street Crash of 1929, Wall Street Crash of 1929, Lead sectionQuote, Associated With: Wall Street Crash of 1929, Wall Street Crash of 1929, Lead section
Historians still debate whether the 1929 crash sparked the Great Depression
Capitalism and Freedom
Milton Friedman, 1962Associated With School: Monetarist Economics
Capitalism and Freedom
Milton Friedman, 1962Associated With School: Monetarist Economics, Chapter 3Quote, Associated With School: Monetarist Economics, Chapter 3
From the cyclical peak in August 1929 to a cyclical trough in March 1933, the stock of money fell by over a third.
The New Palgrave Dictionary of Economics
Palgrave MacmillanAssociated With: Liquidity Trap
The New Palgrave Dictionary of Economics
Palgrave MacmillanAssociated With: Business Cycle
About NBER
National Bureau of Economic ResearchAssociated With: National Bureau of Economic Research
The General Theory of Employment, Interest and Money
John Maynard Keynes, 1936Associated With School: Keynesian Economics, Chapter 22Quote, Associated With School: Keynesian Economics, Chapter 22
Keynesians argue the depression stemmed from collapsed consumer confidence and investment, caused by a widespread loss of confidence that led to drastically lower investment and persistent underconsumption.
The Road to Serfdom
Friedrich A. Hayek, 1944Associated With School: Austrian School, Chapter 1Quote, Associated With School: Austrian School, Chapter 1
Austrian economists argue that the Great Depression was the inevitable outcome of the monetary policies of the Federal Reserve during the 1920s.
Dissenting Readings (2 dissenting readings)
Description
The Depression was not primarily a collapse of private spending or confidence; it was the direct result of the Federal Reserve allowing the money stock to fall by over a third between the 1929 peak and the 1933 trough, turning an ordinary recession into a catastrophe by failing in its core duty as lender of last resort.
A dissenting reading, from Monetarist School (Milton Friedman and Anna Schwartz)Milton Friedman, Capitalism and Freedom, 1962
Description
Neither the demand collapse nor the monetary contraction is the root cause; the Depression was the inevitable liquidation of the malinvestment built up during the Federal Reserve's own credit expansion of the 1920s, and government efforts to prop up prices and wages after 1929 prolonged the necessary correction rather than curing it.
A dissenting reading, from Austrian SchoolFriedrich A. Hayek, The Road to Serfdom, 1944
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