Talk:Great Depression

I dunno if this article has changed greatly since these last comments. But it seems to be filled with lots of statements which seem similar to the beliefs of people who strongly support exclusively precious metal standard over fiat money.

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(1) Removed "American" from "of American history." Books are written about the history of the Depression in Europe... Wikipedia is an international encyclopedia--has to be, since it's on the Internet!

(2) I cannot parse this sentence, so I can't fix it either: "It was an extended economic contraction that ended with the government induced World War II spending economic expansion." I also wonder how widely-agreed upon this explanation is.

(3) Finally--I'm no historian, so I'm just asking--was it the events in the U.S. that led to the worldwide depression? Is that widely-agreed upon as well?

--LMS

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I would guess that events in the USA were probably the trigger for the depression, but not the real cause. The economic situation in most parts of the world was a real mess ever since the end of World War 1. The appearance of prosperity 1919-1929 was an illusion. Unemployment was high, a lot of people were poor, and most of the rich had money and shares that turned out to be either borrowed, embezzled, or worthless. The big crash was going to happen somewhere, and no matter where it happened it was going to spread.

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Also, supposedly world war II ought not get the credit for ending the depression. The economy had already returned to pre-depression status a while before.

in some places - added to article -- mike dill

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I know little about the depression in other countries, but for the U.S. this is not true. The depression began to ease after the Supreme Court struck down FDR's New Deal legislation, but after they began to uphold his legislation, the economy had another serious downturn in 1937 (I think). The economy was on an improving trend prior to our entry into WWII, but was nowhere near its pre-depression status. Jhanley

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The Great Depression resulted in deflation, not hyperinflation--right? So says someone on sci.econ. --LMS

Hyperinflation is when the paper money you hold becomes worthless, in the depression, money actually gained value, while the price of goods was depressed by deflation.

If that's true, then it should be in the article, shouldn't it? --LMS

see the article now, I added this piece. -- mike dill

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Deflation in some countries, hyperinflation in others. It depended on which methods the governments used to try to solve the problem. "Business as usual" and budget balancing resulted in deflation. "Spend our way out of trouble by printing money" resulted in hyper-inflation. Neither method worked.

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Someone who has read Frederick Lewis Allen's 'Only Yesterday' and 'Since Yesterday' more recently than 40 years ago needs to work this article over. There is a great deal to be said about the extreme depth of the depression (25% unemployment in the US at one point), Hoover's unfortunate attempts to maintain budget balance (which I believe he himself abandoned near the end of his term); the failure of the US banking system in 1932, etc. (DJK)

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Fixed up the sentence on the causes of the Great Depression. I think that there is a general consensus among economists today that certain policies help create the Great Depression. What's more controversial is the notion that government intervention caused the Great Depression, as opposed to wrong government intervention. Also changed the wording on Smoot-Hawley. The conventional wisdom is that things like Smoot-Hawley turned a stock market panic into something worse. However, the paragraph as it stood seem to imply that Smoot-Hawley caused the stock market crash of 1929 which would have been interesting since it was passed afterward.

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It's a huge subject, really involving the entire history of the inter-war world economy, and I'm not even going to attempt incorporating these items into the article just yet, but a few thoughts may be worth discussing:

1) European (and particularly German) reliance on the outflow of U.S. dollars in the form of loans and investments (in the absence of buoyant U.S imports of European goods): in this connection the Wall Street boom has to be seen as a cause of the depression in Europe, since the lure of stock market speculation diverted money that might otherwise have gone overseas: Germany was already in recession as the Dow started on its last ascent, sharply cutting the flow of dollars to Europe by mid-1929. As a result, when the crisis came in the States, Europe was in no position to keep the international system afloat with purchases of cut-price U.S. (or other) goods.

2) Deflation vs. inflation: I don't know of any hyperinflations in the 1930s: prices everywhere fell until currencies were freed from gold, and even after currency depreciation, the problem was maintaining prices rather than controlling inflation: hyperinflation requires the belief that today's goods will fetch more (devalued) money tomorrow, which is difficult to achieve in the conditions of the 1930s. Germany's experience under Bruning (1930-32) was actually severely deflationary: I think there's a confusion in paragraph 4 with Germany's 1923 inflation - a very different crisis.

3) The US banking system only failed in February 1933 - i.e. after Roosevelt's election (November 1932) but immediately before his inauguration (March 4). The immediate effect on business was extremely severe but equally short-lived, with U.S industrial output shooting up in March-July 1933 and prices recovering in the wake of de facto devaluation. The banking crisis is really a distinct episode, one which may paradoxically have assisted recovery by allowing the Administrations to show decisiveness and by enlisting public support for dramatic action.

4) While fear of the Administration's regulatory initiatives appear to have contributed to the downturn of July-Novermber 1933, the Supreme Court's decisions of January 1935-January 1936 and its change of heart in April 1937 came too late to cause the 1933-37 recovery or the 1937-38 recession, which I think is generally blamed on a premature over-tightening of fiscal policy: the 1938 contraction was a temporary affair, and national income in 1940 was already above the 1929 peak. Recovery in most of Europe was already well under way, and war preparations at most cushioned European economies against the effects of the 1937-38 U.S. downturn and contributed to the sharp rise in US production in 1940-41.

David Parker

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In my view, this article needs a serious rewrite. It almost entirely is devoted to a discussion to the debates over what caused it, could have prevented it, or made it worse (and I might add it seems mostly slanted against the New Deal), while spending almost no time discussing the actual facts about what the Depression was and how it affected people. soulpatch

Agreed. Right now this article amounts to a section -- to be called Causes of the Great Depression -- of the even better article which I hope you will help me write!

Agreed, and I believe there's an NPOV problem in the later paragraphs, beginning with Because the US was still in a state of depression when it entered World War II, it is hard to make a serious argument that the New Deal was a success. That's advocacy, not description. Many can and do make such serious arguments. For example, it has been argued that the purpose of the New Deal was to "tide people over" to prevent some human suffering until better times. Others have pointed to the growing unrest in Depression-stricken areas, and suggested that the New Deal actually saved capitalism in the United States, which elsewise might have been overthrown by a seriously discontented populace. Now, the original author may not like or agree with these arguments, but they're serious arguments. -- April

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Maveric149, I mean not to accuse you personally of a whitewash. Roosevelt is still a towering figure in 20th century history, and because of this honest criticism of actions he took is still muted today. His legacy rides on the triumphs of social security and defeating fascism, and the whitewash lies not with you but with the way his legend is told in our national mythology. Despite confiscating private gold, at least he kept the linkage. If you want to look for the true thieves, consider the meaning of [1] (http://oregonstate.edu/Dept/pol_sci/fac/sahr/pl166512.htm) -º¡º

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I can't help feeling here that this article is somewhat biased and needs more pro New Deal arguments adding. The anti new deal people seem to contradict themselves, they claim that government deficit spending in the new deal worsened the depression. But then they claim that the depression came to an end due to government deficit spending in World War 2.[[User:G-Man] ]