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Dedication

TO JOEY,

the indispensable framework

Thanks

The Ludwig von Mises Institute dedicates this volume to all of its generous donors, and in particular wishes to thank these Patrons:

Dr. Gary G. Schlarbaum

George N. Gallagher (In Memoriam), Mary Jacob, Hugh E. Ledbetter

Acknowledgments

While the problem of 1929 has long been of interest to myself as well as most Americans, my attention was first specifically drawn to a study of the Great Depression when Mr. Leonard E. Read, President of the Foundation for Economic Education, asked me, some years ago, to prepare a brief paper on the subject. I am very grateful to Mr. Read for being, in this way, the sparkplug for the present book. Having written the article, I allowed the subject to remain dormant for several years, amid the press of other work. At that point, on the warm encouragement of Mr. Richard C.

Tables

TABLES

TABLE 1: Total Money Supply of the United States, 1921–1929

TABLE 2: Total Dollars and Total Gold Reserves

TABLE 3: Member Bank Demand Deposits

TABLE 4: Demand and Time Deposits

TABLE 5: Time Deposits

TABLE 6: Member Bank Reserves and Deposits

TABLE 7: Changes in Reserves and Causal Factors... 1921–1929

TABLE 8: Per Month Changes in Reserves and Causal Factors... 1921–1929

TABLE 9: Factors Determining Bank Reserves July–October 1929

TABLE I: National Product

TABLE II: Income Originating in Government

Introduction to the Fifth Edition

The Wall Street collapse of September–October 1929 and the Great Depression which followed it were among the most important events of the twentieth century. They made the Second World War possible, though not inevitable, and by undermining confidence in the efficacy of the market and the capitalist system, they helped to explain why the absurdly inefficient and murderous system of Soviet communism survived for so long.

Introduction to the Fourth Edition

There seems to be a cycle in new editions of this book. The second edition was published in the midst of the 1969–71 inflationary recession, the third in the mighty inflationary depression of 1973–75. The economy is now in the midst of another inflationary depression at least as severe, and perhaps even more so, than the 1973–75 contraction, which had been the worst since the 1930s.

Introduction to the Third Edition

America is now in the midst of a full-scale inflationary depression. The inflationary recession of 1969–71 has been quickly succeeded by a far more inflationary depression which began around November 1973, and skidded into a serious depression around the fall of 1974. Since that time, physical production has declined steadily and substantially, and the unemployment rate has risen to around 10 percent, and even higher in key industrial areas.

Introduction to the Second Edition

In the years that have elapsed since the publication of the first edition, the business cycle has re-emerged in the consciousness of economists. During the 1960s, we were again promised, as in the New Era of the 1920s, the abolition of the business cycle by Keynesian and other sophisticated policies of government. The substantial and marked recession which began around November, 1969, and from which at this writing we have not yet recovered, has been a salutary if harsh reminder that the cycle is still very much alive.

Introduction to the First Edition

The year 1929 stands as the great American trauma. Its shock impact on American thought has been enormous. The reasons for shock seem clear. Generally, depressions last a year or two; prices and credit contract sharply, unsound positions are liquidated, unemployment swells temporarily, and then rapid recovery ensues.

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