And so we see that when the Great Depression struck, heralded by the stock market crash of October 24, President Hoover stood prepared for the ordeal, ready to launch an unprecedented program of government intervention for high wage rates, public works, and bolstering of unsound positions that was later to be christened the New Deal. As Hoover recalls:

By early 1930, people were generally convinced that there was little to worry about. Hoover’s decisive actions on so many fronts—wages, construction, public works, farm supports, etc., indicated to the public that this time swift national planning would turn the tide quickly. Farm prices then seemed to be recovering, and unemployment had not yet reached catastrophic proportions, averaging less than 9 percent of the labor force in 1930.

The year 1931, which politicians and economists were sure would bring recovery, brought instead a far deeper crisis and depression. Hence Dr. Benjamin Anderson’s apt term “the tragic year.” Particularly dramatic was the financial and economic crisis in Europe which struck in that year. Europe was hit hard partly in reaction to its own previous inflation, partly from inflation induced by our foreign loans and Federal Reserve encouragement and aid, and partly from the high American tariffs which prevented them from selling us goods to pay their debts.

President Hoover came to the legislative session of 1932 in an atmosphere of crisis, ready for drastic measures. In his annual message to Congress, on December 8, 1931, Hoover first reviewed his own accomplishments of the past two years:

The fact that Hoover sought reelection in the midst of the deepest and worst depression in American history, and in the face of unprecedented unemployment did not lower his satisfaction as he looked back upon his record. After all, as he said in his acceptance speech for the Presidential renomination:

In footnote 21 of Chapter 9, we explain how we arrive at our estimate of the degree of government depredation on the private national product. The critical assumption is the challenge to the orthodox postulate that government spending, ipso facto, represents a net addition to the national product. This is a clearly distorted view. Spending only measures value of output in the private economy because that spending is voluntary for services rendered.

Introduction to the First Edition

1. The Positive Theory of the Cycle

Under conditions of free competition... the market is... dependent upon supply and demand... there could [not] develop a disproportionality in the production of goods, which could draw in the whole economic system... such a disproportionality can arise only when, at some decisive point, the price structure does not base itself upon the play of only free competition, so that some arbitrary influence becomes possible.

A  |  B  |  C  |  D  |  E
F  |  G  |  H  |  I  |  J
K  |  L  |  M  |  N  |  O
P  |  R  |  S  |  T  |  U
V  |  W  |  Y

A

Abbott, Charles Cortez, 130, 161

Abbott, Charles F., 278

Murray N. Rothbard, the author of 25 books and thousands of articles, was the dean of the Austrian School of economics. The S.J. Hall Distinguished Professor of Economics at the University of Nevada, Las Vegas, he was also Academic Vice President of the Ludwig von Mises Institute.