The Causes of the Great Depression

Thursday, March 14, 2013
7:00 pm - 8:30 pm (EST) Enter Classroom Enter Forum
1928-great-depression2

Leader

Colin Gordon
Professor of History
The University of Iowa

About the Seminar

The principal goal of the readings is to move away from an emphasis on the speculative orgy of September and October 1929, and to focus on—as the key causal factors—the background weaknesses in the economy. One way to think about this is to rephrase the question: instead of “what caused the Great Depression,” we devote our attention to “what made the Great Depression “great”? There are three key elements of this problem: 1) the failure of wages to keep pace with productive capacity, or the tendency of growing inequality to erode aggregate consumption or demand; 2) the failure of trade policy to keep pace with economic change, which erodes another source of potential demand (the rest of the world); the absence of a social safety net, which ensured—in the mass production/mass consumption economy of the era—that any hiccup in business confidence would spiral into a larger and longer crisis.

The readings draw primarily on contemporary business views of the economic crisis. Louis Fischer’s article distills the widespread view that falling wages and rising inequality had made the economic growth impossible to sustain. Edward Filene (a noted retailer) and John Fahey of the US Chamber of Commerce reflect on the shortsightedness of tariff policy. Hoover’s 1930 message to Congress captures the conventional (but spectacularly mistaken) view that the crisis would run its course without government intervention. And the businessman Henry Tynan and the National Retail Dry Goods Association urge the government to establish a “floor” of economic security that could sustain incomes (and purchasing power) when the labor market fails.

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Assigned Readings

  1. "Mass Production and the Tariff," by Edward A. Filene, January 1929.
  2. "Annual Message to the Congress on the State of the Union," by Herbert Hoover, December 1930.
  3. "Tariff Barriers and Business Depression" by John H. Fahey, June 1931.
  4. "Steady Pay" by Henry J. Tynan, June 1932.
  5. "Depression and the Profit System" by Louis Fischer, May 1933.
  6. " Retailers' Economic Security Plan" by National Retail Dry Goods Association, 1934.

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