Before the Great Depression, it was not considered to be the business of the federal government to try to get the economy out of a depression. But the Smoot-Hawley tariff — designed to save American jobs by restricting imports — was one of Hoover’s interventions, followed by even bigger interventions by FDR.Read the rest here.
The rise in unemployment after the stock market crash of 1929 was a blip on the screen compared to the soaring unemployment rates reached later, after a series of government interventions.
For nearly three consecutive years, beginning in February 1932, the unemployment rate never fell below 20 percent for any month before January 1935, when it fell to 19.3 percent, according to the Vedder and Gallaway statistics.
In other words, the evidence suggests that it was not the “problem” of the financial crisis in 1929 that caused massive unemployment but politicians’ attempted “solutions.” Is that the history that we seem to be ready to repeat?
Saturday, December 27, 2008
Thomas Sowell on misconceptions about the Depression, and how not remembering them could make our own financial crisis worse: