Myth Depression

Mackinac Center for Public Policy | Great Myths of the Great Depression

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Great Myths Great Depression

This edition is a joint project of the Mackinac Center for Public Policy and the Foundation for Economic Education

“HERBERT HOOVER believed government should play no role in the economy.” “GOVERNMENT PROGRAMS helped lower unemployment by putting many Americans to work.” “FRANKLIN ROOSEVELT’S ‘New Deal’ saved America from the failure of free-market capitalism.”

of the

Lawrence W. Reed

These and other myths are dispelled by the facts in this essay by economist

Mackinac Center for Public Policy | Great Myths of the Great Depression

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To JaMes M. Rodney a great friend of truth, character and liberty

Great Myths of the Great Depression by Lawrence W. Reed. Original edition printed in 1981. This edition was printed in 2010 as a joint project of the Mackinac Center and the Foundation for Economic Education.

Mackinac Center for Public Policy | Great Myths of the Great Depression

1

Great Myths of the Great Depression

s

tudents today are often given a skewed account of the Great Depression of 1929-1941 that condemns free-market capitalism as the cause of, and promotes government intervention as the solution to, the economic hardships of the era. In this essay based on a popular lecture, Mackinac Center for Public Policy President Lawrence W. Reed debunks the conventional view and traces the central role that poor government policy played in fostering this legendary catastrophe.

inTroducTion

four workers was out of a job at the Depression’s nadir, and ugly rumors of revolt simmered for the first time since the Civil War. “The terror of the Great Crash has been the failure to explain it,” writes economist Alan Reynolds. “People were left with the feeling that massive economic contractions could occur at any moment, without warning, without cause. That fear has been exploited ever since as the major justification for virtually...