Myth Of The 20th Century – Episode 8: Origins Of The Great Depression

Welcome to the Myth of the 20th Century. The podcast airs on Fridays.

— Brought to you by —

Adam Smith, Hank Oslo, Alex Nicholson, Nick Mason, and Mark Brown.


Like war, few who haven’t experienced losing their job and home, let alone seeing millions of others experience the same, can fully understand the suffering and psychological horror an economic depression brings. But from 1929 to 1932, the United States experienced its worst depression in history, and the world’s deepest decline in industrial production, falling 46%, and unemployment that reached 25%. With few exceptions, the Great Depression was a global one, stretching on for nearly the entire 1930s, with most countries failing to escape its grasp – setting the stage for world war in the 1940s.


1920s- economic structure: after severe recession following decline in WWI arms production, manufacturing industry consolidates and shifts to consumer market, growing with help from credit, Ford Motor company being the leading company developing a model for American middle class manufacturing jobs
1920s- wealth and income: worker productivity rises by 43 percent, but gains funneled to the top; 1/2 million dollar / year income rises from 156 to 1,459 from 1920 to 1929; taxation rates decline for the rich, and 80% of all earners will be dropped form income taxation completely; minimum wage and child labor laws are struck down
1924- stock market begins stratospheric climb, disconnecting with economic growth
1928- stocks rise by 40 percent
1929- signs of a bubble: backlog of business inventories, production declines 20% by August
1929- October- stock market crash
1929- Hebert Hoover elected President
1930- Federal Reserve cuts prime interest rate from 6 to 4 percent; Treasury Secretary Andrew Mellon will stand by as the market “Liquidate labor, liquidate real estate.. values will be adjusted, and enterprising people will pick up the wreck from less-competent people”
1930- Smoot-Hawley tariff passed; most modern economists consider it having negligible impact on the US economy, but a major on in Europe
1930- GNP falls 9.4%, unemployment goes from 3.2% to 8.7%
1931- GNP falls 8.5%, unemployment rises to 15.9%
1931- Germany, England go off gold standard
1932- GNP falls 13.4%, unemployment rises to 23.6%
1932- industrial stocks down 80% since 1930, 10,000 banks failed, 40% of total, 13 million Americans lost their jobs since 1929
1932- top tax rate raised form 25% to 63%
1932- 17,000 WWI veterans march on Washington DC to demand cash payment redemption of their service certificates; demonstration broken up by Douglas MacArthur, George Patton, demands rejected
1933- Franklin Delano Roosevelt inaugurated, begins ‘First 100 Days’ of intensive legislative activity


– America’s Great Depression, Rothbard (1972)
– Depression, War, and Cold War, Higgs (2006)
– The Great Depression 1 – A Job at Ford’s –
– The Great Depression 2 – The road to rock bottom –
– Bernanke: Federal Reserve caused Great Depression, Kuelian (2009) –
– The “Second Great Wave” of Immigration: Growth of the Foreign-Born Population Since 1970 (2014) –
– Federal Net Outlays as Percent of Gross Domestic Product, Federal Reserve Bank of St. Louis,
– Great Depression Statistics,
– Homelessness in the United States,
– 1930 United States Census,
– The Great Depression Facts, Timeline, Causes, Pictures,
– John Williams’ Shadow Government Stats –
– Bonus Army –
– “It takes a great man to be a good listener.” – Calvin Coolidge

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  1. Obama's boyfriend March 3, 2017 at 9:58 am

    Gee not a mention of the Fed’s reckless actions, nor the speculation, easy credit of the 20s, nor the ham fisted actions of big government.

    1. All government is “big government.” Government is the law of all human society, and all government is absolute.

  2. That point on French hoarding gold is key.

    Here’s a great piece on the Gold Standard, the Great Depression, and their relationship to the European Union. The EU has similar, negative, impacts on countries, as they give up the ability to control the value of their money:

    1. Alex Nicholson March 7, 2017 at 10:25 pm

      Thanks Fred, so true. I remember reading this paper way back.

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