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Two Who Called the Great Depression: An Initial Formulation of the Monetary-Origins View


  • The author is grateful to Harris Dellas, Heather Gibson, Allan Meltzer, William Silber, Michael Ulan, Kenneth West, and two anonymous referees for constructive comments on an earlier version of the paper.


The consensus view in the economics profession today is that the genesis of the Great Depression was the tightening of policy by the Fed in 1928 and 1929, mainly to stem the stock market boom. Nevertheless, monetary historians have not provided evidence that any economist writing prior to the stock market crash of October 1929 foresaw that the Fed's actions would lead to a major depression. This paper shows that two economists, William Foster and Waddill Catchings, co-authored a paper in July 1929 containing arguments strikingly similar to the present consensus view. Their critique of Fed policy supports the view that the genesis of the Great Depression had monetary origins and was preventable.

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