What Do We Know about the Great Crash?

The Great Crash of October 1929 marked a fundamental break in U.S. history, a drastic change in basic attitudes and institutions that define the roles of citizen and state. Within about three years, stock prices were down to one-tenth of what they had been, real gross national product (GNP) had fallen by a third, industrial production was cut in half, and unemployment had hit a fourth of the labor force. Meanwhile, the public mind was affected as much as the economy, with the people turning to the government for security.

The terror of the Great Crash has been the failure to explain it. 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 unlimited federal intervention in economic affairs.

About the Author

Alan Reynolds

Alan Reynolds, National Review’s economics editor from 1972 to 1976, is a senior fellow at the Cato Institute and the author of Income and Wealth.

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The Great Crash of October 1929 marked a fundamental break in U.S. history, a drastic change in basic attitudes and institutions that define the roles of citizen and state. Within about three years, stock prices were down to one-tenth of what they had been, real gross national product (GNP) had fallen by a third, industrial production was cut in half, and unemployment had hit a fourth of the labor force. Meanwhile, the public mind was affected as much as the economy, with the people turning to the government for security.

The terror of the Great Crash has been the failure to explain it. 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 unlimited federal intervention in economic affairs.