Was the Great Depression Necessary?
By the Editors
The Twenties were a bubble in Jay Gatsby’s champagne glass. The policies of the 1920s made the Depression of the 1930s inevitable. Calvin Coolidge and Treasury Secretary Andrew Mellon were to blame. Coolidge even hyped the stock market, rendering the Crash of 1929 worse.
These are the truths we learn in school. Yet they aren’t true at all.
By 1929, a drop in the stock market was indeed inevitable. But the 1929 crash didn’t cause the ten years of double-digit unemployment that followed.
Those who blame Coolidge for the crash walk on shaky ground.
So do those who contend that he hyped the market. Coolidge’s successor, Herbert Hoover, made this contention. Yet Hoover remembered wrong, as his authoritative biographer George Nash has shown.
As for the Depression, some of it was bad luck, in weather—the Dust Bowl—and in leadership. But policy also mattered. Evidence suggests that the policies of both Hoover and FDR, policies opposite to Coolidge’s, put the “Great” in Great Depression.
The new Winter 2025 issue of the Coolidge Review examines the overlooked lessons from the 1920s and the causes of the Great Depression.
As James Grant shows, America can shorten a downturn by cutting federal spending and tightening interest rates. That’s exactly what the Harding-Coolidge administration did to end a brutal depression in 1921. A federal pullback leaves the economy room to find its feet.
Americans wonder which policies our leaders should follow come the next downturn. This issue of the Coolidge Review offers a starting point for investigating that crucial question.