The Great Depression: Consensus among American Economic Historians
Three years ago I conducted a survey of American economic historians on a
wide range of issues, including some on the Great Depression. Based on
the survey, I concluded that the profession has not reached a consensus
about the causes of the Great Depression, nor about the impact of the New
Deal on economic growth. The findings from the survey (and some of my
comments from the article) are given below.
While the propositions that I included on the survey were generally from
classic works in the field (Friedman & Schwartz and Temin) these questions
miss a number of major issues. They do not ask about the new round of
research on the Great Depression which has tried to refocus on issues beyond
the traditional Keynesian-Monetarist debate, nor do they ask much about
what may be the most important set of issues: the long-term impact of the
Great Depression and the New Deal on the American economy and its
Department of Economic
Wake Forest University
(See Robert Whaples, "Where Is There Consensus among American Economic
Historians?, _Journal of Economic History_, Vol. 55, No. 1, March 1995
for more details.)
Great Depression and Business Cycles:
Four of the questionnaire's propositions are taken from
Peter Temin's Did Monetary Forces Cause the Great Depression? and
Milton Friedman and Anna Schwartz's The Great Contraction. This
set of answers reveals a lack of consensus on the causes of the
The first proposition restates the Friedman and Schwartz
position that "monetary forces were the primary cause of the
Great Depression." Among economists, Friedman-Schwartz and Temin
seem to have fought to a draw, while about two-thirds of the
historians reject the monetarist proposition.
The second question of this section is much narrower. It
must be treated with caution because it has the lowest response
rate of the survey, with two in five of the sample members
declining to respond. About sixty percent of the economists and
nearly seventy percent of the historians agree with Temin that
the "demand for money was falling more rapidly than the supply
during 1930 and the first three-quarters of 1931."
While the traditional Keynesian explanation holds the edge
in the first two questions, there is a consensus among both
groups that "throughout the contractionary period of the Great
Depression, the Federal Reserve had ample powers to cut short the
process of monetary deflation and banking collapse. Proper
action would have eased the severity of the contraction and very
likely would have brought it to an end at a much earlier date."
However, most supporters of this position require that unnamed
provisos be added before the contention is fully accepted.
Finally, economic historians are sharply divided over Peter
Temin's alternative explanation of the depression that a "fall in
autonomous spending, particularly investment, is the primary
explanation for the onset of the Great Depression." About forty
percent of economists and fifty percent of historians disagree
with the hypothesis.
Is the message of economic historians that they feel both
monetarist and Keynesian explanations have some merit? Or is it
a message of irreconcilable differences? Despite considerable
innovative and painstaking subsequent research about the causes
and nature of the Great Depression, this may be a debate from
which no consensus will ever emerge.
While the central causes of the depression are still hotly
contested, there is a consensus that the "passage of the Smoot-
Hawley Tariff greatly exacerbated the Great Depression.
On top of the profession's lack of agreement about the genesis of the
Great Depression, there is a disagreement about the role of the New Deal.
In fact, the economists in the sample are almost evenly divided on the
question of whether or not when taken "as a whole, government policies of
the New Deal served to lengthen and deepen the Great Depression." The
consensus among historians is that the New Deal did not lengthen and
deepen the depression.
Table 1: Responses to Propositions
In the margin, next to each question, write:
D for generally disagree,
P for agree- but with provisos
A for generally agree, or
? if you don't have an opinion
Note: In each table below, E = economist, H = historian. Pr =
Confidence level with which one can reject the equality of the
distribution of the two groups' answers, using the Likelihood
Ratio Chi-square statistic, followed by the confidence level with
which one can reject the equality of the percent who disagrees
with the proposition, using a pooled variance t-test.
(Nonresponders have been omitted in performing the Chi-square
tests.) ? = percent of economists replying, followed by the
percent of historians replying.
A P D 34. Monetary forces were the primary cause
E 14 33 52 of the Great Depression.
H 17 17 66
A P D 35. The demand for money was falling more
E 48 12 40 rapidly than the supply during 1930 and the
H 46 23 31 first three-quarters of 1931.
A P D 36. Throughout the contractionary period of
E 32 43 25 the Great Depression, the Federal Reserve had
H 31 47 22 ample powers to cut short the process of
Pr 7/24 monetary deflation and banking collapse.
? 96/82 Proper action would have eased the severity
of the contraction and very likely would have
brought it to an end at a much earlier date.
A P D 37. A fall in autonomous spending,
E 18 44 39 particularly investment, is the primary
H 23 29 49 explanation for the onset of the Great
Pr 55/59 Depression.
A P D 38. The passage of the Smoot-Hawley Tariffs
E 60 26 14 greatly exacerbated the Great Depression.
H 64 21 15
A P D 39. Taken as a whole, government policies of
E 27 22 51 the New Deal served to lengthen and deepen
H 6 21 74 the Great Depression.
34. Proposition tested by Peter Temin, Did Monetary Forces Cause
the Great Depression, New York: W. W. Norton, 1976.
35. Temin, Did Monetary Forces, p. 137. "Instead, the data are
consistent with the hypothesis that the demand for money was
falling more rapidly than the supply during 1930 and the first
three-quarters of 1931."
36. Milton Friedman and Anna J. Schwartz, The Great Contraction,
1929-1933, Princeton, NJ: Princeton University Press, 1965,
preface. "Throughout the contraction, the System had ample
powers to cut short the tragic process of monetary deflation and
banking collapse ... Such action would have eased the severity of
the contraction and very likely would have brought it to an end
at a much earlier date."
37. Temin, Did Monetary Forces, back cover. "He does so by
contrasting two competing explanations of the decline: One
asserts that the Depression resulted from a contraction of the
money supply in the early 1930s; the other, that a fall in
autonomous spending, particularly investment and, within
investment, housing, spurred a general collapse."
38. Peter Fearon, War, Prosperity and Depression: The U.S.
Economy, 1917-1945, Lawrence, KS: University Press of Kansas,
1987, p. 157, "the Hawley-Smoot tariff added to the
The questionnaire was sent to 90 economists (Ph.D. in
economics or currently teaching in economics department) and 88
historians (Ph.D. in history or currently teaching in history
department). Each group was randomly selected from the 1993 EHA
Telecommunications directory, using the following procedure. The
last two economists and the last two historians from each page of
the directory who met the following criteria were selected. (In
some cases, particularly among historians, there were not two who
met the criteria, this necessitated selecting three or more from
the next page of the directory.) All individuals selected a)
teach in the U.S., b) hold a Ph.D., c) and identify a research
interest in the U.S. or North America. This information was
ascertained from the EHA 1991 Directory (EHA, 1991). Those not
reporting the necessary information were excluded. The EHA had
approximately 1200 members in 1994. Of these, 427 are teaching
in the U.S. in department of economics, business and the like.
165 are teaching in history department in the U.S..
It is not known if those who reported the information form
an unrepresentative sample. The questionnaire was anonymous, but
respondents were encouraged to report their gender and date of
degree. There was a superficial difference between the
questionnaires of economists and historians, so discipline can be
identified for all respondents. A stamped, addressed return
envelop was included and this helped generate a response rate of
48 percent. 51 percent for economists, 44 percent for historians.
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