Someone linked to this 2009 VoxEu piece by Lee Ohanian on Herbert Hoover and the start of the Great Depression:
What started the Great Depression? This column says that the industrial decline began before monetary contraction or banking panics – the conventional culprits – took hold. It attributes the massive drop in manufacturing hours to President Hoover’s labour policies, which kept nominal and real wages high.
Economists cite monetary contraction (Friedman and Schwartz, 1963) and banking panics (Bernanke, 1983) as important determinants of the Depression, but industry was significantly depressed before either of these factors was quantitatively important. The attached figure shows per-capita industrial hours worked between January 1929 and September 1930, and two measures of the money stock from Friedman and Schwartz that roughly correspond to M1 and M2. Hours decline substantially, but these two measures of the money supply fall only about 4%, and 1%, respectively. Moreover…
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