By Paul Johnson The Wall Street collapse of September–October 1929 and the Great Depression which followed it were among the most important events of the 20th century. They made the Second World War possible, though not inevitable, and by undermining confidence in the efficacy of the market and the capitalist system, they helped to explain why the absurdly inefficient and murderous system of Soviet communism survived for so long. Indeed it could be argued that the ultimate emotional and intellectual consequences of the Great Depression were not finally erased from the mind of humanity until the end of 1980s, when the Soviet collectivist alternative to capitalism crumbled in hopeless ruin and the entire world accepted there was no substitute for the market.
Granted the importance of these events, then, the failure of historians to explain either their magnitude or duration is one of the great mysteries of modern historiography. The Wall Street plunge itself was not remarkable, at any rate to begin with. The United States economy had expanded rapidly since the last downturn in 1920, latterly with the inflationary assistance of the bankers and the federal government. So a correction was due, indeed overdue. The economy in fact ceased to expand in June, and it was inevitable that this change in the real economy would be reflected in the stock market.
The bull market effectively came to an end on September 3, 1929, immediately the shrewder operators returned from vacation and looked hard… (Read the full article)
Source: Mises.org
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