From Prof Emeritus D.R. Myddelton.
Sir, In today’s difficult economic conditions, reference is once again being made to the Great Depression, which in the US started in 1929 and lasted at least 10 years. Presidents Herbert Hoover and Franklin D. Roosevelt employed Keynesian-type policies of government intervention, but they didn’t work. That is why the Great Depression lasted so long.
Why does nobody refer to the “Short Depression” of 1920-21 as an example worth following?
President Warren G. Harding used “orthodox” methods such as cutting government spending, cutting taxes, liquidating bad investments and allowing wage rates to fall. As a result, the “Short Depression” was soon over. Indeed it seems to have been almost forgotten.
Emeritus Professor of Finance and Accounting,
Cranfield School of Management,
Cranfield, Beds, UK
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