Audio: The Coming of the Great Depression
Robert Peel, 1844: My confidence is unshaken that we have taken all the Precautions which legislation can prudently take up against the Recurrence of a pecuniary Crisis. It my occur in spite of our Prescuamay occur in spite of our Precautions, and if it does, and if it be necessary to assume a grave responsibility for the purpose of meeting it, I dare say men will be found willing to assume such a responsibility. I would rather trust to this than impair the efficiency and probable success of those measures by which one hopes to control evil tendencies in their beginning, and to diminish the risk that extraordinary measures may be necessary...
Karl Marx, 1851: As is always the case, prosperity very rapidly encouraged speculation. Speculation regularly occurs in periods when overproduction is already in full swing... provides... temporary market outlets, while for this very reason precipitating the outbreak of the crisis and increasing its force. The crisis itself first breaks out in the area of speculation; only later does it hit production. What appears to the superficial observer to be the cause of the crisis is not overproduction but excess speculation, but this is itself only a symptom of overproduction. The subsequent disruption of production does not appear as [what it really is,] a consequence of its own previous exuberance, but merely as a setback caused by the collapse of speculation....
The crisis reached its peak... all commercial transactions had come to a standstill. A deputation from the City then brought about a suspension of the Bank Act of 1844, which had been the fruit of the deceased Sir Robert Peel's sagacity.... Since his death Peel himself has been apotheosized in the most exaggerated fashion.... His power over the House of Commons was based upon the extraordinary plausibility of his eloquence. If one reads his most famous speeches, one finds that they consist of a massive accumulation of commonplaces, skillfully interspersed with a large amount of statistical data...
Karl Marx, 1867: The... decennial cycle... of periods of average activity, production at high pressure, crisis and stagnation, depends on the constant formation, the greater or less absorption, and the re-formation of the industrial reserve army or surplus-population.... The superficiality of Political Economy shows itself in the fact that it looks upon the expansion and contraction of credit, which is a mere symptom of the periodic changes of the industrial cycle, as their cause...
Great Depression Problem Set:
In light of today's financial crisis, I felt that the historical perspective offered provided by today's lecture was decidedly pertinent. Moreover, with opinions of the bailout/rescue plan coming from all sides, it's interesting to see that many of today's opinions have counterparts that were in existence in 1929. A topic that I think should be discussed more fully is Karl Marx's understanding of financial crises and wage rates.
Posted by: Michael Pimentel | October 08, 2008 at 11:56 PM
It was interesting, in fact scary, to see how the financial crisis of the US stock/housing market today can be mirrored/compared with the events of the Great Depression. As an EAP student, I have little knowledge of the Great Depression, but from what I have learned today (25% unemployment!!) and just general knowledge of how bad times were during the depression it is seems to be troubling times to say the least for the American economy.
Posted by: Michael Hui 20785005 | October 09, 2008 at 12:26 AM
I enjoyed how the lectured tied into the events happening today. It was a little confusing trying to understand the impact that the financial crisis today will have on our economy. It seemed at times Delong suggested that, for the financial sector, this crisis is just as bad as it was in the great depression. However, other times it made it seem as if this were still less severe than the Great Depression. It was very interesting to hear how one of the main reasons why the Great Depression was enabled was because Mellon advised Hoover not to bail out banks. And yet, you would think people today would learn not to repeat history, but just a week ago 1/3 of the house did not vote for the Bail out plan.
Posted by: Brittany Bianchi | October 09, 2008 at 01:50 AM