A New Interpretation of the Onset of the Great Depression

Journal of Economic History, Vol. 44, pp. 489-498, June 1984

10 Pages Posted: 19 Mar 2008

See all articles by Alexander J. Field

Alexander J. Field

Santa Clara University - Leavey School of Business - Economics Department

Abstract

Over the 1919-1929 period, fluctuations in the value of stock trading on the New York Stock Exchange exercised statistically significant and economically important impacts on the demand to hold cash balances. The marked post-1925 rise in the volume and value of stock trading led to a measurable increase in the transactions demand to hold cash balances, an increase in demand not recognized or seriously discussed by individuals inside or outside of the system. Had it been recognized, it is unlikely that the Fed would have persisted in its antispeculative policies in 1928-1929, policies associated with rises in interest rates and the beginnings of a downturn in real activity in the second quarter of 1929.

Keywords: Great Depression, Monetary Policy, Stock Trading

JEL Classification: E32, E41, E52, N12, N22

Suggested Citation

Field, Alexander J., A New Interpretation of the Onset of the Great Depression. Journal of Economic History, Vol. 44, pp. 489-498, June 1984, Available at SSRN: https://ssrn.com/abstract=1109156

Alexander J. Field (Contact Author)

Santa Clara University - Leavey School of Business - Economics Department ( email )

500 El Camino Real
Santa Clara, CA California 95053
United States
408 554 4348 (Phone)
408 554 2331 (Fax)

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