It is important to reflect on the causes of the 1929 crisis and the subsequent depression in order to better understand the scope of the economic recovery policies implemented by governments.
Two different issues must be examined: first, the stock market crash of 1929, and then the phenomenon of the depression. The two are often linked, but many authors did not clearly differentiate the specific causes of the crash from the causes of the global depression. The statements we cited from the Harvard Economic Society show that, in the months—and even in the year—following the crisis, a deep and lasting depression was not expected. On the contrary, a downturn had been predicted for early 1929, and it was only from June onward that the index of global production began to fall. Construction activity had already weakened from 1929 onward. Lord Robbins wrote in 1934 about the consequences of the collapse of the New York Stock Exchange:
“…There seems to be no reason to assume that such a development could take on major proportions in a system that was not disturbed by other depressive forces. If we refer to similar disruptions in the prewar period, there might be grounds to believe that after a phase of liquidation and falling prices, business activity would again show signs of improvement, leading to a gradual recovery. But events have evolved differently during the present crisis…”
No single explanation is sufficient to account for this phenomenon. It is possible to trace the origins of the crisis to the collapse of a general inflationary cycle, which might be considered the principal cause. But the later evolution of the depression was so clearly shaped by a multitude of influences that any attempt to group them under one category would necessarily be an oversimplification. Political instability, deliberate policy decisions, structural weaknesses, nationalist attitudes—all these factors played roles that cannot be ignored. It is equally impossible, at least for now, to assign them a precise quantitative weight. It is uncertain whether the moment will ever come when we can determine exactly which factor was the primary cause. The most we can do is identify tendencies and describe how they manifested.
Thirty years later, when analyzing the causes of the Great Depression, the same conclusion still applies. We must distinguish the causes of the crisis itself from the causes of the global depression.