Comments on “Some Macroeconomic Impacts of the National Industrial Recovery Act, 1933–1935”

Abstract

Here we are again returning to the 1930s, an obsession monetary economists share with the proverbial criminal who supposedly cannot resist returning to the scene of his crime. In our case we return to the scene of our major failure to explain events. It is not, I hasten to add, that monetary developments fail to explain the severity of the Great Contraction and ensuing recovery. The monetary explanation fits very well. The other question raised at this conference—whether monetary developments were exogenous and so provide a self-contained explanation of the 1930s—cannot be resolved by inferences drawn from this one observation. When we put together all the relevant episodes, however, as I argued in an earlier study (1965, pp. 263–68), the combined evidence strongly supports the proposition that business contractions became severe when monetary growth declined substantially for any of a variety of reasons and not otherwise, and that most of the monetary declines could not be attributed to the severity of the accompanying business contractions.