The Economic Crisis, 1929-1932

SCARCELY anyone thought, in the later 192Os, that they were living through the closing years of the upswing of a trade cycle. Great Britain, admittedly, enjoyed a recognizable boom in the new issue capital market in 1928, and ordinary share prices rose rapidly. Rut the unemployment situation was very little better in 1987 and 1928 than before 1926; the balance of payments on current account was more favourable, but not by much; the country's share of world trade had fallen, between 1924 and 1927, quite considerably; and prices were still falling gradually, as they had done almost without interruption since 1922. Times were dull, and the outlook was never particularly promising. In the United States, on the other hand, an upswing which was soon to come to an end was not recognized because the good times which the country was enjoying were confidently expected to last for ever. From 1925 to the autumn of 1929 large groups of people and most kinds of economic activity—agriculture was the most conspicuous exception—enjoyed 'an era of prosperity approaching that of wartime'.¹ Its continuance was confidently forecast. 'Our situation is fortunate,' reported an expert economic committee early in 1929, 'our momentum is remarkable.'² The chief reason for the failure to grasp the impermanent, cyclical nature of the long American boom of the 1920s was that prices were fairly stable. If prices were not rising, so the argument went, there could be no cyclical hpswing and no inherent weakness leading to collapse.