The cause of the Great Depression was the post-World War I decision to resume the gold standard on prewar terms, after immense inflation during the war. No collection of smaller shocks, such as bank failures and demand declines was required, as the deflationary effects of full-resumption policies is sufficient to explain the Depression by itself.

Sandeep Mazumder is professor of economics and department chair in the Department of Economics at Wake Forest University.
John H. Wood is Reynolds Professor in the department of economics at Wake Forest University.
American HistoryEconomic History and DevelopmentEconomic PolicyEconomyGovernment and PoliticsLaw and Liberty
Other Independent Review articles by John H. Wood
Summer 2023 Money and Empire: Charles P. Kindleberger and the Dollar System
Winter 2002/03 Bagehot’s Lender of Last Resort: A Hollow Hallowed Tradition