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Fifteen Minutes Of Pain
...Going back to the period, scholars have recently traced a different story line. 1920s growth, it turns out, wasn't illusory; it was real. From rising companies to low unemployment to increases in GDP, the decade was a prodigious one. The Greenspan of the period, Andrew Mellon at the Treasury, presided over a series of tax cuts that pulled the top rate on the income tax down to 25%. These rate cuts generated government surpluses. In the last years, the stock market did move too high--but certainly not high enough to cause 11 years of misery.

As for President Hoover, his tenure was marked not by laissez faire or respect for private property--indeed, Hoover had labeled property a "fetish" before he became president. The Great Engineer was in fact the Great Intervener, meddling in multiple areas, raising taxes and backing tariffs, to the economy's detriment. Mistrusting the stock market as unreal, Hoover berated short-sellers and exhorted businesses to keep wages high when they could ill afford it. ...

...Roosevelt's glee in prosecuting the business heroes of the '20s terrified market players. So did the president's 1937 inaugural speech, in which he told crowds that, in government, he and his administration sought "an instrument of unimagined power." In short, the caricature of the New Yorker cartoon is true: The businessman really did cry into his martini and wait for it all to be over.

The most unnecessary pain came in the so-called "Depression within the Depression" of the later 1930s, caused not only by monetary tightening but also by the political arrogance of the New Dealers following their 1936 electoral landslide. As for the Depression's end, the right question to ask is not how the war brought recovery, it is why the Depression lasted all the way up to the war....