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Affluent Christian Investor | December 8, 2023

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The Forgotten Depression


Of course everyone is aware of the Great Depression of 1920 – no wait, virtually no one knows of it. Why would virtually no American know about the worst recession of the 20th century? The answer is certainly speculation. But what is not speculation is how the majority of Americans are unaware of what really happened during this time period.

“To this day, the [stock market] index has yet to show a more precipitous drop in such a short time [as it did on 1920].”[1] To put the Depression of 1920 into perspective, economist James Grant compares it to the Great Recession of 2009. “From 1920 to 1921, the Federal Reserve’s index of industrial production fell by 31.6 percent; in 2007-09, it declined by 16.9 percent.” Grant continues with comparisons to the depression of the 1930s; “Over the course of 12 months, wholesale prices plunged by 36.8 percent, consumer prices by 10.8 percent and farm prices by 41.3 percent (for speed of decline, not even the Great Depression would match the break of 1920-21.”[2] Also devastating, as reported by Dr. Patrick Newman, was that “from May 1920 to March 1921 producer prices fell by an enormous 38.54%, which bottomed out in June 1921 for a total decline of 44.09%.”[3]

As James Grant wrote, “Over and done within 18 months, the depression of 1920-21 was the beau ideal of a deflationary slump.”[4] We must embrace the Light; we are obligated to embrace the Light. Our obligation and reference to God’s Light is articulated in the Declaration of Independence.

We will look at one of the best examples of American Exceptionalism of modern times—how the leadership and citizens of the United States rose to combat economic evil, which also discloses to some degree the wickedness of evil to hide this amazing American story from its posterity.[5]

During World War I, the US debt climbed from about $1 billion to about $25 billion, a whole assortment of industries were nationalized, thousands of government bureaus were erected, and top income-tax rates hit 77 percent. American economic liberty would never again be restored to prewar levels.[6]

In several upcoming articles I will discuss details, data, and events of the 1920 Depression, which are lessons to help us combat the degraded economic patterns of post-WWII America.

[1] CJ Maloney, September 22, 2010, “1920:  The Great Depression that Wasn’t,”, [].

[2] James Grant, 2014, The Forgotten Depression, (New York, NY: Simon & Schuster), pp. 68-69.

[3] Patrick Newman, December 5, 2015, “The Depression of 1920-1921:   A Credit Induced Boom and a Market Based Recovery?” Review of Austrian Economics, Forthcoming, p. 22, [].

[4] James Grant, 2014, The Forgotten Depression, (New York, NY: Simon & Schuster), p. 212.

[5] For data and analysis of the 1920 economic figures see Robert B. Ekelund Jr. and Mark Thornton, December 1986, “Schumpeterian Analysis, Supply-Side Economics, and Macroeconomic Policy in the 1920s,” Review of Social Economy, Vol. 44 No.3, pp. 221—237.

[6] Anthony Gregory, November 23, 2011, “The “Great Leaders” Were Mass Murderers,” Mises Daily, (Auburn, AL: Ludwig von Mises Institute), [].



Originally published on Townhall Finance.


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