The 1920 recession had
adjusted itself within a year. There was no reason why the 1929
recession should have taken longer, for the American economy was
fundamentally sound. If the recession had been allowed to adjust
itself, as it would have done by the end of 1930 on any earlier analogy,
confidence would have returned and the world slump need
never have occurred.

Before the massive government interventions of
the 1930s, all recessions were short-lived. The severe depression of
1921 was over so rapidly, for example, that Secretary of Commerce
Hoover, despite his interventionist inclinations, was not able to
convince President Harding to intervene rapidly enough; by the
time Harding was persuaded to intervene, the depression was
already over, and prosperity had arrived. When the stock market
crash arrived in October, 1929, Herbert Hoover, now the president,
intervened so rapidly and so massively that the market–
adjustment process was paralyzed, and the Hoover–Roosevelt New
Deal policies managed to bring about a permanent and massive
depression,

My supreme debt is to Professor Ludwig von Mises, whose
monumental theory of business cycles I have used to explain the
causes of the otherwise mysterious 1929 depression. Of all
Professor Mises’s notable contributions to economic science, his
business cycle theory is certainly one of the most significant. It is
no exaggeration to say that any study of business cycles not based
upon his theoretical foundation is bound to be a fruitless undertaking.

The responsibility for this work, of course, is entirely my own.