The Gold Standard and the Great Depression

Did the gold standard in any way "cause" the Great Depression?

Most certainly not, though that is often given—and usually rather flippantly—as a plausible explanation.

There are several sources I would like to suggest you consider consulting for further detail, including a pamphlet I've written myself on this very subject. It also mentions the depressions prior to 1929, though very briefly in each case. The additional sources are:

1. America's Great Depression—by Murray N. Rothbard

2. Economics and the Public Welfare—by Benjamin M. Anderson

3. The Case for Gold—by Ron Paul

Blaming the gold standard for the Great Depression ignores the substantial monetary manipulations of the Federal Reserve System in the 1920s and 1930s—manipulations that would have been utterly impossible if the country had not already abandoned major elements of the gold standard and bestowed wide discretionary powers upon government monetary authorities. As Rothbard and many others have documented, the money and credit supply was substantially increased between 1924 and 1929 by the Federal Reserve, which then presided over just the opposite: a contraction of the money supply by one-third between 1929 and 1933. This was not the normal operations of an unfettered gold standard or of a free market at work; rather, it was the result of monetary mischief at the hands of government.

Other factors, all government-imposed, assured that the recession that was underway in early 1930 would actually deepen into a decade-long depression: the Smoot-Hawley tariff in June 1930, the doubling of the income tax in 1932, the costly and counterproductive interventions of the early New Deal in 1934, and the Wagner Act of 1935. All these and more are discussed in the pamphlet we will be providing you.

Each time I hear the tired, old refrain about "the gold standard caused the depression," I wonder if the speaker is even aware of the vast literature to the contrary, or if he is simply ignoring it because it doesn't fit into some larger ideological agenda. In any event, it's nonsense, and your professor needs to climb out of the economic dark ages and get past the bumper stickers to examine what the record really shows.