Contemporary Explanations of the 1937 Business Recession

The purpose of this thesis was to present and examine the 1940 contemporary explanations of the downturn or the “recession” of 1937. Primarily the purpose was to isolate factors that this downturn had in common with other downturns, to determine factors that are peculiar to it alone, to find where it fits and where it does not fit business cycle theories, and to add to the general store of information about business cycles.It is also hoped that the study may help in “doing something about depressions” and to offer a method of possible control to possibly ensure that the next depression could be partly ironed out, the boom prevented, and a sharp decline avoided. Government spending is discussed in the first chapter. Chapter II, which treats of money and credit conditions, is organized around Federal Reserve policy—of special interest because the Board of Governors at the time raised reserve requirements for the first since the inauguration of the system.The movement of prices is discussed in the next chapter, which emphasizes the boom and collapse of stock prices and the rather unusual boom and collapse in commodity prices.In the chapter on investment the writer discusses the “capital strike”—a term heard often during the period.Chapter V is devoted to consumption in light of frequent references made to a “consumption recovery.” Chapter VI discusses the course of production and the inventory situation—“the inventory recession.” In the conclusion, the various explanations are evaluated and the summary of the thesis is related to some aspects of business cycle theories, forecasting and control. Advisors: William A. Spurr and J.E Kirshma