"Why was there only one Great Depression?"

Professor, you mean thus far...

What's the fourth story?

No gold standard/Sachs? Or is that crammed in under (2)?

The Great Depression didn't happen before because people lived on farms before.

I believe the Great Depression happened when it did because the stock market crash led to the collapsing of the 1920s credit bubble. Job growth in the 1920s was in finance and retail/wholesale sales. In other words, job growth centered around credit consumption. There was zero job growth in manufacturing from 1921 - 1928. Furthermore, wages gains were far surpassed by productivity gains creating a two-tiered economy. Rendezvous all over again.

A question
Wouldn't the "Panic's" in the middle to late 1800 culminateing in the Great Panic in the 1890's be considered a depression by modern terms?

From my admiiedly limited knowledge of it is seems that;
Different environment, different composition but similiar result to the non farm work force ( even farmers saw income drop), similiar shuttering of business's and widespread bank closures.

But as I stated I have limited knowledge of those.

Ken,
Looking at a chart of US business activity from 1790-1986, the "Great Depression" is clearly in a class of of own in terms of %change in activity and duration. The recessions of the 1800's just pale in comparison.

Dan,
The preceding boom in the 1920's doesn't look out of the ordinary compared with other booms preceding the depression. The WWII boom does look extremely large by historical comparison.

The chart is reproduced in Ken Fisher's "The Wall Street Waltz", an excellent compilation of such long term charts.

Mundell says the Big Depression, in "A Reconsideration of the Twentieth Century," sprang largely from a stubburn attempt to re-esetablish the gold standard, at close to the old parity, after the inflation of WWI.

It woulda required a doubling of the price of gold in dollars, or a shrinkage of the money supply to reduce claims on gold. They chose the latter, a monetary contraction about the time they shoulda been injecting some liquidity into the banking system.

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"Why was there only one Great Depression?"

Because the second one hasn't happened yet.

When I studied economic history in the 1960s they called the 1880s era the great depression and the 1930s the depression. I discovered that the 1930s was now called the great depression about a decade ago. When and why did the switch occur?

Snarky answer: things get "greater" as memory is replaced by history (op. cit. "the Greatest Generation").

Cynical answer: the depression of the 1880s led to the rise of Populism. the depression of the 1930s was "solved" by WW II, and the subsequent American supremacy of ca. 1946 - ca. 1961. Since Populism is a "bad" thing and "American capitalism" is a good thing, the depression with the "better" outcome needs to be emphasized.

Realistic answer: the depression of the 1930s impacted all classes significantly (remember, the Dust Bowl was suffering a decade of decline even during the Roaring 20s), while the 1880s ravaged farmers, workers, and silver speculators but left the conservative rich entrepreneur/monopoly segment of the economy relatively unscathed, so the 1880s was a shallower (in terms of years) depression and did not permanently alter the attitudes of a generation.

Brad, allow me to inform your readers of developments in Central Asia that I think are worthy of note:

http://news.bbc.co.uk/2/hi/asia-pacific/4307583.stm

Isn't it nice that Turkmenistan is conducting an experiment that will prepare us for "Medicare/caid 'reform'"?

Adding to (3): JM Keynes notion of temporary demand shortfall. The liquidity crunch led consumers to underconsume, prompting via multiplier-effects a further contraction. The New Deal was among other things a huge surge in government demand, offsetting the shortfall.

I noticed that the Great Depression in the 1930s and the Greatest Depression in the 1830s were connected to transportation revolutions in automobiles and tractors, and steam trains and steam boats. The subsequent land value changes may have had something to do with the economy changing.
But during the Greater Depression of the late 1880s I notice no such discontinuity. Damned if I know what was going on in 1888 to set things off.
Lots of immigration, but not greater than usual. Closure of the frontier to all intents and purposes? That new variety of hard Russian wheat increasing production on the northern great plains? Something happening overseas like the development of Quinine plantations and the first importation of massive tropical crops like palm oil and coconut oil? Refrigerator ships from Argentina and Australia competing with feed grain exports from America? Russian railroads putting Russia into the grain export business? Everything at once?
And why did any of the above make stocks collapse in London and New York?

Er, Brad, you forgot to mention Temin's argument that the Great Depression in both continents was caused by the Gold Standard-induced distortions in monetary policy, i.e., the Fed sterilizing gold inflows (out of an unfounded fear of inflation) and so reducing the world money supplies, with predictable effects on the stock and credit markets. This is a far more plausible account, imho, than Hayek or Friedman.

[I buy that for the Great Depression in Europe, but not for the Great Depression in the U.S. There are, really, two simultaneous Great Depressions--both triggered by the 1929 stock market crash, but thereafter driven by very different forces.]

Brad, in which of the categories would you place the prolonged drought as a causal factor of the Great Depression?

[Cause of dustbowl and 1920s agricultural depression, yes. Cause of Great Depression, no.]

One thing really puzzles me.
How come most economists still use that equation ?
MV = PY

Explanation, the real equation says :
The monetary base (M) multiplied by the speed at which the monetary circulates (in one year)
is equal to the total of the things out there that you can buy multiplied by the price of those things.
That's the real equation. To buy things, you need cash. That's ok.

But
1 : how come Y is equated with "the things out there on sale". Lots of things on sale are not included in Y. Y is the production of new things.
Well some things last from one year to another.
Those things can be sold, and are sold, this needs money.
+ the black market etc.

2 even worse :
What is P ?
Y is production of consumption goods (cloth, food etc) and investment goods (machinery, patents etc)
So the P in that equation should be the level of ALL prices ! Yet the stat economists are watching is only the stat of GOOD prices (inflation in good prices is watched, inflation in asset prices is ignored).

So there you have your explanation of the great depression. Asset prices boomed without restraint, consumption and investment was boosted by credit, all this was based on excess liquidity flowing to the asset markets. When the asset prices finally appeared as unreasonnable, credit crunch followed and there s nothing the federal bank could do to increase the money supply. Once private banks stop to create private money because there's no secure lending ... then money creation falls and deflation follows.

Love the course, Professor! But there was an earlier Great Depression - after Andy Jackson sacked the Bank of the US, we had the Panic of 1837 and a very deep deflation/recession. Lots of bank failures and rapid shrinkage of credit. The deflation in the 1880s had a different character.

Also as some of the comments have noted, one precipitating event of the 1930s is Churchill marking the Pound to the pre-war Gold level in the 1920s, as if the wartime inflation had not occurred. Pounds were turned in for gold and both the money supply and credit shrank in the UK. Gold flowed to US and French accounts, and under the proper gold standard they should have reliquified the world economy. But instead the relatively new Fed did the opposite and raised rates. The Fed was trying to stop 'overinvestment' in US stock markets, much as Greenspan raised interest rates to stop 'irrational exuberance' in the 1990s. (And overall the Fed's record as the steward of the world currency is pretty shameful: the Dollar is worth 4c compared to when the Fed started, whereas from 1815 to 1913 it was relatively flat with some panics here and there, good for culling out excess.)

The lesson of history is - I forget.