Pre-Keynesian Monetary Theories of the Great Depression: What Ever Happened to Hawtrey and Cassel?

56 Pages Posted: 29 Mar 2012 Last revised: 7 May 2013

See all articles by Ronald Batchelder

Ronald Batchelder

Pepperdine University

David Glasner

Federal government agency

Date Written: April 30, 2013


A strictly monetary theory of the Great Depression is generally thought to have originated with Milton Friedman. Designed to counter the Keynesian notion that the Depression resulted from instabilities inherent in modern capitalist economies, Friedman’s explanation identified the culprit as an ill-conceived monetary policy pursued by an inept Federal Reserve Board. More recent work on the Depression suggests that the causes of the Depression, rooted in the attempt to restore an international gold standard that had been suspended after World War I started, were more international in scope than Friedman believed. We document that current views about the causes of the Depression were anticipated in the 1920s by Ralph Hawtrey and Gustav Cassel who independently warned that restoring the gold standard could cause a disastrous deflation unless the resulting increase in the international monetary demand for gold could be limited. Although their early warnings of potential disaster were validated, and their policy advice after the Depression started was consistently correct, their contributions were later ignored and forgotten. This paper explores the possible reasons for the remarkable disregard by later economists of the Hawtrey-Cassel monetary explanation of the Great Depression.

Suggested Citation

Batchelder, Ronald and Glasner, David, Pre-Keynesian Monetary Theories of the Great Depression: What Ever Happened to Hawtrey and Cassel? (April 30, 2013). Available at SSRN: or

Ronald Batchelder

Pepperdine University ( email )

24255 Pacific Coast Highway
Malibu, CA 90263
United States

David Glasner (Contact Author)

Federal government agency ( email )

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