I would rewrite Lesson 4 as "In many disasters the attempted treatments made things worse." In the case of the Great Depression, scholarship is focusing on the

I would rewrite Lesson 4 as "In many disasters the attempted treatments made things worse." In the case of the Great Depression, scholarship is focusing on the failed response of the FED [1]. The current thinking is that WWI precipitated the farm crisis by (a) generating a huge demand for US farm products (b) caused a labor shortage as men were being drafted (c) farmers took out loans to purchase new farmland and equipment [2]. When farm prices dropped with the end of WWI, many regional banks failed in the 20s leaving behind a damaged agriculture sector. In 1930, when many hoped the economy would recover from the great Stock Market crash, it was the collapse of Caldwell and Company which was a huge holding company that triggered a massive wave of bank failures [3]. This most recent wave of bank failures greatly damaged manufacturing output [4]. What was the Federal Reserve doing in all of this? It turns out they did nothing because either those banks were not part of the Federal Reserve system. Or they made things worse by actually increasing interest rates which made troubled banks even less likely to survive. Bernanke and others now think the FED's failure to keep the banking system alive led to the Great Depression. [1] https://www.federalreservehistory.org/essays/great-depression https://www.federalreservehistory.org/essays/great-depressio... [2] http://www.iowapbs.org/iowapathways/mypath/great-depression-begins-1920s http://www.iowapbs.org/iowapathways/mypath/great-depression-... [3] https://www.federalreservehistory.org/essays/banking_panics_1930_31 https://www.federalreservehistory.org/essays/banking_panics_... [4] https://www.kellogg.northwestern.edu/faculty/mezzanotti/documents/lee_mezzanotti_greatdepression.pdf https://www.kellogg.northwestern.edu/faculty/mezzanotti/docu...