Three reasons the Great Depression lasted so long

A large part of what made the Great Depression so painful was that it was not only deep but also long. There were many reasons for this. Let me pick out three:

A first reason it stretched on for so long was workers' unwillingness to take risks. With so much instability, most were content to settle for what manner of living they could find that was most secure. The experience of long and high unemployment casts a large and deep shadow on the labor market. Risky but profitable enterprises had a difficult time attracting the workers they needed, and so investment remained depressed.

A second reason it was long was the memory of the gold standard and the belief that economies needed to get back to it. This belief dissuaded governments in the 1930s from taking many of the steps to boost production and employment that they otherwise might have pursued: the gold standard was dead by 1931, but its ghost continued to haunt the world economy. Few of these much-needed measures were undertaken. The only one that governments did take up was currency depreciation: stimulating net exports by switching demand to domestic-made goods and away from foreign-made goods. Commentators disparaged currency depreciation as "beggar-thy-neighbor." It was. But it was the only thing generally undertaken that was effective.

A third reason was that the lack of a hegemon to guide coordinated action in international monetary affairs not only pre vented anticipatory reforms but also blocked coordinated global policy responses. The major monetary powers of the world passed up their chances to do anything constructive together. Recovery, where it came, was national only, not global.

In general, the sooner countries went off the gold standard, and the less constrained they were thereafter by the orthodoxy of gold-standard habits, the better they fared. Thus, the Scandinavian countries that bailed first from the gold standard did best. Japan was second. Britain also abandoned the gold standard, in 1931, but Japan embraced expansionary policies more thoroughly. The United States and Germany abandoned the gold standard in 1933, but Hitler had a clearer view that success required putting people to work than FDR did with the try-everything-expediency of his New Deal.

- J Bradford DeLong, Slouching Towards Utopia: An Economic History of the Twentieth Century, New York, 2022, p.219-220.