CASSEL, OHLIN, ÅKERMAN, AND THE WALL STREET CRASH OF 1929

Abstract

The 1929 stock market crash on Wall Street is one of the most spectacular economic events of all times. In Sweden, leading economists got involved in a lively debate on the events on Wall Street before, during, and after the crash. Three of them were particularly active. Gustav Cassel and Bertil Ohlin were not overly worried since they regarded the stock market mania and the panic as phenomena more or less disconnected from the rest of the economy. Their theoretical argument was that booms and busts upon a stock market cannot create or destroy capital or purchasing power. Johan Åkerman, on the contrary, warned repeatedly that a serious stock market crash was in the making and, once it had happened, that it would in many ways affect the entire economy.