No Wall Street Crash

http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929

OTL: The Wall Street Crash happened, which caused worldwide depression, and in Germany led to the rise of the Nazi Party, etc as well known.

ATL: In 1929 the USA federal government sees sense in time and sees that a speculation bubble is developing, and takes measures to stop it (e.g. bans share dealings for a month to let everybody's fiinancial tempers cool down). No slump.
 
I am afraid it is not that simple. Crash and the Great Depression were caused by chain of events and attitudes of the masses not easily broken up. You had the wave of optimism, when people thought that shares could rise indefinitely. Their opinion was supported by leading economic minds of the time. Bankers and industrialists staked their fortunes in shares and it just was not possible to stop trade or slow down speculation.

That action alone would cause precipitous fall of indexes and result in same if not worse crash. Prevailing wisdom of the day was to increase confidence.
 
I am afraid it is not that simple. Crash and the Great Depression were caused by chain of events and attitudes of the masses not easily broken up. You had the wave of optimism, when people thought that shares could rise indefinitely. Their opinion was supported by leading economic minds of the time. Bankers and industrialists staked their fortunes in shares and it just was not possible to stop trade or slow down speculation.

That action alone would cause precipitous fall of indexes and result in same if not worse crash. Prevailing wisdom of the day was to increase confidence.

I agree. 1929 is far too late to head off a Great Depression. Honestly, 1919 might be too late. The wild speculation at the time certainly played a factor, as did over production. But another factor was the rural depression which existed throughout the 1920s; the Dust Bowl is the most dramatic example of it, but rural America, even outside the Great Plains, was not doing well at the time. In some ways, the Great Depression was simply urban American finally reaching the level of rural America of a decade earlier.
The problem is that the spirit of the times goes against heavy federal government intrusion into the economy to prevent an eventual collapse. The best chance the United States would have would be if LaFollette wins in 1924, as his campaign called for significant reforms of Wall Street, but that is very unlikely to occur.
Honestly, after WW1, I think the World economy may well be doomed to the Depression. You can play with the strength of it, but some economic downturn is going to happen.
 
As said by others before, 1929 is way too late to prevent a depression. Mitigating its affects afterwards is possible I guess, but it's still not going to be pleasant.

The UK staying off Gold could help the British economy in particular.

In terms of US Politics, I reccon TR living long enough to be elected in 1920 and implement some economic reforms to deal with the 1920/21 ressession is probably your best bet in avoiding the OTL Great Depression.
Failing that, you could always find some way to get either Charles Evans Hughes, Herbert Hoover (ironically) or Charles Daurs elected in 1920. Either of these guys have the potential to provide limited reform, making the Great Depression shallower... but their is still likely to be one at around the same time, unless you go back to before World War I.
 
Yeah, there were plenty of other bombs waiting to go off.

Kreditanstalt in Austria will still implode and take huge swaths of eastern europe with it, if not in late summer 31, then in 32.

re 1929, once you have huge crowds trading on speculation there really isn't a good way to pop the bubble - it's more like crashlanding in the Andes with zero visibility and no instruments.

If you stop trading, even for a few days, or try to ban trading on spec, you will either crash hard as the margin calls come rolling in.
OR you could drive the trade underground (like much of the banking sector in current China), in which case you have neither control nor reliable information about the state of the market.

Raising the rates will just force the speculators into higher gearings, leading of course to a bigger bang.

Probably the only safe way to pop the bubble would be a long period with a basically flat market, but with several small panics, to fundamentally alter the perceptiojn of the gain/risc factor.
 
The Great Depression was the result of the ponzi scheme that came of repaying war debts the Allies owed to the USA with reparations from the Germans. At some point something had to give, and the only way to avert the Great Depression is to somehow have a shorter, less obviously unaffordable WWI.
 

BlondieBC

Banned
By 1929, it is way to late to prevent a crash. To prevent a bubble bursting, a person has to prevent the bubble. I personally believe the Federal Reserve is the party most responsible for the 1929 crash, so one POD is to not create the Fed in 1913. Another POD is to have a fed who tries to prevent bubbles. Back in 1929, you could buy stock on 90% margin. As the stock market started to shoot up in the mid 1920's, the Fed should have raised margin requirements.
 
The Great Depression was the result of the ponzi scheme that came of repaying war debts the Allies owed to the USA with reparations from the Germans. At some point something had to give, and the only way to avert the Great Depression is to somehow have a shorter, less obviously unaffordable WWI.

That's part of it...

It's more an issue of that was the thing that made people vulnerable to an economic calamity if it were to occur, things were fine as long as the reparations could keep on trucking with US assistance, and if there hadn't been the series of structural collapses things would have stayed as they were.

What really unleashed the devastation of the Depression was the widespread and chronic abuses in the financial sector, businesses cooked the books just to keep the lights on it was how entrenched that sort of thing was in the US economy. When signs of a crisis emerged people in government responded to it in the only way they knew how and this of course did not work.

All things considered, Hoover didn't follow Andrew Mellon's suggestions, which is very much to his credit.
 

MAlexMatt

Banned
There's no reason the depression couldn't have been 'Great' as late as the middle of 1930. A recession comparable to the ones in the middle of the 20's, or a sharp but short depression comparable to the one in the early 20's, was perfectly possible until the trade war of the middle of the year destroyed export markets and triggered the first wave of bank failures across the Western world.
 
There is no way it could be stopped that late. I think you'd have to go back to at least around WW1 time in order to prevent a crash of some sort, although if it happened, and butterflies were minor, Nazi's would still popup. Germany's economy would still be worse off than the world and still be angry. The actual war would be more of a curb-stomp though for the allies.
 

MAlexMatt

Banned
Of course there is: Stop the trade war.

The Gold Standard countries enter a minor recession in early 1930 on account of France's contractionary policy, the US might experience a short but sharp depression on account of the bubble blown initially in '26 and '27 to help Britain back on the gold standard, and the Cult of the Real Bills Doctrine at the Fed may make things worse, but without the trad war there's no reason for a feed-back loop of cascading bank failures to begin.
 
Of course there is: Stop the trade war.

The Gold Standard countries enter a minor recession in early 1930 on account of France's contractionary policy, the US might experience a short but sharp depression on account of the bubble blown initially in '26 and '27 to help Britain back on the gold standard, and the Cult of the Real Bills Doctrine at the Fed may make things worse, but without the trad war there's no reason for a feed-back loop of cascading bank failures to begin.

Sorry, but that's not going to stop it; it's already under way when the crash occurs. It actually began in 1926 when the US housing market peaked and began to decline; the crash is just when the symptoms became visible to the average person. Avoiding the trade war will make it less severe, perhaps, but it won't stop it.
 
Anthony Appleyard said:
OTL: The Wall Street Crash happened, which caused worldwide depression, and in Germany led to the rise of the Nazi Party, etc as well known.
IMO, there's a false connection between the Crash & the Depression. Would there have been economic trouble after the Crash? Yes. Did it need to be a calamity? No, if Hoover had been a trifle more sensible & vetoed Smoot-Hawley, which had to be about the stupidest piece of legislation in response to a crisis.:eek::eek: It helped stifle exports, especially agricultural exports, at a time the U.S. was in dire need of increased exports.:eek::confused::confused:
BlondieBC said:
As the stock market started to shoot up in the mid 1920's, the Fed should have raised margin requirements.
:confused: Raising the rediscount rate in '26-7 would hav been a big help. By '29, it was absurd low, about 2%.:eek: It was so low, it was more profitable to put $$$ in the market than loan it out.:eek:
BlondieBC said:
Back in 1929, you could buy stock on 90% margin.
You mean, 10% down? That was uncommon even then. 50% was about the usual max.
 
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MAlexMatt

Banned
Sorry, but that's not going to stop it; it's already under way when the crash occurs. It actually began in 1926 when the US housing market peaked and began to decline; the crash is just when the symptoms became visible to the average person. Avoiding the trade war will make it less severe, perhaps, but it won't stop it.

There was a recession in 1926, but it was a separate, unrelated thing, having more to do with helping Britain return to the gold standard. The economy recovered and grew strongly between '26 and '29.

The crash itself was a rational response to an on-coming train: Get the hell off the tracks.
 
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