The crash of October 1929 played a large role in the Great Depression, but was only one of many drivers. The best evidence suggests that Federal Reserve behavior and the public statements of numerous government officials caused the crash. In the fall of 1928 immediately following the death of Benjamin Strong, the President of the Federal Reserve Bank of New York, the Federal Reserve policy became substantially tighter. Adolph Miller of the Federal Reserve Board was able to take control of policy. The problem began because Miller believed that speculation was causing share prices to be too high, and that

this was damaging the economy. Herbert Hoover, who had just been elected President, backed this idea and together they set out to bring down the stock market.

As previously stated, Keynes' solution on ending the Depression was rejected. President Roosevelt tried countless other approaches, all of which failed. Nearly all economists agree that World War II cured the Great Depression; Keynesians believe this was so because the U.S. finally began massive public spending on defense. This is a large part of the reason why "wars are good for the economy” written by Keynes himself. Between 1939 and 1944, the peak of wartime production, the nation's output almost doubled, and unemployment plummeted--from more than 17% to just over 1%. In those 7 short years after the Depression, the US went from its worst economic hardship to its greatest economic boom.

The essence of Keynes’ theory, however, involves a shift from classical economics' concern with the production of wealth to a concern with the consumption of wealth. According to Keynes, Say’s Law is not true; that is, supply does not create its own demand. Rather, according to Keynes, supply is capable of outstripping demand, with the result that goods remain unsold, and production and employment are correspondingly cut back. As a result, the solution to unemployment, according to Keynes, is not to reduce wages and prices, as the Classicals advocated, but to increase consumption through the spending of money by the government.

One thing clearly visible is that our economic institutions are very different today than they were in 1929. Many of the changes are a direct result of John Maynard Keynes and the Depression itself. Some of the more important things that came from this period are that the Federal Reserve System is more centralized, we have deposit insurance and stronger bank regulation, commercial and investment banking are separate

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