The Essential Rothbard - Ludwig von Mises Institute

42 The Essential Rothbard
In arriving at his interpretation, an earlier work influenced him.
He considered Lionel Robbins’s The Great Depression94 to be “one
of the great economic works of our time. . . . This is unquestionably
the best work published on the Great Depression.” 95 In this
evaluation, he differed from Robbins himself, who under the influence
of Keynes repudiated his own book.
Robbins adumbrated a theme that Rothbard carried much further
in his own book:
We see how bank credit expansion in the U.S. . . . generated
by a desire to inflate in order to help Britain as well as an
absurd devotion to a stable price level, drove the civilized
world into a great depression. . . . He [Robbins] shows that
the U.S. inflation in 1927 and 1928 when it was losing gold
. . . was in flagrant violation of the “rules” of the gold standard.
96
Robbins also prefigured a key point in Rothbard’s analysis of
why the Depression lasted so long.
Robbins shows how the various nations took measures to
counteract and cushion the depression that could only make
it worse . . . [e.g.,] keeping up wage rates (e.g., Hoover and
his White House conferences).” 97
But all these basic Austrian points were carried to a new level of
precision and depth in America’s Great Depression.
Rothbard began his work with a presentation of the Austrian
theory of the business cycle. The key problem, he says, is
94 Lional Robbins, The Great Depression (London: Macmillan, 1934).
95 Letter to Ivan Bierly, November 14, 1959; Rothbard Papers.
96 Ibid.
97 Ibid.