Comment on Eichengreen and Mitchener's “The Great Depression as a Credit Boom Gone Wrong”

- 1 - Comment on Eichengreen and Mitchener “The Great Depression as a Credit Boom Gone Wrong” by Charles Goodhart I am not yet as familiar with Kris Mitchener’s work as I hope that I will shortly become, but I do know that any work co-authored by Barry Eichengreen will be lucid, well written, sensible and entertaining. This paper is no exception. Nevertheless a discussant is not supposed just to shower praise. I am supposed to earn my keep by probing for weaknesses and criticisms. So here goes. I cannot refrain from starting by pointing out a splendid gaffe. On page 51, the authors write as follows, “monetary policy is a blunt instrument..... It can result in overkill, as ..... Benjamin Strong and then George Harrison learned starting in 1929.” Overkill is indeed le mot juste since Benjamin Strong had already died in October 1928! In a somewhat similar vein I found it quite hard to credit the claim, admittedly made by Schedvin and not by the authors here, in footnote 55, page 29, that there were a number of general managers of Australian financial institutions in the early 1930s who were already comparatively senior officers in their firms at the end of the 1880s. Let me, however, become more serious. Barry and Kris use numerous adjectives to describe credit expansion in the 1920s and 1990s, such as ample, elastic and abundant. I would like to suggest that bank credit is, almost always, ample, elastic and abundant. The point ...