, Columnist
One Sure Way to Hurt the U.S. Economy? Cut Immigration
Big reductions in residence permits in the 1920s contributed to the Great Depression.
A resource, just like steel or oil.
Photograph: Corbis Historical
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What caused the Great Depression? Most people would probably say that the trigger was the stock market crash of 1929. From peak to trough, the Dow Jones Industrial Average lost about 88 percent of its value, and the index didn’t regain that peak until the mid-1950s:
There was also a housing boom and bust in the 1920s, which was probably a contributor as well. At this point, there’s little doubt that financial crises and large asset bubbles cause economic slowdowns, even if economists don’t know the precise reason that this happens.