I was interested in the cause of the 1937 recession, and began to focus on world trade coming across this paper. The authors place more emphasis on monetary and exchange rate stability than they do on protectionism. This is the reverse of what I though going onto the search.
Back to the main problem of the 1937 recession. The problem solved in that recession was a shift from domestic production to war production. The 1937 Federal Reserve changes, which Rohmer call inadvertent, were more likely the result the prelude to war. The re-alliance of American, Britain and France started with the Tripartite monetary agreement, an effort to allign monetary systems as part of the anti-German efforts.
It is less important what the Fed does, but more important what the regime change was. Regardless of who was on the gold standard, who balanced budgets, the dominant theme is 1937 was a demand in French Europe to invest in the American war machine. Money would have found a path to that investment regardless of initial conditions. The 1935 terms of trade was Domestic Production, in 1937 it became Big Fascist uprising. Yes, monetary stimulus helped, getting France off gold. The deficit, or something like it, was a necessary "zero crossing" in Congress to switch production regimes from domestic to foreign war material.
I have a buncha charts.
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If you're interested in a different perspective on the 1937 Recession, I published this today. Ignoring a few lines in the conclusion on government(which in retrospect I shouldn't have included; I am trying to get the article published elsewhere), I think I present a pretty objective argument:
The Dangerous Lessons of 1937
In case that doesn't work
http://www.economicthought.net
The 1937 recession had to do with high real wages and monetary policy.
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