economists like waddill catchings, william trufant foster, rexford tugwell, adolph berle (and later john kenneth galbraith), popularized a theory that had some influence franklin d. roosevelt. this theory maintained that the economy produced more goods than consumers could buy, because consumers did not have enough income. according to this point of view, salaries had increased at a lower rate than productivity in the 20s. most of the benefits of increased productivity were allocated to profits, which were located in the stock market crisis instead of in consumer purchases. in this way the unequal distribution of wealth in the 20s caused the great depression.
according to this point of view, the original cause of the great depression was an over-investment worldwide while the levels of wages and profits of independent companies fell short in creating sufficient purchasing power. it was argued that the government should intervene through an increase in the taxes of the richest to make income more equal. with the growing income, the government was able to create public works to increase employment and boost the economy. in us economic policies it had been the opposite until 1932. the revenue law of 1932 and the public works programs introduced by hoover in his last year as president and resumed by roosevelt, created redistribution of purchasing power.
congress is the one who was to declare war. : )