Simpson (1933): Real Estate Speculation and the Depression

Overview

Herbert D. Simpson, an economist writing contemporaneously with the crisis, published "Real Estate Speculation and the Depression" in the American Economic Review, Vol. 23, No. 1 (March 1933), pp. 163-171.[1] Drawing on Chicago-area data, Simpson argued that the 1920s saw excessive residential construction abetted by an alliance of real estate promoters, banks, and local politicians; in Cook County alone he counted roughly 151,000 improved and 335,000 vacant subdivided lots still unsold in 1928, projecting — based on population growth — that it would take until 1960 to absorb them.[2] A later economic-history review of the episode credits Simpson with recognizing the real estate collapse as a distinct phenomenon from the wider Depression, while noting that his paper "provided few statistics" and tended to conflate the real estate bust with the broader downturn rather than isolating its causal contribution.[2]

Phillip J. Anderson, in The Secret Life of Real Estate and Banking (2008), cites Simpson's paper as contemporary evidence for his own thesis that real estate lending — not securities losses — was the largest single factor behind the roughly 4,800 US bank failures of 1930-33, part of the book's broader argument that mortgaged land rent, not banking per se, drives the 18-year real estate cycle.[3] This is Anderson's characterization of Simpson's significance; Simpson's own 1933 paper, being closer to journalism than modern econometrics, does not itself present a statistical decomposition of bank-failure causes, and should be read as a period source rather than a peer-reviewed causal estimate. [CITATION NEEDED: a direct page-level quotation from Simpson's original text confirming the "largest single factor" characterization in his own words.]

See Also

• The Secret Life of Real Estate and Banking (Anderson, 2008) — the discovery source that cites this paper
• 18-Year Land Cycle — the periodicity claim this evidence is used to support
• Boom-Bust Cycle — the concept page situating this evidence within land-cycle vs. credit-cycle readings
• Phillip J. Anderson — author who cites Simpson's finding

Sources

1. Herbert D. Simpson, "Real Estate Speculation and the Depression," American Economic Review, Vol. 23, No. 1 (March 1933), pp. 163-171. Internet Archive (full issue, lending library) — primary source; page range and venue confirmed via the secondary source below (full text not independently re-read for this stub).
2. Eugene N. White, "Lessons from the Great American Real Estate Boom and Bust of the 1920s," NBER Working Paper No. 15573 (2009), pp. 4-5 and bibliography. PDF (NBER) — used for the confirmed bibliographic citation, the summary of Simpson's Cook County lot-count findings, and the critical note that Simpson "provided few statistics."
3. Phillip J. Anderson, The Secret Life of Real Estate and Banking, Shepheard-Walwyn, 2008, Ch. 11-12 — discovery source; cited for the claim that Simpson identified real estate loans as the largest single factor in the 4,800 bank failures of 1930-33. See wiki summary.