Prohibition & the Crash
Failed theories: a rehash of some unconvincing explanations, and one or two good ones
Richard Bookstaber came up with two observations that match the facts. The first is that there is never a single cause but rather a nexus of events close together in time which precipitate every major crash. The second is his analogy with cockroach antennae as a mechanism for detecting threats and taking flight. This may matchthe strategy adopted by victims of taxation and exploiters of the economic dislocations brought about by sumptuary and looter laws. His book is titled  A Demon of Our Own Design.
Ben Bernanke's theories are couched entirely in terms of transcendental functions, with no relation whatsoever to any discernible fact or event. Since they come out of nowhere, that is where they lead.
Elmus Wicker assembles the most useful data, but his approach is to so define panics and crashes as to make them go away. Nice trick if you can make it work--and teach the Fed. According to Wicker, there were only perhaps three such crises, all of them caused by the deus-ex-machina of loss of confidence arising from nowhere, from no identifiable cause.
Peter Temin was fairly lucid in confessing not to know the causes. In his second book, however, he reverses thrust and claims the crash was the result of a shortage of socialist policies.
Ayn Rand--who married in 1929--came up with the best explanation. It is based on observable facts and works for nearly all major crashes. It is condensed in the "money speech" in Atlas Shrugged, and again set forth in the preamble to the stage version of "The Night of January Sixteenth." January 16, 1920, incidentally, was the day the Volstead Act for enforcement of the prohibition amendment went into effect.
Herbert Hoover denied the tariff act had anything to do with it "because it was only passed afterward." This same evasion was used in 1893 to obfuscate causes, and loses sight of Baruch's definition of a speculator. What Congress did while planning the tariff act had important economic effects in triggering the Crash, but mystical and altruistic policies were what created the Great Depression.
My explanation states that the crash and most panics resulted from using the 16th Amendment and the revenue laws to prop up the 18th at the expense of the 4th and 5th Amendments, i.e. freedom, hence, the economy. But the interesting part is how major players in the economy found a way to use the 18th amendment and its laws to circumvent the 16th. While they did the economy grew as it had before 1912.