General Electric, bellwether of corporate America, has cut its dividend – its first reduction since 1938. This year we will probably see the largest reduction in dividends since 1938. But 1938 is not generally remembered as a remarkable year in economic history. What happened?

An explanation takes us back to the history of the Great Depression, as recounted entertainingly by J.K. Galbraith and influentially by Ben Bernanke, chairman of the US Federal Reserve. The Wall Street crash of 1929 was not, initially, a dramatic event: by the standards of more recent history, the share price correction was modest. What was remarkable was that the share price decline went on and on. By 1933, US equities had lost three-quarters of their 1929 value.

There is not much dispute that government actions after 1929 made the crisis worse, even if there is still controversy about the relative contributions of restrictive fiscal policy, inept monetary policy and protectionist trade and financial strategies. When President Franklin Roosevelt took office in 1933, America's monetary system had reached the point of collapse.