Q&A: How the Great Depression got its name

It’s not known what Tiger Woods pays his caddie, Steve Williams, left, but a base salary plus a percentage of winnings is typical.

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It’s not known what Tiger Woods pays his caddie, Steve Williams, left, but a base salary plus a percentage of winnings is typical.

How Great Depression named

When did the Great Depression get its name? Was it called a depression when it occurred?

President Herbert Hoover, the man blamed by many for causing the Great Depression of the 1930s, also helped name it.

Previous economic downturns were generally known as "panics," but Hoover deliberately chose the word depression because he thought it sounded less alarming, according to historian William Manchester in his book, The Glory and the Dream: A Narrative History of America, 1932-1972.

Hoover even used these words in a speech in the fall of 1931: "I need not recount to you that the world is passing through a great depression." But his use of "a" instead of "the" was seen as an indication that Hoover did not grasp the historical significance of the economic troubles.

It fell to Lionel Robbins, a British economist, to write a book that would give a name to the times — The Great Depression — in 1934.

Little agreement on definition

What's the difference between a recession and a depression?

Let's start with what we know: A depression is worse than a recession. We've had plenty of recessions since World War II, but no depressions since the Great Depression of the 1930s.

In defining recessions, most economists defer to the National Bureau of Economic Research. That group's definition is subjective, relying on declines in income, employment and other factors. That's one reason others prefer a more concrete definition: two consecutive quarters of declines in gross domestic product, the value of all goods and services produced within the United States.

Depressions are even harder to pin down. Some say it takes three years of unemployment above 10 percent and economic output declining by 10 percent. Others say it's a recession made persistent by structural problems with the economy. A third group argues that it's all about terminology: Officials started using "recession" in the late 1930s to avoid triggering memories of darker days earlier that decade.

In short, there most certainly is a difference between a recession and a depression — but there's no agreement about where to draw that line.

What Tiger's caddie earns

I enjoyed watching Tiger Woods' comeback win at Bay Hill. How much of the $1,080,000 purse does his caddie earn? Is this the standard for PGA caddies?

It's not known exactly what Woods pays his caddie since 1999, Steve Williams, but most PGA Tour caddies earn a base salary plus a percentage of the golfer's winnings. Typically, a caddie would get 6 to 9 percent of what a golfer earns. Some golfers give their caddies 10 percent when they win and up to 8 percent for a top 10 finish.

Q&A: How the Great Depression got its name 04/16/09 [Last modified: Thursday, April 16, 2009 8:03am]

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