Commentary The first installment in this series described America’s limited and frugal federal government from 1789 until the 1930s. This second installment explains how the stage was set for radical change. Crisis and Depression In October 1929, a financial bubble broke. As always happens when financial bubbles break, people lost a great deal and hardship ensued. But bubbles had been breaking for centuries. Wise people knew that in financial panics most government intervention does more harm than good. They had learned that the best solution was for government to assist private charity in relieving the destitute, but otherwise allow the economy to reorganize and recover naturally. However, most people aren’t wise. In times of hardship, they insist that government “do something.” Officeholders respond according to a classic political syllogism: We must do something! This is “something.” Therefore, we must do this! Unfortunately, “this” almost exacerbates the damage or, at best, …