There has been renewed interest in the 1937-8 recession because analysts have mentioned that a Fed engineered increase in interest rates in 2016-7 might stop the 2009-16 recovery much as the 1937-8 recession interrupted the Great Depression recovery. There is interest in finding out whom or what caused the 1937-8 recession. Milton Friedman blamed the Fed for doubling reserve requirements and also said that the Treasury was equally to blame for its gold sterilization program. More recently Irwin came to the conclusion that gold sterilization was the main culprit. Velde finds that the sterilization of gold halted the growth of the monetary base in 1937 and that the effect of the reserve requirement increases was probable but less clear. Calomiris, Mason, and Wheelock find that the Fed, responsibility was minimal. None of these articles mention inventories being a significant problem. Meltzer said it was too small to be a major factor.. Our inventory data are not only for 1935-8 but for accumulations in front of all post WWII recessions It indicates that an inventory bubble was a problem. We also analyze monthly bank reserves in 1935-37 along with expectations expressed by the Fed in the Federal Reserve Bulletin. The banks did not behave as the Fed expected. We believe the Treasury was responsible for half of the money stock decline, the Fed 30%, and other factors 20%. 1934-42 and 2008-16 have major features in common: high excess reserves, zero bound short term interest rates, and a Fed worried that the excess reserves might cause inflation. The 1936-7 solution caused trouble and the new solution also has problems.