Difference between revisions of "Essay: New Ordeal"

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Dow Jones Industrial Averages, 1929-49.

Dow Jones Index in constant dollars relative to the price of gold. The chart is a good reflection of living standards throughout the period.

The New Ordeal describes the period of time between 1929 and 1949, when the American economy finally recovered from the Crash of '29. It encompasses the early stages of the Great Depression during President Herbert Hoover's term and the four terms of Franklin D. Roosevelt, the final term having been administered mostly by his successor, President Harry S. Truman. The New Ordeal also is sometimes refered to as the Great Ordeal or simply the Ordeal.

Etymology

The exact origin of the term "New Ordeal" in unknown. Extensive searches of online and library databases fail to reveal any reference to the New Deal as the "New Ordeal". The best guess, then, is that its origin is too recent to show up in cited works.

Double double dip

During the twenty years of the New Ordeal, America experienced 2 double dip recessions, or essentially a second depression within the Great Depression, and World War II, a calamity that claimed the lives of 55 million people worldwide. Many of the nations involved in World War II resorted to "economic planning", as Economist Friedrich Hayek refered to it, to address the so-called "crisis in capitalism" in the 1930s.

The 1929-1949 recession had within it a recession from 1937-1943; 1933 to 1937 were recovery years stimulated by the New Deal government spending. However by 1937 the nation had nowhere near recovered to where it was in 1929. Manufacturing demand stimulated by WWII led to the 1943-1949 recovery, where finally, in 1949, the New York Stock Exchange recovered to the level it had been at 1929.

During the Great Bear Market from 1929 to 1942, the Dow Jones Industrial Average (DJIA) had rallies of 48% (from November 13, 1929, to April 17, 1930), 94% (July 8, 1932, to September 7 of that year), 121% (February 27, 1933, to February 5, 1934), 127% (July 26, 1934, to March 10, 1937), 60% (March 31, 1938, to November 12 of that year), and 28% (April 8, 1939, to September 12 of that year). Yet, on April 28, 1942, the DJIA was still at only 92.92, 76% below its September 3, 1929, high of 381.17. ^[1]

Recording keeping & construction trades

Record keeping and even economic definitions then were not what they are today. By using the Dow Jones Industrial Average (which is practically the only measurement available in real time that scans the entire period) the Dow did not get back to the level it was at in 1929 until 1949 (160 pts on the Dow). Other economic indexes either did not exist, or were developed later, often by guess work. For example, the oft quotes unemployment rate of 25% which peaked in 1932 is only guess work based upon observations in New York City. No one knows what the real national figures were, or what it actually had been in places like Arkansas or Oklahoma. Gross output figures such as GDP did not exist either.

It was not until 1949 that living standards and peacetime employment returned to something like it was prior to 1929. The New Ordeal is evident today throughout American cities where one can see a distinct gap in the building and construction trades that took place in the decades of the 1930's and 40's. Little was built beyond quonset huts, tin structures with a semi-circular shape and a timber frame underneath. And what was built was either extremely expensive, or built by the government usually for military purposes.

References

1. ↑ Daniel Turov, Mixed Message, Barron’s, 21 May 2001, quoted in the Liethner Letter, Issue 1826 June 2001, retrieved 11 June 2007.

Further reading

• Road to Serfdom, Friedrich A. Hayek, Reader's Digest Condensned Version, April 1945.
• The Great Ordeal, TIME magazine, May. 14, 1945.
• Franklin D. Roosevelt: The Ordeal, Frank Freidel, Boston: Little, Brown and Company, 1954.