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[[Image:29-49.gif|right|250px|thumb|Dow Jones Industrial Averages, 1929-50.]]

[[Image:29-49.gif|right|250px|thumb|Dow Jones Industrial Averages, 1929-50.]]

The '''"New Ordeal"''' is a neologism rarely used by opponents of Franklin D. Roosevelt and his New Deal, which was one of the most successful economic recovery programs in US history during peacetime.  It took the US economy two decades,  between 1929 and 1949, to finally recover from the [[Crash of '29]] which resulted from a number of factors, including delayed repayment of loans by wartime allies (World War I) and the failure of the Harding, Coolidge, and Hoover administrations to regulate the financial sector.  The "new ordeal" in the minds of those who accept that such a thing even existed, encompasses the four presidential terms U.S. President [[Franklin D. Roosevelt]] had been elected to, the final term having been administered mostly by his successor, President [[Harry S. Truman]].   

The '''"New Ordeal"''' is the period of time between 1929 and 1949, when the American economy finally recovered from the [[Crash of '29]].  It encompasses the four presidential terms U.S. President [[Franklin D. Roosevelt]] had been elected to, the final term having been administered mostly by his successor, President [[Harry S. Truman]].   

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During the two decades between 1929 and 1949, America experienced the Great Depression and [[World War II]], which claimed the lives of 55 million people worldwide.  Out of necessity, many of the nations involved in World War II resorted to command economies to meet the demands of the conflict.

During the two decades between 1929 and 1949, America experienced two recessions, and [[World War II]], which 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]] referred to it, to address the so-called "crisis in capitalism" in the 1930s.

The Depression had within it a recession from 1937-1938; 1933 to 1937 were recovery years stimulated by the [[New Deal]] government spending. However by 1937 the US economy had not recovered to the levels of 1929. Manufacturing demand stimulated by WWII and the pent up post-war demand for durable consumer goods fueled the 1941-1949 recovery, until finally, in 1949, the New York Stock Exchange reached the level it had been at prior to the crash of October, 1929.

The Depression had within it a recession from 1937-1938; 1933 to 1937 were recovery years stimulated by the [[New Deal]] government spending. However by 1937 the US economy had not recovered to the levels of 1929. Manufacturing demand stimulated by WWII and the pent up post-war demand for durable consumer goods fueled the 1941-1949 recovery, until finally, in 1949, the New York Stock Exchange reached the level it had been at prior to the crash of October, 1929.

===Managerial state===

===Managerial state===

During the Second World War, the US economy, due to the demands of the conflict, became very much a command economy. Ford, Chrysler, General Motors, Packard, and Studebaker all ceased the production of civilian automobiles by the end of February, 1942. Instead, they fulfilled government contracts that  required them to build tanks, aircraft, and other vehicles for military use. They also turned out engines for aviation and naval use.

During the Second World War, the US economy, due to the demands of the conflict, became very much a command economy. Ford, Chrysler, General Motors, Packard, and Studebaker all ceased the production of civilian automobiles by the end of February, 1942. Instead, they fulfilled government contracts that  required them to build tanks, aircraft, and vehicles for military use. They also turned out engines for aviation and naval use.

Durable goods were not easily obtainable by civilians during the conflict. Gibson refrigerator for example, still produced refrigerators and freezers, but only for the government. Part of their factory was dedicated to the production of gliders for carrying troops in the D-Day invasion of June, 1944.

Other durable goods were not easily obtainable by civilians during the conflict. Gibson refrigerator for example, still produced refrigerators, but only for the government. Part of their factory was dedicated to the production of gliders for carrying troops in the D-Day invasion of June, 1944.

==Crash of 1937==

==Crash of 1937==

===The Second New Deal===

===The Second New Deal===

All during the winter and spring of 1938 a group of economists from Harvard and Tufts were busy on a book which they called ''An Economic Program for American Democracy.'' which  appeared in October, 1938. These instructors had been moving under the guidance of Dr. Alvin H. Hansen,<ref>Alvin H. Hansen, ''Fiscal Policy and Business Cycles'', (Norton, 1941).</ref> The theory they propounded may be briefly stated thus: The expansion of the American economy came to an end in 1929. Before that it had grown primarily because technological expansion went forward on an amazing scale. But all this came an end. Population  now increased at a slower rate.  

All during the winter and spring of 1938 a group of young instructors from Harvard and Tufts were busy on a book which they called ''An Economic Program for American Democracy.'' which  appeared in October, 1938. These instructors had been moving under the guidance of Dr. Alvin H. Hansen,<ref>Alvin H. Hansen, ''Fiscal Policy and Business Cycles'', (Norton, 1941).</ref> The theory propounded may be briefly stated thus: The expansion of the American economy came to an end in 1929. Before that it had grown primarily because technological expansion went forward on an amazing scale. But all this came an end. Population  now increased at a slower rate.  

The theory continued with the observation that Government spending on the First [[New Deal]] had been proved to be a powerful tonic and rescued the US economy.  People realized that government pump priming  could lead to a self-sustaining economic recovery.  The government set up built in stabilizers to maintain prosperity, such as the Federal Deposit Insurance Corporation (FDIC).  

The theory continued: Government spending on the First [[New Deal]] had been proved to be a powerful tonic.  People realized that government pump priming  could lead to a self-sustaining economic recovery.  The government set up built in stabilizers to maintain prosperity, such as the Federal Deposit Insurance Corporation (FDIC).  

    

    

By 1938 Roosevelt embarked on a massive defense appropriations buildup; the Administration would advance 30% to a defense contractor when placing an order. The National City Bank reported an increase of overall business profits in the year 1939 over 1938 of 63.6%, and in its December 1940 Bulletin showed for 284 companies "directly affected by war and defense program" a rise of 79.2%. The ''Wall Street Journal'' reported, "Betterment in profits was naturally more pronounced, as a rule, in those industries benefiting directly or indirectly from the European conflict." <ref>''Wall Street Journal'', May 3, 1940.</ref>

By 1938 Roosevelt embarked on a massive defense appropriations buildup; the Administration would advance 30% to a defense contractor when placing an order. The National City Bank reported an increase of overall business profits in the year 1939 over 1938 of 63.6%, and in its December 1940 Bulletin showed for 284 companies "directly affected by war and defense program" a rise of 79.2%. The ''Wall Street Journal'' reported, "Betterment in profits was naturally more pronounced, as a rule, in those industries benefiting directly or indirectly from the European conflict." <ref>''Wall Street Journal'', May 3, 1940.</ref>

==Stagnationism==

==Stagnationism==

1946 DJIA declined 24.6% over 37 months. There was only one crash phase (August–September 1946), and the bottom was hit within 4 months. But the market moved sideways for almost three years and tested the 1946 low area three times. The final time was in 1949, after which the market rose almost without interruption for the next 12 years (160 to 741 in 1961).

1946 DJIA declined 24.6% over 37 months. There was only one crash phase (August–September 1946), and the bottom was hit within 4 months. But the market moved sideways for almost three years and tested the 1946 low area three times. The final time was in 1949, after which the market rose almost without interruption for the next 12 years (160 to 741 in 1961).

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.

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 effects of the Great Depression 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.  Most new construction of the period was accomplished by the New Deal's Work Progress Administration (WPA) which put many unemployed Americans to work building bridges, post offices, and other government buildings. The home loan guarantee feature of the GI Bill and the employment of rapid construction techniques (perfected by army engineers and navy sea bees during WWII) would result in a boom in postwar suburban housing. The most famous example of this is William Levitt and the creation of Levittown, NY.

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.

 

==Further reading==

==Further reading==

*''Franklin D. Roosevelt: The Ordeal'', Frank Freidel, Boston: Little, Brown and Company, 1954.

*''Franklin D. Roosevelt: The Ordeal'', Frank Freidel, Boston: Little, Brown and Company, 1954.