Here is a fascinating piece of investing arcana — from the St. Louis Fed FRASER archives.

A history of booms and busts from 1775- 1944. Emphasis is on post war economies.  As described by the paper:

A study of the reaction of business activity immediately following previous wars can, in a measure, act as a partial guide to the future — at least avoid a hasty step into the unknown. The general pattern of these reactions is outlined in this chart by the Red or Green squares which block out and high light the trends that have followed previous major wars.

These diagrams indicate a more or less definite pattern of reaction that points up as follows: first, a brief period of uncertainty, then a year or more of business recovery followed by a short depression; then a period of prosperity extending over several years.

Summing up a comparison of these postwar years we find that they cover a space of from eight to ten years each, showing less than three years of business recessions and an average of 7 years of prosperity.

The chart is quite complete and astonishing — rather than attempt to show the entire 170 year time line, here is a about a quarter of it:


click for ginormous graphic


Hat tip Invictus

You can download the PDF here.

Category: Cycles, Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

22 Responses to “Business Booms and Depressions Since 1775”

  1. Marcus says:

    Great chart. One observation involves cloning. Can we get some DNA from Calvin Coolidge and clone him as President.

    Let’s have the roaring 20s back.

  2. constantnormal says:


    Any thoughts as to why they ended it at 1943?

    Perhaps going further might have fueled political debate and taken the historical research into the realm of politics?

    It sure would be fascinating to see the rest of it from 1943 to the present.

  3. tagyoureit says:

    1940′s pin-up verson of chart porn. Va-va-va-Voom!

  4. b_thunder says:

    Stop counting your chickens, the war isn’t even over yet! (Afghanistan)

    …and another war may begin at any moment (Yemen, Iran, Pakistan)

    …and according to some the War on Terror is an open-ended commitment without an end (at least 50 years)

  5. Invictus says:


    They ended it in 1943 because that’s when it was published. It would be interesting to see its continuation.

  6. ironman says:

    Way cool!

  7. SINGER says:

    love the cover art as well….

  8. Marcus Aurelius says:


    We already had the roaring naughts. Now we have to pay it off.

  9. Mannwich says:

    @Marcus and Marcus Aurelius: I thought you guys were one and the same for a second. I often talk to myself as well but doing it on blogs sure would have taken this act to new levels.

  10. nofoulsontheplayground says:

    What’s most interesting to me is how the apparent increases in productivity in the production of commodities combined with improved transportation apparently drove the prices down in the early 1920′s and kept them there through the roaring 20′s, helping create that perfect storm.

    I think one part of that 1920-1940 era that goes mostly unnoticed is the increased use of machinery on the farm to drive huge productivity increases. That is happening now in China, and it is making it tough for them to keep unemployment down even with the 8% (divided by 2 to get the real number) growth continuing with the help of the Chinese sponsored free loan program.

    The war aspect of the chart seems to emphasize the obvious – when the US helps destroy the productive capacity of much of the world, the US economy benefits disproportionately until such a time that capacity can be regained.

  11. constantnormal says:

    @Invictus — another reason that they have not bothered to extend it is the physical improbability of doing so, in a physically readable form.

    As to it’s having been published in 1943, yeah … but it’s only data. Anyone with a PC and a half a day’s time could reproduce it from the raw data today. (OK, maybe a full day’s time … there’s a lotta data in that chart)

    What’s the black area? Is that the stock markets? Was there even an index of stock measurement back in 1775-1790? A lot of this data had to be historical approximations from regional numbers (like commodity prices), as I doubt that there was really a national market prior to the 1800s. But I could be wrong, I am not an economic historian. Franklin411? Please weigh in on this.

    Interesting how federal income stayed ahead of federal debt all the way up until WWII. Even (especially) during the Great Depression — you can see where Krugman and Bernanke are coming from when they state that more could have been done to ameliorate the GD. (I’m not saying whether it would have worked or not — only that you can see their perspective)

    But back to the physical improbability … just look at the high-water-mark for federal debt (1943) — $150B. To hang 2 zeroes on the end of that would scale the chart 100X taller.

    I suppose they could re-cast it using GDP as a data normalizer for monetary amounts, and attempt to re-cast the price indices relative to constant dollars, but the range of valuations across the centuries still makes it unwieldy.

    Perhaps this is a place where a gigapixel image would come in handy. And checkboxes (a la Google Public Data charting) to activate/deactivate specific data elements from the chart.

    Wouldn’t THAT be something to behold!

  12. Niskyboy says:

    On March 21, 1931 the Dow closed at about 188 points, following which a 78-percent decline began that only ended when the Depression low of 41 was reached in July, 1932.

  13. constantnormal says:

    Silly me — that black area is not the “stock market” — stocks can’t go negative (even tho it sometimes feels that way). My best guess is that it is some sort of index of national economic health.

  14. Invictus says:


    The legend states that the black area is “Business Activity,” however they chose to define that (not exactly sure; GDP?). Stocks are dot-dash-dot, and bonds are dot-dot-dot.

  15. torrie-amos says:

    fwiw, i don’t buy alot of those types of charts, imho, i think they get things wrong

    if you map out major technological innovations and the standard S curve over time it is more telling along a 40 year cycle

    basically where we are now was set up 40 years ago, so if we are 2010 going back 40 years is pray tell 1970, and what was going on then……………

    end of a major stupid war, where we decided, war is pretty dumb, peace is better, and the outcome was we got too know our asian members pretty good, then, nixon opened up china in 1974

    so, what happened right then and there was COMPETION OF MAJOR TRANSPORTATION INITIATIVES, us interstates out to burbs all done, shipping worlwide complete to all ports everywhere, and then all countries had airports and airplanes

    thus, in place was worlwide infrastructure for transportation of goods, trade, world trade has exploded since then……..

  16. [...] by Belray Asset Management on March 24, 2010 This morning I was reading Ritholtz’s blog, The Big Picture, and came across an amazing historical chart from the St. Louis Fed FRASER [...]

  17. mdod says:

    This is great stuff.

  18. farmera1 says:

    Wars cause inflation. The first book ever written about war by Sun-Tzu in 500BC or so(THE ART OF WAR) said where armies march inflation follows.

    “Where the army is, prices are high; when prices rise the wealth of the people is exhausted. ”

    Inflation during war is a well known pattern. Depressions following war is nothing new.

    Sun-Tzu also said that no country benefits from a protracted war. The man was well ahead of his time.

    PS: We are at a permanent two front war. Inflation was big early in the wars (not necessarily in the “official inflation figures”) but the people knew we were suffering from inflation. ….

  19. Stephen says:

    Anyone notice all the ‘stability’ that having The Fed brought us?

    I’d dare to say that we might be better off with the minor ups and downs we had before 1913 as opposed to the relative tsunamis we had after.

  20. kbrehm says:

    Vintage InfoGraphic Pr0N! Me likey!

  21. [...] don’t make charts like this anymore: Booms & Recessions since 1775 (Full chart [...]