US and Canadian Private Investment 1929–1939

To continue another point from my last post.

Was the US recovery hindered by Roosevelt’s New Deal after 1933 to such an extent that America’s recovery was inferior to Canada’s?

Robert Murphy thought that it was on the basis of the unemployment data, but, as we have seen, that argument collapses under close scrutiny.

Let us look at another good indicator: private investment in both Canada and the US from 1929–1939.

We can see it in the graph below with 1929 as the index base year = 100 (with data from Amaral and MacGee 2002: 48, Table I).

The data can also be seen in Appendix 1 and 2 below.

It is obvious that US private investment recovered to a greater extent than Canada’s did after 1933: by 1937 it had risen to 59.5, while Canada’s was still at 44.

US private investment fell in 1938 when Roosevelt induced a recession by contractionary fiscal policy, but rose at the same basic rate as Canada’s even if it was still slightly below it in 1939.

Nevertheless, the trend from 1933 to 1937 is quite clear: it does not support Murphy’s case at all. The US had superior private sector investment growth.

Appendix 1

US Private Investment 1929–1939
Year | Index
1929 | 100
1930 | 69.2
1931 | 46.1
1932 | 22.2
1933 | 21.8
1934 | 27.9
1935 | 41.7
1936 | 52.6
1937 | 59.5
1938 | 38.6
1939 | 49

Appendix 2

Canadian Private Investment 1929–1939
Year | Index
1929 | 100
1930 | 85
1931 | 50.5
1932 | 24.8
1933 | 15.2
1934 | 28.5
1935 | 32.9
1936 | 28.2
1937 | 44
1938 | 42.8
1939 | 52

BIBLIOGRAPHY
Amaral, P. and J. MacGee. 2002. “The Great Depression in Canada and the United States: A Neoclassical Perspective,” Review of Economic Dynamics 5.1: 45–72.