THE NEW ERA AND THE GREAT DEPRESSION
THE final diagram of this series is Diagram 6 on page 44. It covers the 20 years from 1920 through 1939, and Cycles W, X, Y, and part of Z. The year 1920 is repeated from the preceding diagram. The downswing of business in Cycle V, from the peak of prosperity in February of 1920 to the upturn from the following depression in July of 1921, was greater in amount than any previous downswing. The peak of prosperity was over 12 percent above the computed normal level, and the trough of the depression was 27 percent below the normal level.
The total downswing to the Primary Post War Depression was over 39 points. The longest previous downswings, measured in the same way, were those of 33 points each in Cycles B and C, not far from 100 years before. The upturn from the depression was preceded by declining interest rates, advancing bond prices and an increasing volume of security issues. Stock prices did not turn upward until one month after the business upturn.
In following these movements on Diagram 6 it should be noted that the scale at the left for stock and bond prices and security issues is quite different from those used in the preceding diagrams of the series. This has been necessitated by the fact that no more than 140 units have been previously needed to show the extreme top ranges of the financial series. Conditions were so entirely different in the great speculative era which came to an end in 1929 that in this diagram the financial scale has a range of 240 units.
Interest rates rose and bond prices declined for seven months before the top of Cycle W was reached in April of 1923. Security issues also declined for six months and stock prices for one month