On This Day In Finance: June 8 - New Deal Again

By Peter Cherewyk | June 08, 2009 AAA
On This Day In Finance: June 8 - New Deal Again

"If, as our Constitution tells us, our Federal Government was established among other things, 'to promote the general welfare,' it is our plain duty to provide for that security upon which welfare depends."

"This seeking for a greater measure of welfare and happiness does not indicate a change in values. It is rather a return to values lost in the course of our economic development and expansion."

The day of this quote by Franklin D. Roosevelt, the Dow Jones Industrial average jumped 3.93% to close at 98.44 - the highest single-day Dow gain in about six months. No, I'm not missing a couple zeros. This was back on July 8, 1934 when the President outlined his "New Deal," from which came the birth of our modern-day pension system known as Social Security. If you want to attempt the whole speech, here it is, but good luck. (Find out how this index tracks market movements - and where it falls short, see How Now, Dow? What Moves The DJIA?)

A quick 75 years later, we have been hearing President Obama mention a universal healthcare system to promote the general welfare of each citizen in the U.S. while attempting to promoting economic development.

How about this little snippet:
"We have not opposed the incentive of reasonable and legitimate private profit. We have sought rather to enable certain aspects of business to regain the confidence of the public. We have sought to put forward the rule of fair play in finance and industry." (For more, see What Caused The Great Depression?)

This is very reminiscent of our recent subprime meltdown, trying to figure out which banks are making a profit and which are trying to create financial Rubik's cubes.

The Good News:
The Dow doubles over the next two years and nine months. (March 11, 1937)

The Bad News:
After a second market crash it took another 19 years (November 24, 1954) to get back to pre-depression levels.

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