The last time the U.K. had an economic decline larger than it had last year, there were no bicycles, telegraphs or mercury thermometers.
The United States had not even been founded.
The year was 1709, or as it was known in England, the year of the “Great Frost.”
It was an extraordinarily cold winter across all of Europe – the coldest winter of the 500 years prior.
Trade across the entire continent was brought to a stop as the sustained arctic blast froze trade routes.
Merchant vessels can’t sail through ice.
Because there was no weather forecasting at the time, everyone was caught unprepared. Inhabitants of many cities were forced to burn furniture to stay warm.
Crops couldn’t survive the frigid temperatures and were ruined. Livestock froze to death in their barns, pens and coops.
The winter hit France particularly hard, and the subsequent famine caused an estimated 600,000 deaths by the end of 1710. Due to frozen waterways, Paris remained cut off from supplies for three months.
In the U.K., when the thaw finally came, it brought another catastrophe: widespread flooding.
The freezing and then flooding devastated the U.K.’s agriculture-based economy. The price of grain soared 600%, and many communities faced starvation.
A Once-in-300-Plus-Years Economic Hit
In this brutal year of 1709, the U.K. economy declined by 13.3%.
That is larger than the 9.9% decline that rings in as the final figure for 2020.
Every year between 1709 and 2020, though, posted better economic numbers in the U.K. than 2020’s 9.9% decline.
For perspective, consider that over those 300-plus years, the U.K. has gone through…
- The American Revolution
- Multiple cholera, influenza and smallpox pandemics
- Famine and food riots in 1816
- Zeppelin attacks during World War I
- The Great Depression of the 1930s
- Massive bombings in World War II
- The financial crisis of 2008 to 2009.
Over three centuries, the U.K. has gone through some trying times.
Yet the economic decline in 2020 was still worse than the economic impact in each of those terrible years!
For stock market investors, there is a lesson here…
It pays to buy stocks when things look bleak.
And it is a terrible idea to bail on the market when the going gets tough.
Always remember, if you are a patient long-term investor, the stock market is rigged in your favor.
Yes, there will always be unexpected and scary blips along the way.
But over the long term, the stock market just keeps marching higher…
Even through the worst economic hit since 1709.