From Thomas Philippon:
|Source: Stern on Finance|
And from Philippon's FinEff.pdf:
The sum of all profits and wages paid to financial intermediaries represents the cost of financial intermediation. I measure this cost from 1870 to 2010, as a share of GDP, and find large historical variations. The cost of intermediation grows from 2% to 6% from 1870 to 1930. It shrinks to less than 4% in 1950, grows slowly to 5% in 1980, and then increases rapidly to almost 9% in 2010.
It's hard to date the turning points exactly, and Philippon's own remarks don't help much. Looks to me like finance increased until the Great Depression, and then decreased until maybe the end of World War II.
The start- and end-dates on my Debt-per-Dollar graph are not the same as Philippon's. But the major turning-point dates are a good fit:
Everything goes up, except during the FDR years.