Evening star. [volume] (Washington, D.C.) 1854-1972, 1904-01-19
sLUMPs IN STOCKS
PERIODICAL. DECLINES THAT PUZ-
zLE WALL STREET sAGEs.
Jevons and His Ten-Year Cycle
Theory Of Adversely and Its Re-
lation to sun Spots.


From the New York Times.
Wall street frankly dislikes theory. 1t
has no dogmas. or thinks 1t has none IL
you want statement painting with actu-
ality listen to a description by any one OF
its denizens of the curious history which is
made within it's precincts from hour to
hour He is never psychological. He
never heard of Hegel. and does not philoso-
phize Experience has taught him that In
the market current there are many surface
currents, making in all manner OF unex-
pected directions. which may be inconsfd-
erabiy viewed at a distance from the
stream but are. nevertheless. great enough
to wreck him. Wherefore the Wall street
man never generalizes except in the form OF
epigrams He only half believes his cpl
gram. and never trades on it.
Yet some things the street believes. all
the more sincerely that 1t treats It's beitefs
as lightly as 1t does most other things. 1t
Is said in some Latin countries that no man
believes In his religion till he can ianght at
II. Wall street believes In one very large
generalization even when 1t laughs at the
man who processes to take 1t for the major
promise of a market syilogism. This is the
"ten-year cycle.
The theory Is of legitimate birth. 1t is
generalization from many particulars II
and little study of history will show 1t is
a respectable hypothesis, with more intrfn-
sic probabili than many the world pins
its faith to. Briefly stated. 1t Is that times
of commercial activity and depression tend
to equalize themselves over PERIODS OF
years. approximating ten years from one
point of extreme depression to another.
eliminating Point.
A panic may mark the eliminating point
of a period of depression. but 1t need not
necessarily do so. 1t depends on the panic
panic like that Of December. 1880. or that
of MAY. 1901, merely interrupted the stock
market In long advance based upon highly
PROSPEROUS general conditions. and had
really the most transient influence upon tne
country at large or no influence at ALL Ihe
panic may accompany the moment OF ex-
IRENE depression. but need not necessarily
do So We may therefore say that the ten
year cycle does not mean the periods eiaps-
ing between panics By the term the street
understands the period between crises OF
more or less national character.
The name Is loose, and we may almost go
so far as to say that the cycle Is showing
a gradual tendency to lengthen. at least II
we take the dates of acute depression over
a long period of years. Thanks to the late
Prof Jevons among a number OF British
economists. we can carry our inquiry back
as far as 1901 which gives us a very re-
spectacle amount of history to generalize
about. Here are Jevons' dates: 1701. 1711-12,
1872 1742. 1872 1853, 1923. 17Ss and 1I!E
and In the nineteenth century. 1SO4-5. 1913.
1925 1886. 1S47. 1857. 1866 and 1873 A most
interesting thing about these dates. curious
Iy enough. Is the personal idiosyncrasy re-
vealed Jevons was trying to trace con-
nection between crises and sun spots, and
has omitted the bad year 1722 because there
were not enough spots to make 1t worth
mentioning 1t almost exactly completes
the ten cycles of ten years in the century,
and we cannot do without 1t.
Nineteen Crises.
If we add to our list of dates that of 1880.
the year of the Barring panic. we get nine
teen crises in one hundred and ninety years.
which makes the ten-year cycle look more
than respectable. A very brief examination
of the dates shows one very interesting
fact. The period has gradually heightened
over the two centuries from ten years to
twelve. There is also very grim induction
possible. The year 1894 is scheduled for
first-class crisis in England. 80 RI
Although not only Jevons, but some
economists of almost as high rank, be
Iieved in the influence of sun spots in mum
dane affairs, Wall street does not. 1t does
not. care. in fact. if the has enough
spots on it to make a straight flush. The
street makes its own superstitions, and has
plenty of them without importing any from
the heavenly bodies. The ten-year cycle
looks like an exclusively American idea, but
we can now see that 1t has it's foundation
in observation of another country by Eng
lish economists. Let US see what we gather
from our own history. 1t should be pre-
missed that we have practically only one
century, and barely that. to draw upon
Here are our dates: 1914, 1856, 1897, 1917.
1851, 1886, 1873. 1884 and 1893.
Not bad showing for the ten-year
theory, is it?
OF the nine dates given five were crises
of the first class. These were in the years
1914. 1897. 1857. 1873 and 1893. The pres
f,,e, I~<,xN, fxr. Iy,1I
street, and but for the prosperity elsewhere
one might use 1T to drive the case further
home. If the Stock Exchange is the barom-
eter of national prosperity it is claimed to
the coming year looks likely. and we may
be able to add 1904 to our dates within
the next twelve months
The Twenty-Year Cycle.
There are other lessons in our dates. The
first-class crisis seems to have approx
mately a twenty-year cycle The panic of
1887 was national. but the depression of
1S47 was comparatively mild. The crisis
of 1857 was one of the very worst, and was
particularly marked by the large number
of failures and bank suspensions. The
Overend-Gurney panic of 1886 in London
affected us only mildly. and hardly until
the following year. The Gold Corner
of 1873 was an incident in the worst ma
tional crisis of modern times. too recent
to need detailed description. The Grant &
Ward failure of 1884 and those of the
Marine and Metropolitan Banks were seri-
Gus. but mild compared with the crisis of
1873 or that of 1893, the latter still pain
fully fresh in Wall street memory.
ALI economists deprecate the use of the
term law in discussion of this kind. Ac-
cepting the less dogn1atic word tendency"
1t looks as If we might say that while
crises not International. their tendency
is to become so. London did not develop
a crisis In 1873 or 1884. although the effect
of our troubles was felt abroad and we
only shared Dendon's troubles of 1878 and
1880 to a moderate extent. In our case the
good harvests saved US. as they have prob
ably saved the country at large this year
in very dark hour for Wall street. Our
greater figure In International affairs IS
likely to tend toward making the crisis of
the future more worldwide. although on
the twenty-year theory our next depression,
which is about due (f. indeed. We have not
had most of 1t in the past year,. seems like
ly to be of the relatively mild sort. The
next real big general smash is not to be
expected on the "ten-year cycle theory
before 1915 There seems time to save quite
bit by then. and there is. on the same
| reasoning. a most almighty" boom. with