The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1921-10-30
Nationwide Symposium
Forecasts Steady
Improvement.
ECONOMIST SAYS
CRISIS HAS PASSED
Author of Business Cyc.
les" Analyses the
Situation.
by WESLEY CLAIR MITCHELL.

Reports upon the current trend of
business affairs agree that the
lowest point Of the depression is
probably past, and that a slow but
i perceptible quickening of activity
U has begun This revival is expected
TO gather momentum gradually and
to develop into a period of business
prosperity-unless checked by some
powerful counteracting influence
| not yet known.
Such expectations are based upon
present facts and past experiences.
They rest on the assumption that
business will recover from the de-
pression of 1920-21 in somewhat the
same way as il recovered from the
depression of 1914. the depression
Iof 1908. the depression Of 1904. and
the depression of 1S96-to go no
further back. In all these cases,
and in many earlier ones. the pro-
cess of liquidation and readjust-
ment was followed by an increase
In the physical volume of manu-
facturing and trade, by a reduction
of unemployment, an advance Of
Iprices for commodities and securi-
ties. a return Of confidence. an ex-
ipansion of loans, and a larger
volume of construction.
The same experience which justi-
fies the expectation that 1922 will
be a better year than 1921 invali-
ldates any expectation that the COM
ling period of prosperity will last
fndehnitely-more than a relatively
few years. Forecasters who take a
long look into the future must dis
icuss how long the new period Of
prosperity will last. when the next
depression Is likely to come. and
how severe IL will prove. Just at
present, naturally. they are con-
cerned mainly with the pact at
which the incipient revival, now
visible. will develop.
The Business Cycle mt Work.
Business cycles" Is merely a
vivid term for this recurrent ebb
and flov Of business activity which
past experfence has taught the
wary to expect. Depressions pave
the way for business revlvals, re-
viyals develop into "booms." booms
breed crises, and crises run out into
depressions- A tolerably regular
repetition of such cycles can be
traced In American experience for
at least a century. Similar cycles
run their round in all countries OF
highly developed business organ
tzation. They have a long history
in the Netherlands and England.
shorter history in France. Germany,
Austria, Italy. and the Scanda- :
nayian countries. they have made
\ their appearance in Russia, Canada
Australia, South Africa, chile. the
\ krventine. British India, and Japan.
ID III
nu.ines. men scarcely recognize the
|lexistence of business cycles. the
E,eason is that business Is an ex-
Eeedingly complex process in which
fbe effects Of the cyclical factors
ere intertwined with and obscured
~ the effects of other factors.
yh.p a business man looks back
over his own career. the CHIEF turn
a. noints are likely to be his IN
as,,,duaI successes or failures. such
=. tbe establishment Of a fortunate
Connection, the making of some als,
s,rous Investment He may nho
,s,,Ie correspondence between the
,,,,ctuations Of his private fortunes
.nd the chronology OF business
ci.. But Individual cases are apt
- n. deceptive when taken singiy'
-. the general trend of expert
thew should be taken In the
en- Tbs safest guide to the fu-
- therefore, Is the summary OF
- nast provided by those statisti-
ssries which show the net re-
i,ant OF thousands OF millions OF
transactions year after year.
what Pig Iron shows.
n these series. however. sell
tbrow the cyclical factor into
ns relief when taken In the raw
The most striking feature OF
hart showing pig-iron proouc-
in the United States Is the
is ate of growth from decade
s.cade In a chart of American
10 as the outstanding features are
-.ffects of great wars ana the
,neriod swings In the purchas-
- mower of gold In a chart snow
- the value of the cotton crop the
ss.ots Of the weather are clearer
.san the effects of prosperity or
-.s.Ion- To trace the course OF
Snsiness cycles clearly 1t Is neces-
ssry to set aside the influence OF
-, ether factors as can be Isolated
o.rticularly the factor OF growth
S seasonal fluctuations. And after
80, has been done II is best TO
ktrust no single index Of business
octivity. but to combine several OF
4 ,he most significant indexes into
single series.
| How the effects OF other factors
90 b, excluded is illustrated by
ths two charts of wheat and pig
-, production. Here the growth
factor is represented by straight
,,,a about which the yearly produc-
,ion oscillates. The 754.00o.O00
,,nshels of wheat which IL Is esti-
,,,ated are harvesting in 1921 would
nave been impossible under the best
leather conditions in 1880. but II
"a aomewhat below the normal
.xpectation for this year. just as
the 3ss, 100000 bushei crop OF lsso
was somewhat below normal for
,bat year. So. too. with pig-iron.
which has a much more rapid fac
TOR Of growth. The best indication
81 activity in the iron trade is given
bv comparing the actual output of
the current year, not with the out
put Of any previous year. but with
the output Indicted for the current
wear by the line OF ''secu.- end,
These deviations Of the actual rec
prd Of each year from the normal
xpectation for that year can