Evening star., 1940-04-07
Business Cycles
Ignore Politics
By OWen L. Scott.

theory is that election years almost al
ways are bad years for business because
Of the uncertainties and the disturbing
disputes of politics.
Actually, history shows, there is next
to nothing to that theory. The record of
past experience reveals little evidence to
bear out the idea that the current de-
cline in business Is due to the coincidence
that 1910 is an election year. The pres
ent prospect of moderate new rise In
business, If realized, will further under
mine what has become a popular theory.
The fact is that there appears to be
little relationship between the trend Of
business and the. trend of politics-so
far as the effect of politics on business Is
concerned. But, very definitely, there is
demonstrated relationship between the
state Of business and the outcome of
elections In other words: When busi-
ness Is bad at election time there is
tendency to throw out Of Office the po-
litical party that is in power and, vice
versa, when business is fairly good or
good there is tendency to keep in Office
the ruling political party. That fact
adds Importance to the course that busi-
ness is going to follow in this year.
But, when politics is stirring and
there is the uncertainty of a campaign
and the doubt about policies of the
President who may be chosen, appar-
emily the trend of business is little in
huenced.
Neither is there anything in the record
of experience to suggest that good or
bad times are the monopoly of either po-
litical party.
Rather, the facts are these: Since 1864
there have been 10 presidential election
years. Out Of those 10 election years, IL
have found business better than normal,
while in the 8 others business was not
up to normal. This means that busi-
ness was good, more often than business
was bad, in years when national elec-
tions were held. Specifically, business
was better than normal in 1864, in 1868,
in 1872, in 1880, in 1885, in 1892. in 1900.
in 1912, in 1916, in 1920 and in 1928. And
business was below normal in 1876 in
1884, in 1896, in 1904, in 1908, in 1924, in
1882 and 1886
A big hole also is shot in the idea that
good business is the monopoly of either
political party when the facts are taken
into consideration. These facts disclose
that Republicans were elected in five
years when business was better than
normal. In four of the years that fol-
lowed these presidential elections busi-
ness either had dropped to depression
or was starting down. On the other
hand, Democratic Presidents were elect
ed in four better -than-normal years and
in all four of the years that followed the
election business was not so good as 1t
was in the election year.
X
Then there is another side to the same
picture
Republican Presidents have been elect
ed in eight years when business was
below normal In seven of the following
years business improved Democrats
were chosen in two depression years and
in each of the years following the elec-
ton business improved.
The fact is that business runs in cycles
and is influenced by much more power
full factors than the single factor of
politics. An election may be one of the
factors that influences trend, but it is
not dominant factor. How true this is
can be discovered by one more look at
the record Of experience. That look dis
closes that in every one Of the presiden-
tial election years since 1864, with the
exception Of four. the trend Of business
was reversed in the year following elec-
ton If business was good in an election
year it pointed down in the following
year and If business was bad in election
year, it pointed up in the year that fol-
lowed. The only exceptions to this rule
were 1863 1876, 1888 and 1900. What
this shows is that the cycles of business
run regardless of politics.
There is, however, an obvious tend
ency in this country to return party to
Office when business Is improving in elec-
ton year and to throw out of Office the
party in power when business is bad and
declining at election time. But there
are many exceptions even to that rule
Politicians right now are interested in
the probable course of business over the
remainder of this year.
The fact that business has taken q
tailspin since December, 1889, is worry
ing the party in power. The sudden urge
in Congress to forget about economy and
to vote more money to farmers and
probably-to relief workers in a reflec-
ton of that worry. This urge grows
from the knowledge that with business
decline late in 1910 the voters will have
an incentive to vote the Republican
ticket, while if business is pointing high
er there will be tendency to avoid q
switch because of the factually unjusti-
fed idea that change would upset
business.
Democratic politicians can be cheered
at this time by the prospect that the
record breaking recession of the first
three months Of 1910 appears now to
have pretty well run its course. What
comes next is probable gradual and
moderate rise in business activity that
will carry through until late in the year.
Such, at least, is the predominate view
of the Governments principal business
forecasters.
Their forecast is based upon the ex-
pectation that war abroad is going to
continue to influence demand for goods
in the United States. Foreign countries,