BUSINESS ANNALS

INTRODUCTION

BUSINESS CYCLES AS REVEALED BY BUSINESS
ANNALS.

BY WESLEY C. MITCHELL.'

I. The Uses of Business Annals.

For our work upon business cycles in the National Bureau of Economic Research we have made two collections of materials, which we think others will find useful.

One is a collection of statistics. We are assembling in a single source-book the widely scattered records of economic and social activities in Great Britain, France, Germany, the United States, and, to a limited extent, in other countries. We are going back to the earliest compilations of continuous series and coming down to the current year, making critical notes upon the character of the data, piecing together fragments, and presenting the figures by months or quarters whenever possible. When this collection is ready for use, we hope that we shall be enabled to publish it in two or more volumes.

The second collection, consisting of what we call "business annals", is presented in this book. Though less bulky than the statistics, these annals cover a wider area and a longer period. For the statistical record shrinks rapidly as we go back 25, 50, and 100 years; few indeed are the series extending to the earliest decades covered by our British and American annals. Another difference is that the annals sketch a general situation of which the statistics show certain parts in

'The writer has received much help from his colleagues in the National Bureau of Economic Research, especially Frederick C. Mills and Willard L. Thorp.

detail. Thus the two collections supplement each other:-one presents the most precise records kept of specific economic or social processes, the other traces the fluctuations in economic and social fortunes at large. Together they sum up much of the experience which may be made to light the path into the future.

The value of statistics for practical and theoretical uses is now widely recognized, and so too are the difficulties, dangers and limitations attending their use. Business annals are a less familiar form of record, and require an introduction showing how they are made, how far they may be trusted, and what they add to our knowledge.

One merit of the annals, simplicity, is obvious at first glance. They tell a story, tell it in the most straightforward way, and tell it without the use of symbols or strange terms. Men who lack the time, patience, or technical training to wring the meaning from statistical tables can use this record with ease.

The story which the annals tell concerns the vicissitudes of economic fortune through which 17 countries have passed in periods which range from 36 to 136 years. In the fewest possible words they trace the fluctuations in manufacturing, construction work, employment, domestic and foreign trade, prices, speculation, financial operations, and agriculture, so far as the facts can be gathered from available sources. Thus the annals cover the grand divisions of economic activity. They also note the most important events of a non-economic sort which presumably influence economic activity— the making of war and peace, diplomatic strains, domestic disorders, changes of political administration and economic policy, droughts, floods, earthquakes, epidemics among men or cattle, and the like.

Everyone who reads this story year after year for nation after nation will see running through all the episodes one of the problems of modern civilization. In no country covered by the annals—not in the most rapidly growing communities developing rich new lands, and not in the most conservative of old communities-does a period of economic prosperity ever last more than five or six years at a stretch. Each country has its seasons of prosperity, but these seasons always end in seasons of depression. In their turn, the periods of depression yield to new periods of prosperity. Economic experience is made up of such alternations of good and ill fortune and the transitions from one to the other. The alternations are more marked or

more frequent in some countries than in others; but they occur everywhere. No country has yet learned to control them.

Upon the vexed question how these fluctuations come about, the annals throw no direct light. That problem is reserved for another volume, in which the National Bureau hopes to make what contributions it can toward a solution. But the annals establish certain facts about business fluctuations over a wider area and for a longer time than any other records. They show not only when periods of depression have begun in numerous countries, but also how long they have lasted, whether they have been severe or slight, confined to one country or spread over many. They show when revivals of activity have occurred and how these revivals have fared; they help us to find out how far the different branches of a country's business— particularly industry and trade, finance, and farming-have had common or diverse fortunes; they bring out the relations between the vicissitudes of business and the vicissitudes of politics and of natural processes.

While these annals were compiled primarily to throw light upon business cycles, they will prove useful for many other ends. Historians, political scientists, sociologists, and publicists frequently need to know the condition of business in certain times and countries. Statisticians dealing with time series will find that the annals provide an illuminating background for their special problems. Journalists who have to comment upon current developments, business men whose plans stretch into the future, indeed everyone who would control his expectations by experience, may profit by this condensed record of what has happened in the recent past. Those who are concerned with the spread of factory production and business enterprise over the world can see how far the economic fluctuations in Russia, Brazil, Argentina, South Africa, British India, Japan and China are being assimilated to the economic fluctuations in Western Europe and North America. The annals show us also how the great commercial nations share in each other's prosperity and suffer from each other's reverses a matter which merits far more attention than it commonly receives in discussions of national policy.

II. The Scope of the Annals.

A few earlier efforts have been made to provide a record of the sort here set forth; but most of them have been restricted in scope

and buried in technical books, journals or official documents.1 Fuller accounts of business conditions in various countries, for various periods, have been included in many of the books dealing with the history or the theory of crises and depressions. But the reader who wished a wide view has had to do much hunting and piece together such scraps as he could collect. There have been gaps he could not fill. Nor has he been safe in trusting all that he found. Errors committed in certain early investigations have been taken over by writers upon the theory of business cycles, and supplemented by fresh errors due to the forcing of a stereotyped pattern upon variable facts. Those who have taken the precaution to consult two authorities have frequently ended in doubt; for the chronologies of business crises and depressions are seldom precisely alike. To settle such doubts by appeal to the sources has been a laborious undertaking, for which few have had the time.

How much labor is required to compile a record which merits confidence can be inferred from the lists of official documents, reports, periodicals, pamphlets and books cited by Dr. Thorp and his assistants

'The use of condensed annals has been much commoner in political history than in economics. Quasi-annals are often found paralleling statistical tables, as in the "Annual Review" in the December number of the Investor's Monthly Manual, 1865 to date, London, and in Pixley and Abell's Silver Circular, London.

Annals for England for the period 1816-1841 were compiled by Thomas Michael Sadler, and reported in his biography by Robert M. Seeley, published in 1842. Annals covering the period 1821-1830 are given by William Smart in his most helpful Economic Annals of the Nineteenth Century, London, 1917, vol. ii, p. 571. The most extensive British annals are found in the Final Report of the Royal Commission on Poor Law and Relief of Distress, 1909-1910 (Great Britain, Parliamentary Papers, 1909, vol. xxxvii, part vi, section 144, footnote). These annals cover the years from 1815 to 1907. Unfortunately, no source or authority is given, and a cloud is cast upon their reliability by several glaring inaccuracies, such as the placing of "Baring's crash" in 1894 instead of 1890.

For the United States, the longest table of annals is the table covering 1781 to 1922 in Otto C. Lightner's History of Business Depressions, New York, 1922, p. 123. These annals are phrased in meteorological terms, such as "stormy," "fair," "tornado." A brief but early series of annals, covering the years 1821 to 1832, is presented by the fiery William M. Gouge in his Short History of Paper Money and Banking in the United States, 4th ed., New York, 1840. Annals covering 1856 to 1893 appear in a broadside published by the Financial Graphic. More detailed annals for 1860 to 1922 are included in Business Barometers by Roger Babson, 16th ed., Wellesley Hills (Mass.), 1923.

At least two attempts have been made to compile comparable annals for several countries. The business annals of the United States, England, Germany and France, 1889-1911, are included in Wesley C. Mitchell's Business Cycles, Berkeley (Calif.), 1913, p. 88. The annals for the same four countries for 1867-1880 are presented by Warren M. Persons, P. M. Tuttle, and Edwin Frickey in the Review of Economic Statistics, preliminary volume ii, supplement, July, 1920.-Note by Willard L. Thorp.

'For example, the years of American depression listed by Mr. George H. Hull (Industrial Depressions, New York, 1911, pp. 50, 51) do not tally with the periods discussed by Mr. Otto C. Lightner in his History of Business Depressions, New York,

1922.