APPENDIX A 



ELIMINATION OF THE SECULAR TREND 



THROUGHOUT this book, except where otherwise noted, the 

 secular trend has been eliminated from all diagrams showing 

 the course of events for a series of years. The secular trend is the 

 progressive change arising from causes which act with comparative 

 regularity throughout long periods. Thus the secular trend of the 

 production of pig iron in the United States is upward, for under 

 normal conditions the production increases from year to year. On 

 the other hand, the trend of the deathrate is downward because of the 

 improvement in medical science. Nevertheless, the total number of 

 deaths in a given city may trend upward because of growth in 

 population. 



The purpose of eliminating the secular trend is to bring into true 

 proportions the irregular or cyclical variations, which trend first one 

 way and then the other without apparent system. The method of 

 elimination is illustrated in Figure 27. The lower of the three irregu- 

 lar lines represents the variations in bank clearings at New York for 

 a period of over forty years. Note the maxima in 1873 and 1906, for 

 example. Our problem is to determine their relative importance. To 

 do this we divide our forty years into periods of five or ten years or 

 other convenient length, and plot the average clearings for each period. 

 With the points thus obtained as guides we draw a smooth curve 

 such as the solid line in the lower part of Figure 27. This represents 

 the normal course of bank clearings, or the course that clearings would 

 have followed if there had been no disturbing influences such as bad 

 crops, panics, and the like. The steadily increasing upward tendency 

 of the secular trend is obvious. 



Having obtained the normal for each year, it is easy to eliminate 

 the secular trend by calling each year's normal 100, and finding the 



