The Mechanism of Cycles 105 



Table I of the Appendix to this chapter. The coeffi- 

 cient of correlation between the index for the four 

 representative crops and the index for the nine crops, 

 is r = .960. 



It is a common observation of writers on economic 

 crises that the production of pig-iron is an unusually 

 good barometer of trade. The amount of pig-iron 

 that is annually produced swells with the activity 

 and volume of industry and trade, and it is among the 

 first commodities to indicate the general shrinking in 

 the ultimate demand which checks the activity of 

 trade and causes its temporary decline. Is there any 

 relation between the movement of this barometer of 

 trade, the production of pig-iron, and the cycles of the 

 crops? Can it be that the increase and decrease of the 

 " ultimate demand" which lies back of the flow and 

 ebb of trade has its source in the cyclical movements 

 of the yield per acre of the crops? 



The data for testing whether there is a relation be- 

 tween the yield per acre of the crops and the annual 

 production of pig-iron are the statistics of the annual 

 production of pig-iron and the index numbers of the 

 yield per acre of our nine crops. 



The method of testing the relation presents difficul- 

 ties, and as it will be used again to measure the relation 

 between the cycles of crops and the cycles of general 

 prices, we shall have a firmer grasp upon our problem 

 if we stop now to gain a clear idea of the terms that 

 continually occur in the argument. In any one of the 



