110 Economic Cycles: Their Law and Cause 



interval of time required for the cycles in the crops to 

 produce their maximum effect upon the cycles of the 

 activity of industry. When the calculation of the co- 

 efficients of correlation is made according to this plan, 

 it is found that for a lag 



Of zero years, r = .625; 

 Of one year, r = .719; 

 Of two years, r = .718; 

 Of three years, r = .697; 

 Of four years, r = .572. 



It is clear, therefore, that the cycles in the yield per 

 acre of the crops are intimately related to the cycles in 

 the activity of industry, and that it takes between one 

 and two years for good or bad crops to produce the 

 maximum effect upon the activity of the pig-iron in- 

 dustry. Figure 23 illustrates the general congruence 

 of the cycles of the crops and of the cycles in the produc- 

 tion of pig-iron when a lag of two years is eliminated. 



As to the general question concerning the relation 

 between the harvests and the activity of industry, we 

 may conclude from our statistical inquiry that there is 

 a positive, intimate connection, and very probably a 

 direct causal relation, between the bounty or niggardli- 

 ness of nature and the flow or ebb of trade. 1 



A New Type of Demand Curve 



A moment ago, we saw that two preliminary problems 

 had to be treated before we could pass to the direct 



1 In a later section of the chapter the method that has been used 

 in treating this problem will be employed for another purpose and 

 will then be illustrated in detail by means of graphs. 



