GENERATING ECONOMIC 

 CYCLES 



CHAPTER I 



INTRODUCTION 



An ancient fable teaches the wisdom of provid- 

 ing one's self with a clue before going into an unex- 

 plored labyrinth. We are in search of regular causes 

 of economic fluctuations and before entering the tangled 

 maze of changes, we wish to profit by the wisdom of 

 the ancient myth and take with us a clue to the intricate 

 disorder 



A Clue to the Economic Maze 



Such a clue to the general course of regular economic 

 changes in the United States and to the causes in which 

 they originate is given by the rhythmic changes in the 

 weather. Figure 1 describes three fundamental general 

 facts which, considering the dependence of agriculture 

 upon the weather, suggest an originating source of 

 economic regularities and may not wisely be ignored 

 in a theory of economic cycles. The three facts re- 

 vealed by Figure 1 are these: 



(1) The annual rainfall in the United States con- 

 sidered as a unit fluctuated in clearly defined 

 eight-year cycles during the forty years for which 

 we have data, from 1881 to 1921; 



