CHAPTER III 



GENERATING CYCLES REFLECTED IN A CENTURY OF 



PRICES 1 



Summary 



Cycles of approximately eight years ia the jdeld per acre of 

 British crops have probably recurred in a continuous series during 

 the last one hmidred and sixty years. In consequence of the law 

 of demand, these crop cjTles have generated corresponding cycles 

 in the prices of food and of organic raw materials. In conformity 

 with the law of competitive price, the cycles in the prices of food 

 and of raw materials should have been followed by corresponding 

 cycles in the prices of manufactured commodities. As a matter of 

 fact, the analysis of Sauerbeck's index numbers of general wholesale 

 prices reveals real cycles of approximately eight years in which 

 the originating, generating crop cycles are reflected throughout 

 the century for which the Sauerbeck index numbers have been 

 computed. 



The principal results of the investigation appear in the graphs of 

 Figures 15 and 16. 



In the preceding chapter I drew a distinction be- 

 tween generating economic cycles and derived economic 

 cycles. Generating economic cycles were described as 

 economic cycles that have their origin in non-economic 

 causes and become the originating som*ce of derived 

 economic cycles. A careful scrutiny of American 

 agricultural statistics revealed the existence of an eight- 

 year generating cycle in the yield per acre of the leading 

 American crops, and this generating cycle of products 



^ This chapter was first published, substantially in its present from, 

 in the Qvarlerly Journal of Economics, August, 1921. 



