684 TRANSACTIONS OF SECTION P. 



respectively, harvests being abundant in continental areas when they fail in lands 

 bordering the oceans. Compensation is incomplete, however, because the cul- 

 tivated area of continental regions now greatly exceeds that of the oceanic terri- 

 tories. The grand total of the world's agricultural produce varies, therefore, 

 from year to year, sometimes probably by more than 10 per cent. Good har- 

 vests recur in the continental areas every three or four years, and they have a 

 predominating influence on the world's trade. 



Abundant harvests stimulate trade through five channels : (1) Increased 

 demand of the agricultural classes for manufactured goods of all kinds ; (2) the 

 cheapening of food, which means greater purchasing power for all classes; 

 (3) the decreased cost of the raw materials of many industries ; (4) the increase of 

 credit which results from the increase of wealth, and starts a general rise in 

 prices ; (5) the increase of free capital which, in conjunction with the foregoing 

 effects, greatly stimulates the demand for materials of construction. Many ex- 

 porters are well aware of the close dependence of their trade on the harvests 

 of the countries they deal with, and the facts can be demonstrated statistically. 

 Most striking is the close relation between the output of pig iron and the total 

 agricultural production in the United States. 



The trade cycle consists of four periods— depression, expansion, boom, collapse 

 —constantly recurring. Prices, railway earnings, and total foreign trade are the 

 best indices of the phase of the cycle. The collapse of prices is usually the most 

 definite feature, and where credit organisation is defective it sometimes causes 

 a financial crisis. _ 



The dates of collapses are ascertainable definitely from 1/72 on, and with 

 great probability from 1695. They occurred in the following years : 1696. (1702), 

 (1712) 1721, 1732, (1743), (1753). (1763), 1772, 1783, 1793, 1796, (1811), 1815, 

 1825, 1836, 1839, 1846, 1857, 1866, 1873, 1883, 1890, 1900, 1907. There is some 

 doubt as to whether the collapses indicated by parentheses might not be put one 

 year earlier ; but they could not go later. These trade cycles may be grouped 

 according to their length, under the first and second suppositions as to the dates 

 in parentheses, as follows : — 



Length of cycle in years 



Dates as above 



lates in pare 



year earlier 



Dates in parenthesis taken one 1 



The clustering round 3, 7, and 10 years is significant. If ir represents a 

 short period, about 3^ years in length, it is evident that the trade cycle may be 

 it, 2ir, 3tt. or even 4ir'. The whole period 1696-1907 is 62ir, and this gives 

 3-4 years as the average length of *. The discrepancy between this figure and 

 36 requires investigation ; but the meteorological period is determined from only 

 40 or 50 years' observations. The fact that 7-year cycles are becoming more 

 frequent relatively to 10- or 11-year cycles is explainable on economic grounds, 

 because supply responds more rapidly now to altered demand. 



5. Co-operative Credit Banks. By Henry W. Wolff. 



The concentration of banking business in a limited number of great joint- 

 stock banks has to a large extent destroyed that convenient occasional personal 

 credit which private bankers gladly gave, and were in a position to give, because 

 they were in close touch with borrowers and aware of their doings. Large joint- 

 stock banks are in a different position, and they have a more lucrative use for their 

 money. It has been proposed to supply the want created, which is felt in many 

 quarters, by the formation of a distinct kind of bank, formed for such special 

 purpose, likewise on the joint-stock principle. Such schemes, however, offer 

 little promise of abiding remedy, since experience shows that all such banks, 

 once they find themselves strong enough to do so, desert their original path for 

 more remunerative business. The crux of the question lies in the shareholder's 

 natural desire for dividend. If the potential borrower is to be helped with a 

 certainty that such help will be forthcoming and endure, the quest of profit must 



