Wesley Mitchell’s Business Cycles (1913) was published just over a century ago. It is a neglected classic that should be recognized, as one contemporary noted, as the key economic text between Alfred Marshall’s Principles of Economics (1890) and John Maynard Keynes’s General Theory (1936).

Its importance does not come from its being a bestseller, for it was not. Nor is it known for being read cover-to-cover by other academic economists. Instead, the book deserves our attention because it was a great distillation and analysis of economic thought, bringing together a huge range of ideas about economic “cycles,” “oscillations,” “fluctuations,” and “rhythms” that had long occupied the attention of leading economists, such as Clément Juglar and Karl Marx . 1 It was an omnibus, collecting statistics on a range of topics, including production, prices, debt, and bank deposits. It was international in perspective and included comparisons of the economic history of the USA, England , France , and Germany. Moreover, it not only summarized, and gave authority to, a wealth of existing ideas and information, but also pointed the way forward for future scholars and analysts, providing them with a new and ambitious research agenda. Its many tables exemplified the vastness of economic data newly available and yet, at the same time, the book had the markings of an unfinished project, ripe for further inquiry.

Most of all, Business Cycles helped to popularize a “cyclical” understanding of the economy that became adopted by businesspeople, politicians, and journalists in the decades following its publication. It provided a way to make sense of the whole economic “system” from a deep historical perspective. It described an inherent logic to the workings of capitalist, profit-seeking, business-oriented economies.

The central theme of the book—arguing that cycles of prosperity and of depression had their origins in the behavior of business enterprise—gained popularity in the 1910s and 1920s. For many, the idea that the economy went through discernible “business cycles” provided a comforting transition from an agricultural past. The notion of an industrial or economic cycle, recalling a natural or seasonal one, brought a sense of control, or at least understanding, amid relentless change. It promoted the idea that the trajectories of capitalist economies were not random. Rather, they followed a recognizable pattern. Even more, the book promised the idea that government action could dampen the severity of economic fluctuations and could foster stable economic growth—a new role for public officials that is now deeply entrenched.

The goal of this paper is not to support or criticize Mitchell’s Business Cycles but rather to explain how the central concept of the book, the phenomenon of business cycles, became of seminal interest to a range of Americans in the early twentieth century. My argument is not that Mitchell’s book alone created an intense popular fascination with cycles. Rather, it is that Mitchell’s book helped to crystallize and give authority to ideas about business cycles that proved widely appealing—and, moreover, helped to shape economic, popular, and public discussions about capitalism. Indeed, the term “business cycles” became a popular shorthand way of describing the boom-and-bust nature of capitalism in the decades before the publication of Keynes’s General Theory (1937), and the Keynesian Revolution that helped promote the field of macroeconomics. 2

Why did the idea of business cycles resonate with a diverse group of people in the USA in the early twentieth century? The idea that capitalist economies operated according to the laws of business cycles provided for many businesspeople and politicians useful clues for shaping strategy and public policy. Among those who were inspired by Mitchell’s work on business cycles were three groups.

1. Economists and statisticians, including those of the new National Bureau of Economic Research (NBER, an organization that Mitchell co-founded), who saw, in Business Cycles, a plan for measuring economic activity and a way to tie together many disparate aspects of economic life. Theoretical economists had long been interested in the idea of cycles, but the effort among quantitative and data-gathering economists was different: They sought to observe cycles and to use them to measure change over time. Indeed, the study of business cycles provided a way to measure all aspects of economic life—construction, production, trade, commodity prices, etc.—as moving either with or against the cycle.

2. Entrepreneurs and businesspeople, who, in a time of frequent economic panics, became infatuated with the idea of “business cycles” and began to make predictions of future ups and downs in output and in the prices of securities and commodities in order to formulate investment and purchasing plans. The entrepreneurs who pushed this idea furthest were the founders of the economic forecasting industry, a nascent business in the early twentieth century that later became well established. Nearly, all of the pioneering forecasters based their predictions on cyclical models—citing Mitchell’s work even though they often greatly simplified or even distorted his ideas.

3. Politicians, who saw the idea of “business cycles” as a way to gain rational control over the whole economy—and began to conceive of ways to dampen cyclical swings. In the 1920s, for instance, Herbert Hoover became a major figure in this effort. While head of the Department of Commerce, he courted Mitchell aggressively to serve on his Business Cycle Committee and began the publication of government reports and bulletins on the subject. Hoover’s view of government’s role in dampening cycles was far more restrained than his successor in the Presidential office, Franklin Roosevelt . But Hoover brought the mandate of controlling economic cycles into the orbit of executive power.

To put this more poetically, the idea of “business cycles,” backed by such empirical evidence in Mitchell’s book, kindled three dreams in the early twentieth century. The first, of empirical economists and statisticians, was to analyze and measure business cycles; the second, of entrepreneurs and businesspeople, to predict future cycles; and the third, of politicians, to control them.

Not all of the individuals in these three groups—empirical economists, forecasters, and politicians—defined the business cycle in the same way, of course. Some, such as the statistician and economist Warren Persons , saw business cycles as fluctuations stemming from relations between investing, business enterprise, and banking in capitalist economies. Others, such as the popular forecaster Roger Babson , fetishized the idea of the business cycle, seeing in it ties to the natural sciences and even the work of seventeenth-century physicist and mathematician Sir Isaac Newton . Still others, including Herbert Hoover , saw the business cycle as resulting from inefficiencies in the economy that could be reduced with better information and technology and a more enlightened class of business managers.

While few closely followed Mitchell’s own nuanced definition of the business cycle, all benefited from the authority he gave to the phenomenon—and all found something deeply appealing in the idea of a cyclical economy. The efforts to pursue these “dreams” had significant social, political, and economic consequences.

The story of this article, then, is not only of Business Cycles itself, but also of Mitchell’s working out of the promise of the book, with the formation of the NBER and with his service in government. It is also the story of how, in the 1910s and 1920s, the idea of “business cycles,” like other economic ideas in other times, inspired disparate audiences with widely varying agendas. In the end, it is the story of how this captivating idea, a description of a measurable economic phenomenon, was popularized, commercialized, and used in the exercise of political power.

Mitchell

Wesley Clair Mitchell was born in 1874 and died in 1948, making him a near contemporary of economists Irving Fisher and John Maynard Keynes . When mentioned at all today, Mitchell is recalled as one of the founders, along with Harvard Business School dean Edwin Gay , of the National Bureau of Economic Research. In the 1910s and 1920s, though, Mitchell was one of the two or three best-known American economists of the time. He was at least as well known as Fisher, and he attracted scores of students to Columbia to study with him—something Fisher, with his heavily mathematical approach, did not do at Yale. Indeed, Mitchell was a highly successful institution builder. In addition to establishing the NBER in 1920, Mitchell was instrumental in the founding of the New School for Social Research in 1919 and the Social Science Research Council in 1922.

Mitchell was regarded as immensely knowledgeable about both economic history and statistics and for being extremely judicious. Herbert Hoover referred to Mitchell as an “umpire” because of his sound judgment in weighing conflicting ideas. 3 The economist Joseph Schumpeter said of Mitchell in a eulogy: “Here was a man who had the courage to say, unlike the rest of us, that he had not all the answers; who went about his task without either haste or rest; who did not care to march along with flags and brass bands; who was full of sympathy with mankind’s fate, yet kept aloof from the market place; who taught us, by example and not by phrase, what a scholar should be.” 4

Mitchell was a member of the first class at the University of Chicago in 1890. His teachers included philosopher and educational reformer John Dewey and economist J. Laurence Laughlin , who had come from Cornell to head the Chicago economics department, bringing with him Thorstein Veblen —who had been a fellow in Laughlin’s department in Ithaca. 5 Veblen, who had a doctorate in philosophy from Yale University (1884), encouraged Mitchell to take a multidisciplinary approach to understanding how economies functioned, advising him to study psychology, anthropology, and culture. At the time Mitchell arrived, Veblen was undertaking a statistical analysis of commodity prices—similar to the type of work Mitchell produced throughout his career. 6

For his doctoral dissertation, Mitchell studied the effect on prices of the printing of greenbacks by the federal government during the Civil War. The thesis is nearly 600 pages long, with roughly 150 pages devoted to statistical tables covering gold prices, wages, cotton prices, salaries, and other data from 1860 to 1866. Mitchell used these statistics to dispute the idea, expressed in the Quantity Theory of Money (popularized by Yale’s Irving Fisher ), that changes in prices occur relatively evenly throughout industries. Instead, he gathered detailed evidence to see what actually happened to prices as new bills were introduced. Mitchell found that in some, but not all, industries, prices increased and that the effects of the new bills were unevenly distributed.

While Veblen moved on from his statistical studies to pioneer his idiosyncratic and satirical approach to economics, Mitchell continued in that vein, a quintessential observer and data gatherer. 7 Still, the two are alike on some levels. While Mitchell was at the University of Chicago , Veblen published The Theory of the Leisure Class (1899), his classic text on conspicuous consumption. The book offered a description of capitalist economies as complex phenomena, rife with envy, ornament, and display—worlds away from the rational marketplace of utility maximizers that some economists, like Fisher, were describing in mathematically precise terms. 8 To Mitchell, like Veblen, economics was a science of human behavior rather than of timeless principles of wealth creation. Classical economists, such as Adam Smith and his followers, wrote as if their theories were permanently true. Mitchell thought instead that economic theories evolved over time and that economic “laws” depended on context. He was interested in developing the field of economics as one that took into account what human beings actually did.

Business Cycles

After the turn of the century, Mitchell turned to what would be the main intellectual subject of his lifetime: business cycles. It is perhaps not surprising he took on this subject. Mitchell wrote during a time of financial panic. Financial crisis was followed by severe economic hardship in 1873, 1893, and 1907. Many attributed these downturns to speculation and to schemes by leading business titans and politicians.

The 1907 panic was particularly perplexing, as it seemed to come without warning. Financial writer Alexander D. Noyes noted that part of the reason for the resulting alarm was that, due to the strength of banks and to efficiencies in industry, existing wisdom in financial circles held that panics were a thing of the past: “The opinion then entertained by these practical banking experts … was that ‘aggregation of banking resources’ and ‘coordination of industry’ had, between them, created a new economic situation, where old-fashioned financial and commercial panics … would be no longer possibilities.” 9

Before Mitchell’s 1913 book on the subject, the term “business cycles” was not in the mainstream. Instead, panics were thought to be man-made events, brought on by the greed of business barons or the machinations of political bosses, or to stem from acts of God, such as massive crop failure or devastating storms. In the nineteenth century, the English economist William Stanley Jevons (1835–1882) enlisted mathematical techniques in one of the earliest statistical analyses of the business cycle. His paper titled “Commercial Crises and Sun-Spots” (1878) linked economic fluctuations to meteorological conditions that affected harvests. 10

In popular writing, the business cycle, when referred to, was usually meant as a fixed cycle, often of 7 or 10 years, depending on the writer. One mention in 1896, for instance, in a House of Representatives report, described cycles in such terms. “Prosperity, panic, and liquidation … constitute the business cycle, or circle,” it read. “Prosperity from 5 to 7 years, panic a few months or a year later, and liquidation a few years, more or less.” 11 Moreover, there was far more interest in the periods of crisis than in efforts to link periods of prosperity and periods of depression. 12

In Business Cycles, Mitchell looked at the evolution of thinking about economic fluctuations and how to predict them. He carefully summarized the writings of economic fluctuations from such luminaries as the British economists William Henry Beveridge and John Hobson ; the German scholar Arthur Spiethoff ; and the economist and sociologist Veblen, and Irving Fisher . By 1913, there were many opinions being advanced about the cause of such ups and downs—some of which Mitchell dismissed quickly. “Each recurring crisis, indeed, produced a fresh crop of ill-considered explanations,” he observed. 13

Mitchell’s book came out the same year as other volumes on the business cycle, including the French economist Albert Aftalion’s Les crises périodiques de surproduction [Periodic Crises of Overproduction] and British economist R.G. Hawtrey’s Good and Bad Trade: An Inquiry into the Causes of trade Fluctuations. 14 But Mitchell’s book was distinguished as the authoritative text. “It bids fair, we venture to pronounce, to be regarded as the classical authority for future students,” said one reviewer. The book was an oversized volume of 12.5 inches by 10 inches and published in a tiny font. The text was divided into three main sections: the first, on the “problem and its setting,” including summaries of existing business-cycle theory; the second, on key comparative statistics from the USA, England, France, and Germany, 1890–1911; and the final section on Mitchell’s own observations of “the rhythm of business activity.” It was a highly ambitious work that included dozens of statistical tables and detailed explorations of the crises of 1873, 1893, and 1907.

Reviewers praised his “penetrating acumen and the sane persuasive judgment which he displayed with much advantage some years back in his earlier study on the issues of ‘greenbacks.’” 15 Business Cycles brought Mitchell acclaim. In a review of Business Cycles in the Quarterly Journal of Economics , the Harvard statistician Warren Persons wrote that the genius of the book lay in “the marshaling of the data, and the clear expositions and the combination of the ideas of various writers into a self-consistent theory of business cycles.” 16

Mitchell’s book spawned interest in the topic and a swarm of new studies, including William Franklin Gephart’s Bank Credit and the Business Cycle (1923); William Charles Schluter’s The Pre-War Business Cycle 1907 to 1914 (1923); Carl Snyder’s The Influence of the Interest Rate on the Business Cycle (1925); Alvin H. Hansen’s Business-Cycle Theory: Its Development and Present Status (1927); and Dorothy Swaine Thomas’s Social Aspects of the Business Cycle (1927). 17

There was also an awareness that Mitchell’s approach, as he intended, would appeal to both academics and practitioners. It would be a work frequently returned to “by statisticians, by economists, and by statesmen and business organizers in every country where the phenomena here defined, investigated, and explained have become normally recurrent.” 18

Mitchell’s Business Cycles popularized a four-phase description of the business cycle that became common in the late 1910s and the 1920s—of depression, revival, boom, and crises. He wrote that “business cycles” is a “vivid term for this recurrent ebb and flow of business activity … Depressions pave the way for business revivals, revivals develop into ‘booms,’ booms breed crises, and crises run out into depressions.” He did not treat the ups and downs of the market phenomena as dependent on external events—rather they were inherent to moneymaking economies. Moreover, he used statistical series to reveal these cycles, studying numerous types of economic data to determine how cycles in one sector of the economy could affect fluctuations in another. 19

Though he regarded cycles as an intrinsic feature of capitalism, he did not believe that they were inalterable. Business Cycles embodied Mitchell’s commitment to rigorous empiricism and observation, but his approach was based on the pragmatic idea that it was possible to control the extremes of the peaks and troughs of cycles—once enough was known about them. 20 He also argued for the need for measures of national incomes and of national product, two projects he would later pursue at the NBER .

Mitchell did not believe in the perfectibility of knowledge about cycles. He thought that the search would be ongoing. Mitchell likened the task of an economist trying to construct a theory of business cycles to a mechanical engineer trying to improve the design of an existing machine—say, a lamp. The engineer first had to understand the operation of all existing lamps and their flaws and then painstakingly design a new one, testing it over and over again to see that it was efficient. This described how Mitchell worked carefully through existing business-cycle theories. But, Mitchell conceded his own work was more difficult than that of the engineer. “The social sciences give no such guidance to a social engineer as the physical sciences give to a mechanical engineer,” he wrote. “Human beings are the most intractable of materials. Nor can an inventor experiment with them at will as he can with alloys and plastics; he has to persuade his fellows to experiment on themselves, which they are generally reluctant to do.” 21

But he also believed that there was no need to wait until more knowledge had been gained before acting. What kinds of things could be tried? Long-range planning of public works, for instance, or a change in the policy of banks regarding credit ratios, and establishing new forms of unemployment insurance. 22 It was important to press ahead to try to curb unemployment during hard times. “Social experimentation, based on clearly thought-out hypotheses and accompanied by careful record-keeping, is one of the essential processes in increasing social knowledge and gaining social control,” wrote Mitchell. 23 In this way, his thinking was parallel to that of his former teacher at Chicago, John Dewey , as it pertained to social experimentation and solving social problems. Ideas needed to be tested through social experimentation. This separated economics from the hard sciences. 24

The Term “Business Cycles”

Mitchell’s book was instrumental in increasing the popularity of the phrase “business cycles.” Not everyone approved of the term, however. The most prominent critic was the stellar economist Irving Fisher —author of Our Unstable Dollar and the So-Called Business Cycle (1925). Fisher called the “business cycle” a “myth.” 25 For Fisher, fluctuations in the price level alone explained the rise and fall of trade and hence accounted for what most people referred to as the “business cycle.” He called such changes the “dance of the dollar.” 26 The idea of a cycle, Fisher wrote, “implies a regular succession of similar fluctuations, constituting some sort of recurrence, … as in the case of the phases of the moon, the tides of the sea, wave motion, or pendulum swing …” 27

In 1925, the New York Times reported on this claim, writing that Fisher “attempted to explode one of the most favored of economic theories.” 28 Observing fluctuations in the economy was not like the tides, he wrote, but like watching the swaying of treetops and branches in a forest. “If, in the woods, we pull a twig and let it snap back, we set up a swaying movement back and forth… In actual experience … twigs or tree-tops seldom oscillate so regularly, even temporarily. They register, instead, chiefly the variations in wind velocity.” 29 Similarly, the business world “oscillated” with variations in the “velocity” of money through the economy, in an uneven and irregular pattern.

But, for Wesley Mitchell , the term “business cycle” did not imply the scenario that Fisher described. Mitchell preferred the term “cycle” to other possibilities, such as “rhythm,” “oscillation,” or “fluctuation.” Stock prices could go up and down several times in a day—from 10, say, to 3, and then up to 15. They “fluctuated” but they did not exhibit a secular pattern. Hence “cycle” was not appropriate to frequent changes in securities prices or commodity prices, but seemed a better choice to describe long-term trends in production, unemployment, and trade. 30

For Mitchell, the term described an “exceedingly complex phenomena” by which “seasons of business prosperity, crisis, depression, and revival come about in the modern world.” 31 Both parts of the term “business” and “cycle” were essential. He differentiated the business cycle from the “economic cycle,” which is as “old as economic records” and from “financial cycles.” In neither of these instances, Mitchell wrote, did the causes for crisis emerge from “business sources.” The business cycle, instead, dated essentially from the nineteenth century.

The “business cycle,” Mitchell believed, was a phenomenon directly linked to the process of moneymaking, profit seeking, and business operations in a modern capitalist economy. Business cycles came gradually into existence as business enterprise grew to dominate the production and distribution of goods and the allocation of resources. This came to some industries faster than others. In some, even in the early twentieth century, craftsmanship was a primary concern and in some professions, such as medicine, the profit motive was not an overriding issue. Mitchell wrote:

In size, in complexity of organization, in dependence on the money market, in singleness of business aim, the typical farm, small retail store, handicraft shop, and professional office are not equal to the typical corporate enterprises of wholesale trade, transportation, manufacturing, lumbering, mining, and finance. These highly organized enterprises of the latter fields constitute the world of business par excellence. In the study of business cycles this uneven development of business organization in different fields is highly important. For it is within the circles of full-fledged business enterprise that the alternations of prosperity and depression appear most clearly, and produce their most striking effects. 32

Business Cycles criticized the notion that depressions or expansions were aberrations from some “normal” level of economic activity. Instead, Mitchell pointed out that business fluctuation was a constant process, a necessary consequence of a money-pursuing economy. 33 “Business cycles get their economic interest from the changes they produce in the economic well-being of the community,” wrote Mitchell. “This well-being depends upon the production and distribution of useful goods. But the industrial and commercial processes by which goods are furnished are conducted by business men in quest of profits.” 34

What caused cycles, however, was not merely individual profit seeking, but the fact that business enterprises were deeply interrelated. “For the accountant’s purpose each enterprise may be treated as a separate unit; but for the economist’s purpose, all enterprise are so bound to each other by industrial, commercial, and financial ties that none can prosper and none can suffer without affecting the others.” 35

The causes of cycles, then, came when individual businesspeople, managers, and entrepreneurs sought profits within the interdependent network—each business affecting the others through, for instance, credit, the supply of raw materials, consulting, or through distribution. Mitchell’s effort to understand the causes of business cycles led him to analyze the vast array of connections between businesses—and how changes introduced by several firms, or by a single large firm in a key industry, could have widespread consequences.

While each business cycle was different, Mitchell believed that enough similarities existed to begin to map out a common sequence of events in the course of a cycle. In a period of depression, Mitchell wrote, giving one such scenario, the level of prices was lower than in comparison to periods of prosperity; there were widespread reductions in the overall cost of doing business; profit margins were narrow; and consumers exhibited cautious buying. Some entrepreneurs, however, took advantage of these relatively inexpensive terms and began making profits, or, perhaps, some external event, such as a generous harvest or increased government spending, occurred, and this increased business activity. Mitchell wrote that such revivals could occur in widening economic circles and feed a feeling of optimism. “This increase in profits, combined with the prevalence of business optimism, leads to a marked expansion of investments,” Mitchell wrote. “Of course the heavy orders for machinery, the large contracts for new construction, etc., which result, swell still further the physical volume of business.” 36

Mitchell, that is, did not reduce the story of business cycles to a few variables or to simplified causes. Rather, he saw business cycles as stemming from the formation, and growing dominance, of large business organizations in the national economies of the USA, England , France , and Germany. Moreover, Mitchell thought that the causes and nature of business cycles would continue to evolve as business organizations themselves evolved and therefore required persistent study.

Mitchell’s overall exploration of the field of business cycles and his careful analysis of data inspired a strong following. While Mitchell’s views of business cycles were cautious and highly informed, many of those who latched on to the idea of “business cycles” sought to apply his ideas—often in highly simplified forms. Among the first group of these were other empirical economists and statisticians.

Economists and Statisticians

Mitchell promoted his longtime interest in business cycle research among empirical economists and statisticians in the early twentieth century, most notably through his role as Research Director of the National Bureau of Economic Research.

The origins of the NBER can be found among the social scientists, including Mitchell, who were engaged in the mobilization effort during World War I. At the time of the USA’s entry into World War I in 1917, the federal government had little ability to chart, distribute, and interpret economic data. Statistics available during the war were haphazardly collected and inadequate in their coverage. When President Woodrow Wilson declared war , for instance, there were at least twenty separate data-gathering bureaus in Washington—most of which were narrow in their mission and acted independently of other bureaus.

Accordingly, when war was declared, the government moved to increase its knowledge of gathering economic and population statistics and turned to academics for help. Mobilization bore the unmistakable stamp of American fascination with efficient management systems. Economists and statisticians brought to Washington new ideas about creating statistical portraits of the mobilization effort and increasing the efficiency of labor. They were joined by other scientists, including industrial psychologists. Harvard professor Robert Yerkes persuaded the surgeon general to administer his Alpha and Beta tests, devised to measure general intelligence to 1.75 million army soldiers.

Among the most important efforts in the collection of data were those undertaken by statistician Leonard Ayres for the Council of National Defense and by Harvard Business School’s Edwin Gay , who served as chair of the Central Bureau of Planning and Statistics of the War Industries Board. Ayres, for instance, oversaw the creation of about 230 organization charts to help create a sense of order in the chaos of Washington. Edwin Gay promoted the use of cost accounting as a way to improve the economic efficiency of business.

Mitchell headed the Price Bureau of the War Industries Board. After Armistice, Mitchell underlined the war’s importance for the field of economic statistics. “The war forced a rapid expansion in the scope of federal statistics and the creation of new statistical agencies,” he recalled. “What is more significant, the war led to the use of statistics, not only as a record of what had happened, but also as a vital factor in planning what should be done.” The war experience made government officials aware of the value of accurate data to inform decision making—and especially the need for improved government methods of estimation to produce a better understanding of the state of economic activity.

Toward the end of World War I, Mitchell and his friend Edwin Gay conceived of creating a national organization to gather economic statistics, similar to the wartime Central Bureau of Planning and Statistics, which collected similar information as presented in Business Cycles (1913). They thus envisioned turning the Central Bureau into a peacetime organization. But Woodrow Wilson was opposed to this and the Bureau came to a close in June 1919.

Mitchell and Gay then decided to pursue the formation of a private bureau. Malcolm Rorty , a statistician from AT&T, joined them and helped secure $20,000 in funding from the Commonwealth Fund, a philanthropy founded by a Standard Oil executive. In February 1921, the NBER was incorporated. Mitchell served as the research director from the Bureau’s founding to 1945 and was its intellectual leader. The NBER, now headquartered near the Harvard University campus in Cambridge, Massachusetts , was originally based in New York City .

The idea of a scientific research center was largely new in economics , a field still dominated by nonquantitative methods. The NBER was not the only effort along these lines, however. Other entrepreneurs and academics formed centers for gathering economic data. The Harvard Economic Society, headed by economist C.J. Bullock and statistician Warren Persons , developed economic “observatories” to gather statistics around the world—in England, Italy , France, Germany, and other countries. 37 Irving Fisher also founded a large data-collection operation in the basement of his massive house in New Haven; the Index Number Institute published economic statistics, including on the cost of living, in newspapers on a weekly basis. Neither of these organizations survived the 1930s, however.

Instead, the NBER became the pre-eminent center due to its stellar staff and its close association with the US government. As Director of Research, Mitchell’s goal at the NBER was not only tracking historical business cycles but also taking the pulse of the current phase. This, in many ways, was a fulfillment of the outline of research he had described in Business Cycles (1913).

The Bureau began developing aggregate statistics to measure different parts of economic life. Under Mitchell’s guidance, research at the Bureau had five precepts: Research should “concentrate on determining facts”; the knowledge should be “quantitative in character”; research should follow “scientific principles”; research should be impartial; and the NBER should not engage in making policy. 38 For its first project, the NBER undertook a massive study of national income—including a study of the geographical distribution of income and a study of the rate of savings. Mitchell was clear that such studies should not only serve academic interest but also have contemporary relevance. 39

In the early 1920s, Mitchell embarked more directly on a study of the business cycle, enlisting now the resources of the Bureau in studies of production, employment, spending, saving, and other phenomenon. In the mid-1930s, his student, Simon Kuznets , developed the concept of Gross National Product, which became the standard measure of economic health. The figure was a major innovation in the history of economics and in business cycle research because it provided an accepted baseline from which to measure change in output over time—in the USA and in other countries. GNP provided a clear way to compare different national economies; the British economist Colin G. Clark was among those who recognized the use of GNP for this purpose. 40

At the NBER , Mitchell wrote, edited, or coauthored many books on the subject of cycles, including Business Cycles: The Problem and Its Setting (1927); Business Cycles and their Causes (1941); and Measuring Business Cycles (1946). A final project, What Happens During Business Cycles: A Progress Report (1951), was published posthumously.

Over the course of the twentieth century, virtually every well-known economist has been associated with the Bureau. Many of the Nobel laureates of the twentieth century were members, including Simon Kuznets , Milton Friedman , George Stigler, Robert Fogel, Robert Merton, Joseph Stiglitz, and Paul Krugman—exploring a wide variety of subjects.

Entrepreneurs and Forecasters

Another group for whom Business Cycles, and Mitchell’s promotion of the central ideas of the text, played a formative role was businesspeople and investors interested in predicting the economic future.

Mitchell included a section on forecasting in his 1913 book. “The uncertainty attending present forecasts of business conditions arises chiefly from the imperfections of our knowledge concerning these conditions in the immediate past and in the present,” Mitchell began. “For, since business cycles result from processes of cumulative change, the main factors in shaping tomorrow are the factors at work yesterday and today.” 41 Mitchell wrote of the need for improved business barometers to mark historic trends in business production, distribution, trade, and profitability. Mitchell suggested that while businessmen “of means” had access to substantial data, and to analysts who could decipher it, most business leaders lacked information—on bank clearings, railways earnings, employment, imports and exports, and manufacturing output—to give them a broader sense of current conditions. 42

Mitchell’s book came out at a time when business managers were enamored of finding “systems” (a highly popular word in business journalism in the early twentieth century). 43 Business Cycles, for instance, was published around the same time as Frederick Winslow Taylor’s Scientific Management (1912). While the texts are quite different—Mitchell’s is exhaustive and academic, while Taylor’s is brief and popular—they shared some similarities. What “Taylorism” was for factory owners—that is, a promise of how to conceptualize and control the administration of factory labor using quantitative metrics—the notion of “business cycles” was to those who sought to understand how the overall economy worked. How could one make sense of the very atmosphere in which business operated—the ups and downs businesspeople faced in prices, demand, and employment? What metrics would be used to measure progress? Could the economic cycles be predicted?

There was a growing demand for answers to such questions among business leaders. The proponents of business cycle forecasting included Isidor and Nathan Strauss at Macy’s, paper manufacturer Henry Dennison at Dennison Manufacturing Company, and Clarence Woolley at American Radiator—all of whom instituted business cycle planning at their firms. They and other forward-looking business managers sought information about upcoming fluctuations to help plan future purchases, plant openings, and the hiring of personnel—just as they sought out any information they thought would bring them competitive advantage. Dennison wrote articles on the subject of countercyclical planning, urging, for instance, the need to resist firing salespeople in times of overall depression. 44 In the 1920s, there were several efforts to formalize a relation between business investments and spending and the business cycle, including Joseph H. Barber’s Budgeting to the Business Cycle (1925) and John Everette Partington’s Railroad Purchasing and the Business Cycle (1929).

In the early 1920s, Mitchell himself completed a series of forecasts in the New York Evening Post, where his friend the economic historian Edwin Gay was working as editor. 45 These writings show Mitchell’s somewhat cautious approach to solving economic problems. In his own forecasts, Mitchell avoided a single approach. He looked at a great number of indicators, including factors that would affect demand for crops, and economic conditions overseas. To these, he added his view of the expectations of investors and myriad other statistical and qualitative conditions. 46

But Mitchell only pursued commercial forecasting briefly. By the mid-1920s, especially, he had grown suspicious of the industry—and of the vast marketing that private forecasters were using to promote their newsletters and build confidence in their predictions. He believed that the entrepreneurs who issued forecasts cultivated a false sense of security among businesspeople and investors, as well as promoted a good deal of “misunderstandings and exaggerations” in popular discussion. “Many a businessman is developing the precipitate zeal of a new convert and talking about cycles as if they came around with the regularity of presidential elections,” wrote Mitchell in a 1923 article in the Journal of Accountancy. “Not a few forecasting agencies are publishing prophecies as if they had the certainty of history.” Mitchell feared that investors and businessmen had begun to have blind faith in entrepreneurial forecasters, who hoped to prosper from boom-and-bust calls. There was a need, wrote Mitchell, for “clear and sober thinking … by men of trained minds.” 47

But despite Mitchell’s reservations, the forecasting industry gained great strength in the 1920s, mostly around ideas about cyclical fluctuations. At the start of World War I, there were only about five forecasting agencies operating in the USA. By 1925, Irving Fisher observed, “We now have nearly fourscore forecasting agencies to help the business man.” 48

Many forecasters cited Mitchell’s work as proof of the idea that the economy was cyclical in nature. 49 Among those referring to Mitchell as the authority on business cycles were the famous economic graph maker Karl Karsten , economist and writer Carl Snyder , and the Massachusetts -based entrepreneur Roger W. Babson . Babson wrote, “There is … a law under which mechanics, medicine and other sciences move …” and noted Mitchell as first among those who had made “recent scientific contributions to the literature on business cycles …” 50

Forecasters developed their own theories of how economies worked. For instance, Babson developed the Babsonchart, which used the theories of Isaac Newton to predict the ups and downs of macroeconomic change. He argued that “depressions” and “expansions” would always exactly equal out in severity, just as “equal and opposite reactions” operate in the natural world. Around this time, James H. Brookmire pioneered the Brookmire Economic Service, which also built a business barometer, and often featured Brookmire’s “Cycle Chart of Business and Banking.” 51 These forecasters were essentially trend analysts who looked through past data hoping to find historical patterns that they thought would recur into the future. They emphasized what today we would call the “real economy”—upcoming changes to production, employment, trade, and services—rather than trends in the stock market.

These early forecasters often distributed their predictions in weekly bulletins that carried relevant business news and economic indexes. They devoted substantial time to sales and marketing and further popularized ideas about a cyclical economy. Some forecasters built sales forces to travel from office to office in lower Manhattan or in Boston and Chicago. Others sent their representatives to Rotary Clubs and churches in smaller cities and towns to give lectures. Nearly all forecasters advertised in the New York Times, the Wall Street Journal, the Commercial and Financial Chronicle, and the Chicago Tribune. Many of these advertisements encouraged the “zeal” Mitchell had feared by claiming the future was now predictable.

The forecasting industry thus grew markedly in the decade after 1913, with the industry centered chiefly on predicting phases of the business cycle. In 1938, Fortune magazine noted that forecasting had become as required as “breathing” in the operation of a firm: “Business can no more do without forecasting than it can do without capital. From birth to death a business is the moving sum total of its adjustments to the future.”23 While forecasting later went in new theoretical directions and became a site for serious academic work (such as that by Laurence Klein after World War II), its early entrepreneurial phase was greatly influenced by the authority Mitchell’s work gave to the idea of business cycles.

Politicians

Finally, a third group that responded to the idea of business cycles, expressed in Mitchell’s 1913 book, was politicians. In the 1920s, the term “business cycle” became of great political interest—it was fastened on by members of both political and conservative parties. For conservative politicians, the idea that the economy operated according to cyclical swings supported the policy that government intervention was futile—and that periods of prosperity and depression were merely the working out of the true nature of capitalist economies.

For others, though, the idea that economies had predictable cyclical swings brought the idea that, if properly anticipated, these cycles could be dampened or even flattened entirely. Herbert Hoover , a moderate Republican, played a key role in promoting the latter view. In the 1920s, Hoover and Wesley Mitchell collaborated to develop a government-led program that would provide business leaders and analysts with information that, they hoped, would enable them to improve their ability to forecast economic conditions. They aimed to educate business leaders on economic affairs so that these business leaders would make their companies more efficient and more attuned to economic conditions. Business leaders who recognized whether they were in the midst of a boom or bust cycle, the argument went, would enact countercyclical strategies that, in aggregate, would stabilize the economy.

The two of them came at this work from different angles: Mitchell’s interest in the field stemmed from his profound belief in the nature of business cycles; Hoover’s desire to combat economic volatility had a more political orientation and stemmed from his experiences in Europe. In the wake of the Bolshevik Revolution in Russia , nations throughout Europe and the Americas saw class revolution as a genuine threat. “We have witnessed in this last 8 years the spread of revolution over one-third of the world,” Hoover wrote in the first sentence of his book American Individualism (1922). 52 He wanted to eliminate the “hallucinations transported from Europe” of rosy ideas about socialism. 53

The commerce secretary hoped to establish a uniquely American solution to the problem of economic crises. His overriding idea was that the New World was separated from the Old World by the American sense of “individualism.” An earlier generation of pioneers had surveyed and explored the American West; new ones would shape the country’s economic and social future. They would explore the “continent” of science. The goal was not to overturn capitalism with a new system but to encourage individuals in ways that would alleviate its cyclical extremes and avoid its bottlenecks.

Mitchell and Hoover promoted the idea that governments should be deeply engaged with combatting cycles—most notably through the indirect methods of spreading objective information and by sharpening theories about why cycles occurred. They developed a plan to modify cycles that depended on the interrelation of three parties: The Department of Commerce, which would circulate ideas and information; economists and statisticians at the NBER , who would provide objective data and analysis; and private philanthropies, which would fund these efforts. The number of philanthropies interested in improving society through expert-led research increased substantially in the early twentieth century; the Carnegie Foundation (1905), the Rosenwald Fund (1917), the Rockefeller Foundation (1913), and many others were formed during this time.

Essential to the plan was a clearer understanding of the nature of the business cycle. 54 To gain knowledge and to draft policy, Hoover believed in holding conferences of experts from diverse backgrounds—and he drafted Mitchell to lead these conferences. The two of them set about creating an extraordinary network of businesspeople, scholars, and philanthropists. Among the experts were Harvard Business School (HBS) dean Edwin Gay ; Arch Shaw (1876–1957), a Chicago office supplier and HBS instructor; John J. Raskob (1879–1950), an executive at DuPont and General Motors; and Owen D. Young (1874–1962), an industrialist, lawyer, diplomat, and chairman of General Electric. Several in this group had written on the subject of forecasting and business planning. Dennison , in particular, promoted the idea of business cycle planning. 55

Hoover and Mitchell held three major business cycle conferences, each of which produced a major report: Business Cycles and Unemployment (1923); Recent Economic Changes in the United States (1929); and Recent Society Trends of the United States (1933) . Mitchell, as research director at the NBER , contributed significant essays to each of these reports and supervised the collection of articles for all of them. He wrote four of twenty-one chapters for Business Cycles and Unemployment (1923), the report of the first meeting. The book advanced several recommendations to reduce the extremes of business cycles. It emphasized the importance of the dissemination of statistical information and encouraged the active role of the Federal Reserve in moderating cyclical fluctuations. Mitchell also called for “informed action by individual businessmen in periods of rising markets in order that excessive expansion may be prevented and the extent of the decline reduced.” 56

Through their partnership, Mitchell and Hoover promoted the idea that federal policy could stabilize cycles. Even in the early 1930s, when it was clear that their hope that business leaders could revive the economy had failed, their work had lasting effect. Mitchell and Hoover had successfully promoted the idea that it was the government’s role to track economic cycles, collect and publish economic data, endorse a standard measure of economic prosperity (which became GNP in the 1930s), and attempt to flatten the extremes of boom-and-bust periods. The federal government continued all of these activities under Franklin D. Roosevelt . That is not to say, of course, that these presidents used the same means to curb economic cycles. President Roosevelt’s direct fiscal involvement in the economy was far different than Hoover’s ideal, for example. But it was in the 1930s that the president became the one responsible for these activities. The impact of these legacies can hardly be overstated. No president since Roosevelt has failed to make a promise to improve GNP and promote stable economic growth. The effort to do this and the consequences of these efforts have engaged thousands of government personnel, have been the focus of elections, and have been the measure of success of presidential administrations.

Conclusion

The Keynesian Revolution, and the rise of macroeconomics , moved the center of the field of economics away from Mitchell’s emphasis on observation and the history of economic institutions toward a formal, mathematical, and policy-oriented approach. The Econometric Society, founded in 1930 by Irving Fisher , Ragnar Frisch , Charles Roos , and others, began to draw the attention of young empirically oriented economists toward model building and higher mathematics. Economics , as a discipline, also moved beyond another pillar of Mitchell’s work—the assumption that studies of business cycles could, in some way, encapsulate all aspects of economic activity. One of the last books to treat the subject in such a comprehensive way was by Mitchell’s friend, the Harvard economist Joseph Schumpeter , who published a two-volume book entitled Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist Process (1939). 57

Keynes’s insight that market competition did not guarantee full employment and, in times of lasting and severe depression, governments should engage in fiscal and monetary intervention, became the predominant research focus for decades. The Keynesian approach promoted a new way to make sense of business cycles. It flourished in the USA in a mixed economy in which the scale of industry and the size of government spending increased dramatically—as FDR initiated the New Deal and, even more important, increased spending for wartime mobilization. In 1932, total federal government spending was $12.4 billion; in 1952, it had risen to $99.9 billion.

But for the pre-Keynesian period, Business Cycles was the key text. For observers and analysts who were uncertain about the scale of economic change, the idea of “business cycles” promised that ups and downs were measurable. For managers in large firms, looking to make purchases or to plan new plant openings, “business cycles” promoted an understanding that the economic atmosphere was also part of a system—a system that, if understood, could yield advantages and efficiencies. For government officials who wanted to control fluctuations, “business cycles” seemed to promise that ups and downs were potentially controllable. The idea of “business cycles” presented a way to encompass all the big questions of the field: What economic activity contributed to growth? What signaled recession? How could statistics be combined? How could change be measured?

In the years after Mitchell’s 1913 book on the subject, the idea of business cycles took hold of the American imagination and influenced economic analysis and thought, business strategy, and political policy. Mitchell’s book helped promote the idea that economies were best understood through statistical series and empirical observation. It emphasized the idea that the best way to talk about an economic phenomenon was to compare such aggregate series of industrial production, trade , unemployment, or credit. It popularized the idea that economies can largely be thought of as existing in one of four phases (recovery, prosperity, crisis, or depression) that move up or down in this wavelike fashion. 58 A review of the book and of Mitchell’s endeavors in promoting his research agenda helps illuminate economic strategies and political policies of the 1910s and 1920s—the growing interest in economic data gathering organizations, the birth of the economic forecasting industry, and the rising involvement of politicians in efforts to promote national economic stability.

Notes

  1. 1.

    Economist Arthur Burns makes this observation, recorded in Lucy Sprague Mitchell, Two Lives: The Story of Wesley Clair Mitchell and Myself (New York: Simon and Schuster, 1953), 291.

  2. 2.

    See Clément Juglar, Des Crises commerciales et leur retour periodique en France, en Angleterre, at aux Etas-Unis (Paris: Guillaumin, 1862); Karl Marx, Das Kapital (Hamburg: Meisner, 1867).

  3. 3.

    David Glasner, ed., Business Cycles and Depressions: An Encyclopedia (New York and London: Garland, 1997), iv.

  4. 4.

    Quoted in Mark C. Smith, Social Science in the Crucible: The American Debate over Objectivity and Purpose, 1918–1941 (Durham: Duke University Press, 1994), 50.

  5. 5.

    Joseph Schumpeter, “Wesley Clair Mitchell (1874–1948),” Quarterly Journal of Economics 64, no. 1 (February 1950): 155.

  6. 6.

    John Maurice Clark, “Thorstein Bundy Veblen: 1857–1929,” American Economic Review 19, no. 4 (December 1929): 742–45.

  7. 7.

    Veblen’s quantitative work included “The Price of Wheat since 1867,” Journal of Political Economy 1, no. 1 (December 1892): 68–103, which included charts of the ups and downs of prices in this commodity, and “The Food Supply and the Price of Wheat,” Journal of Political Economy 1, no. 3 (June 1893): 365–79, which included some statistics-based forecasts.

  8. 8.

    Mitchell, Two Lives, 305.

  9. 9.

    Ibid., 176.

  10. 10.

    Alexander D. Noyes, “A Year after the Panic of 1907,” Quarterly Journal of Economics 23, no. 2 (February 1909): 186.

  11. 11.

    William Stanley Jevons, “Commercial Crises and Sun-Spots,” Nature 19 (November 14, 1878): 33–37.

  12. 12.

    House of Representatives, Hearings and Arguments before the Committee of Banking and Currency (Washington, DC: Government Printing Office, 1896–1897), 165.

  13. 13.

    See Paul Barnett, Business-Cycle Theory in the United States, 1860–1900 (Chicago: University of Chicago, 1941).

  14. 14.

    Wesley C. Mitchell, Business Cycles (Berkeley: University of California Press, 1913), 3.

  15. 15.

    Albert Aftalion’s Les crises périodiques de surproduction [Periodic Crises of Overproduction] (Paris, M. Rivière et cie, 1913); R. G. Hawtrey’s Good and Bad Trade: An Inquiry into the Causes of Trade Fluctuations (London: Constable & Co., Ltd., 1913).

  16. 16.

    See a review of these three titles: L. L. P., Review: “Les Crises Periodiques de Surproduction by Albert Aftalion: Good and Bad Trade: An Inquiry into the Causes of Trade Fluctuations by R.G. Hawtrey; Business Cycles by Wesley Clair Mitchell,” Journal of the Royal Statistical Society 77, no. 2 (January 1914): 218.

  17. 17.

    Warren Persons, review of Wesley C. Mitchell, “Business Cycles,” Quarterly Journal of Economics 28, no. 4 (August 1914): 796.

  18. 18.

    William Charles Schluter, The Pre-War Business Cycle 1907 to 1914 (New York: Columbia, 1923); William Franklin Gephart, Bank Credit and the Business Cycle (St. Louis: First National Bank, 1923); Carl Snyder, The Influence of the Interest Rate on the Business Cycle (New Haven: American Economic Association, 1925); Joseph H. Barber, Budgeting to the Business Cycle (New York: Roland Press, 1925); Alvin H. Hansen, Business-Cycle Theory: Its Development and Present Status (Boston: Ginn, 1927); Dorothy Swaine Thomas, Social Aspects of the Business Cycle (New York: Knopf, 1927); and John Everette Partington, Railroad Purchasing and the Business Cycle (Washington, DC: The Brookins Institution, 1929).

  19. 19.

    See a review of these three titles: L. L. P., Review: “Les Crises Periodiques de Surproduction by Albert Aftalion: Good and Bad Trade: An Inquiry into the Causes of Trade Fluctuations by R.G. Hawtrey; Business Cycles by Wesley Clair Mitchell,” Journal of the Royal Statistical Society 77, no. 2 (January 1914): 218.

  20. 20.

    Daniel Breslau, “Economics Invents the Economy: Mathematics, Statistics, and Models in the Work of Irving Fisher and Wesley Mitchell,” Theory and Society 32, no. 3 (June 2003): 379–411, discusses the use of the word “economy” by Mitchell and Fisher.

  21. 21.

    Smith, Social Science in the Crucible, 124.

  22. 22.

    Mitchell in 1943, quoted by Dorfman, The Economic Mind in American Civilization 4:361.

  23. 23.

    Hirsch, “Reconstruction in Economics,” 126.

  24. 24.

    Ibid., 126; original source: “Unemployment and Business Fluctuations,” 17–18.

  25. 25.

    Ibid., 127.

  26. 26.

    See, for instance, “Review: Recent Books on Business Cycles,” The Quarterly Journal of Economics 38, no. 1 (November 1923): 153–68. This included reviews of several books including Business Cycles and Employment by the Committee of the President’s Conference on Unemployment; The Stabilization of Business by Wesley Clair Mitchell and Lionel D. Edie; Business Forecasting by David F. Jordan; and The Trade Cycle by F. Lavington; and others, seven in all.

  27. 27.

    Irving Fisher, “Our Unstable Dollar and the So-Called Business Cycle,” Journal of the American Statistical Association 20, no. 150 (June 1925): 179. Fisher wrote, “It seems certain, humanly speaking, that wherever the dollar—our yardstick of commerce—suffers wide fluctuations in purchasing power, those fluctuations largely predetermine or, at any rate, precede closely related fluctuations in trade.”

  28. 28.

    Irving Fisher, “Our Unstable Dollar and the So-Called Business Cycle,” Journal of the American Statistical Association 20, no. 150 (June 1925): 192.

  29. 29.

    “Assails, ‘Business Cycle,’” New York Times, November 8, 1924, 24.

  30. 30.

    Irving Fisher, “Our Unstable Dollar and the So-Called Business Cycle,” Journal of the American Statistical Association 20, no. 150 (June 1925): 192.

  31. 31.

    For current understandings of the business cycle, see Arnold G. Lutz, Business Cycle Theory (New York: Oxford University Press, 2002). This describes Keynesian economics, monetarism, new classical economics, the real business cycles theory, and new Keynesian economics understandings of the cycle.

  32. 32.

    Mitchell, Business Cycles, 3, vii.

  33. 33.

    Mitchell, Business Cycles, 22–23.

  34. 34.

    See Mitchell, Business Cycles.

  35. 35.

    The English economist A.C. Pigou noted this aspect, and included this quote, in his review of Mitchell’s book. See A. C. Pigou, “A Review of Business Cycles by Wesley Clair Mitchell,” The Economic Journal 24, no. 93 (March 1914): 78–81.

  36. 36.

    Mitchell, Business Cycles, 23.

  37. 37.

    Ibid., 572.

  38. 38.

    Mason, “Harvard Economics Department,” 411. Persons also taught a course in the college on statistical theory and analysis William Trufant Foster, “Warren Milton Persons,” Journal of the American Statistical Association 34, no. 206 (June 1939): 413. According to one observer, “In that course, as elsewhere, [Persons] held staunchly to the view [that] statistics is much more than a collection of numerical facts; that it is, on the contrary, a method and a logic; that it is an applied science in which, therefore, it is just as necessary to scrutinize the premises as the logic and mathematics.” The Harvard Alumni Bulletin, of April 8, 1920, contained an article describing the work of the Review.

  39. 39.

    See Solomon Fabricant, “Toward a Firmer Basis of Economic Policy: The Founding of the National Bureau of Economic Research,” NBER (1961), 1–6, 14.

  40. 40.

    Simon Kuznets, National Income and Capital Formation, 1919–1935 (New York: National Bureau of Economic Research, 1937). On the history of GNP, see also Thomas A. Stapleford, The Cost of Living in America: A Political History of Economic Statistics, 1800–2000 (Cambridge: Cambridge University Press, 2009), 319–24. See also Colin G. Clark, National Income 1924–1931 (London: Macmillan, 1932).

  41. 41.

    Mitchell, Business Cycles, 589.

  42. 42.

    Ibid., 593.

  43. 43.

    See, for instance, System magazine.

  44. 44.

    See, for instance, Henry S. Dennison, “Management and the Business Cycle,” Journal of the American Statistical Association 18, no. 137 (March 1922): 20–31. See also C. H. Crennan, “Business Men and the Business Cycle,” Annals of the American Academy of Political and Social Science 109 (September 1923): 291–95; J. H. Jones, “Business Forecasting,” The Economic Journal 8, no. 151 (September 1928): 414–25.

  45. 45.

    See, in the New York Evening Post, “The Outlook of 1921 as Seen by Bankers, Business Men and Economists,” December 31, 1920, Sect. 3, part I, 2; “Present Facts and Past Experience Indicate Revival Is Now at Hand,” October 17, 1921, 1, 13; “Business Revival Expected to Gather Momentum in Immediate Future,” October 18, 1921, 1, 10; “Business Making Progress in Positive Phase of Cycle,” December 31, 1921, Sect. 2, part I, 1; “Business Revival Shows Signs of Developing into Prosperity,” December 30, 1922, Sect. 2, part I, 1, 9; and “Business during 1924 Likely to Be Generally Satisfactory,” December 31, 1923, Sect. 2, part I, 1–2. Mitchell also wrote on the subject in “How You Can Use ‘The Business Cycle,’” System 5, no. 40 (1921): 683–85, 767–68.

  46. 46.

    See Dorfman, The Economic Mind in American Civilization, 4:552. Abraham Hirsch, “Reconstruction in Economics: The Work of Wesley Clair Mitchell” (Ph.D. diss., Columbia University, 1958), 121–24. The original source is “Unemployment and Business Fluctuation,” American Economic Review 5, no. 8 (1923): supplement, 47. See, in the New York Evening Post, “The Outlook of 1921”; “Present Facts and Past Experience”; “Business Revival Expected to Gather Momentum in Immediate Future”; “Business Making Progress in Positive Phase of Cycle”; “Business Revival Shows Signs of Developing into Prosperity”; and “Business during 1924 Likely to be Generally Satisfactory.”

  47. 47.

    Wesley C. Mitchell, “Accountants and Economics with Reference to the Business Cycle,” Journal of Accountancy 25, no. 3 (March 1923): 167.

  48. 48.

    Irving Fisher, “Our Unstable Dollar and the So-Called Business Cycle,” Journal of the American Statistical Association 20, no. 150 (June 1925): 180. Many of these are listed in an unpublished booklet by the Illinois Chamber of Commerce (Research Dept.), Commercial Services (Chicago, 1927), available in the Baker Library, Harvard Business School.

  49. 49.

    See, for instance, Roger W. Babson, “International Cooperation for the Standardization of Statistical Work,” Publications of the American Statistical Association 14, no. 109 (March 1915): 462–66; Roger W. Babson, “Factors Affecting Commodity Prices,” Annals of the American Academy of Political and Social Science 38, no. 2 (September 1911): 155–88; Irving Fisher, “‘The Equation of Exchange’ for 1911, and Forecast,” The American Economic Review 2, no. 2 (June 1912): 302–19; Irving Fisher, “A Weekly Index Number of Wholesale Price,” Journal of American Statistical Association 18, no. 143 (September 1923): 835–40; Irving Fisher, “Mathematical Method in the Social Sciences,” Econometrica 9, no. 3/4 (July–October, 1941): 185–97; Warren M. Persons, “Statistics and Economic Theory,” The Review of Economics and Statistics 7, no. 3 (July 1925): 179–97; and Warren M. Persons, “Theories of Business Fluctuations,” The Quarterly Journal of Economics 41, no. 1 (November 1926): 94–128.

  50. 50.

    See Roger W. Babson, Business Barometers Used in the Accumulation of Money (Wellesley Hills, MA: Babson Service Co., 1918), 120; Karl G. Karsten, “The Theory of Quadrature in Economics,” Journal of the American Statistical Association 19, no. 145 (March 1924): 14–29, see p. 27; and Carl Snyder, “New Measures in the Equation of Exchange,” The American Economic Review 14, no. 4 (December 1924): 699–713.

  51. 51.

    James H. Brookmire, The Brookmire Economic Charts: A Graphic Record of Fundamental, Political and Industrial Conditions as a Barometer to the Financial and Business Situation (St. Louis: Brookmire Economic Chart Co., 1913).

  52. 52.

    Herbert Hoover, American Individualism (Garden City, NY: Doubleday, 1922), 1; Guy Alchon, The Invisible Hand of Planning: Capitalism, Social Science, and the State in the 1920s (Princeton: Princeton University Press, 1985), 80. In this view, proper forecasting could lessen class conflict: Hoover’s argument that both labor and management should receive recognition as actors who can stabilize the economy, and who should be equipped with a rational organizational and informational apparatus to do so, pointed to a different balance between manager-led and worker-led reform than that promoted by (some of) the private forecasters, who were as a body less interested in questions of class conflict. See also Robert Zeigler, “Labor, Progressivism, and Herbert Hoover in the 1920s,” Wisconsin Magazine of History 58, no. 3 (Spring 1975): 196–208.

  53. 53.

    See Alchon, The Invisible Hand of Planning, 80, who includes Mitchell’s notes of Hoover’s views expressed during a Business Cycle Committee meeting.

  54. 54.

    Herbert Hoover, foreword to Business Cycles and Unemployment, v. Hoover’s initial experience in trying to mitigate unemployment came when Warren Harding called for a conference on the subject when four to five million people were unemployed. The President’s Conference on Unemployment met in September 1921. It was a combination of businessmen, labor leaders, economists, and statisticians. It proposed an “exhaustive investigation” be made of the causes of unemployment and “methods of stabilizing business and industry so as to prevent the vast waves of suffering which result from the valleys in the so-called business cycle.”

  55. 55.

    Dennison, “Management and the Business Cycle,” 20–31.

  56. 56.

    Report quoted in Alchon, The Invisible Hand of Planning, 107.

  57. 57.

    Schumpeter, Business Cycles (New York: McGraw-Hill, 1939). On Schumpeter, see Thomas K. McCraw, “Schumpeter’s ‘Business Cycles’ as Business History,” Business History Review 80, no. 2 (Summer 2006): 231–61.

  58. 58.

    See J. Adam Tooze, Statistics and the German State, 1900–1945: The Making of Modern Economic Knowledge (Cambridge, UK, 2001) for similar developments in Germany.