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    "source_key": "britannica_1926",
    "source_title": "Encyclopaedia Britannica (1926)",
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    "chunk_id": "1926:trade:fd66394511ab",
    "title": "TRADE",
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    "verified_text": "-trade is the business of buying and selling commodities. by a natural transition of thought and usage the term is applied also to the goods themselves. the expres- sion “international trade ” is likewise employed to refer both to the business or occupation of buying goods in a foreign country and of selling them abroad and to the goods themselves. in practice, however, the term country or “ nation ” in this con- nection is used to mean not necessarily a separate political en- tity, but a territory with an independent customs frontier, when such frontier exists. thus, since the customs convention of may i 1922, between belgium and luxembourg, it is no longer possi- ble to speak of international trade between these two political entities. the comparability of foreign trade statistics in most countries careful records are kept of the quantity and value of goods crossing the customs frontier and great importance is attached to the expansion or contraction of the quantum of trade, although there is no necessary connection between the growth of a country’s trade and its general economic prosperity. but neither the quantum nor the value of that trade can be measured with any nice degree of accuracy. the difficulties which present themselves are due in part to the different systems of measurement adopted in different countries,in part to the recent alterations which have been introduced in those systems, in part to changes in the composition of world trade, and in part to changes in value. two main divisions —although the trade statistics of no two lands are compiled on exactly similar principles, it is cus- tomary and on the whole the custom is justified, to divide the world into two broad divisions of countries consisting of those which enforce the “ continental’? and those which enforce the “‘ anglo-saxon ”’ system. the former show what is called general and special trade, “general trade ’’ meaning all im- ports into warehouse and exports therefrom, and ‘‘ special trade ” all “imports for domestic consumption ” and all exports of “national and nationalised produce.” the latter publish 798 “imports ” and “ exports,’”’ which are roughly equivalent to the general trade of the first division of countries, transhipment, transit and temporary trade and re-exports of foreign produce normally being excluded. were the definition of nattonalisation of foreign goods uniform in all countries the existence of these two different systems would be of no great importance, because the imports, less the re-exports, of the “‘ anglo-saxon ”’ countries would be roughly equivalent to the special imports of the ‘‘ continental” group, and the exports of the one and the special exports of the other would likewise be approximately comparable. but in the great majority of countries adopting the continental system all goods which have entered the free domestic market are considered as being for domestic consumption and all goods exported from the free domestic market as being national or nationalised. when an import duty is imposed on goods entering the domestic mar- kets this supposition is generally justified; but in the case of raw materials, which are usually free of duty, it may frequently be quite unfounded. as a result the special imports and exports of countries adopting the continental system tend to include a cer- tain amount of commerce which would be excluded from the statistics (imports minus re-exports and exports) of countrics employing the anglo-saxon system. the second great difference of method lies in the systems of valuation. in certain countries the goods are valued at average prices fixed by a government commission. these prices may or may not be differentiated by countries or be applied equally to imports and exports. normally they are revised once a year, with the result that the trade of any given year is valued at prices ruling during the previous twelve months. in others and now in the majority of countries, the values recorded in the trade statistics are based on the declarations of the importers and exporters, which are checked against the documents accompanying the goods. were the official valuations accurate and the merchants’ declarations always honest, the coexistence of these two systems would be of little importance. but in post-war years the violent fluctuations of prices rendered the official valuations useless and the great majority of countries abandoned them in favour of merchants’ declarations. this change, while increasing the com- parability of trade statistics in the last year or two has rendered the annual national statistics of certain countries incomparable at various dates since 1917. moreover, the “ declared value ” system demands a degree of commercial honesty and adminis- trative competence to which all communities ‘cannot lay claim, a further dilliculty arises on account of the fact that certain imports and exports are not included in all statistics—the com- monest exclusions being gold and bullion, goods sent by parcel post, government stores, ships and ships’ stores. the importance of such exclusions may vary enormously from one year to an- other. thus, the british trade statistics during the war up to july 1917 were rendered quite misleading by the exclusion of all articles, other than food, imported on british govt. account. difficulties of measuring values—these three difficulties all relate to the manner in which national trade statistics are com- piled. but even were all countrics to adopt a common system, it would still be impossible to measure accurately the volume or value of world trade during the years immediately succeeding the war; still less during the war period. in order to measure changes in volume cither the goods must be so similar in kind that they can be measured in some common unit of weight or they must be reduced to some other common denominator. but the only available common denominator—price—has undergone such violent changes in recent years as to render the trade sta- tistics of many countries almost mcaningless. at the same time, and largely asa result of relative price changes, the composition of international trade has been greatly modified. in each coun- try an unequivocal trade price index may be compiled by taking fixed commodity weights equivalent to the importance of cach class of goods on a given date. such a procedure postulates that the relative importance of each commodity has remained unchanged. the quantitative importance of the various commodities of trade which the trade of any country is composed has, however, in most cases changed very considerably since 1914 and even in 1924 when world economic conditions had become more normal the catena of commodities arranged in the order of their “ full value ” importance was by no means identical with that of 1913. asa result indices so compiled, though unequivo- cal in the sense that their oscillations are dependent on changes in values only, are based on a hypothesis which we know to be untrue. in addition to this difficulty the indices are liable to be misleading because the apparent changes in values may be «ue, not simply to an alteration of price, but to a modification of the quality of the article the price of which is measured. in other words the second necessary hypothesis, that the character of the goods measured remains unaltered, may likewise prove untrue. such indices have, however, been compiled in a number of coun- tries based, as a rule, on a pre-war ‘ weighting” and attempts have been made to show the variations in the quantum of trade by dividing the values of imports and exports by them. the results, for the reasons just given, cannot be accepted as giving more than a rough indication of the general character and trend of the changes which have taken place. the international problem presents similar, though even greater, difficulties than the national. first it is necessary to convert the national currencies into some common unit of meas- ure, & conversion which during periods of very rapid inflation involves great risk of error. secondly it is necessary to compile a price index of all goods entering into international trade from the various national trade value indices. this composite index must be weighted according to the relative importance of the trade of each country in some given year, preferably the base year of the national indices. but just as it is not true that the relative importance of different goods entering into the trade of any single country has remained unchanged, so also 1s it not true that the relative importance to world trade of the imports or exports of each country is the same now as it was in 1913. dil- ferent results will be obtained if the standard year adopted be, for instance, 1913 or 1924. an analysis of the data for these two years, however, will show that the ditferences are not very great. in a publication of the league of nations entitled afemoran- dum on balance of payments and foreign trade balances (1925) an attempt is made to obtain a rough measure of the changes which have taken place since 1913 1n the general level of the prices of the goods composing world trade in 1924 by means of these trade value indices. ‘the conclusion reached is “ that it is not unreasonable to presume that the average gold value of the goods entering into international trade in 1923 was somewhere between 40% and 50° higher than in 1913 and that in 1924 1t was nearer the latter than the former figure.”” during the years immediately preceding 1924 the difficulties of international comparison were so grave, and the reliability of national statistics so questionable, that no attempt to estimate the volume of world trade could be justified. by 1924, however, prices throughout the world had become so far stabilised, and the movements of the exchanges so far reduced as to render reasonable the belief that the published estimates of world trade present at any rate data from which cer- tain very general conclusions may be drawn. changes in the volume of world trade if the calculations made by the league of nations be accepted as a rough guide, and the results obtained are in accordance with the gencral evidence available from other sources, then it would seem probable that the total quantum of world trade in 1913 and in 1924 did not differ greatly. possibly in the later year it was still slightly less than in the earlier. in the accompanying table the imports and exports and total trade in terms of dollars of the very great majority (136 in 1924) of the independent trade statistical areas are given for the years 1913 and 1924. the table is not quite complete, as statistics for a few countries, none of any great importance, are not available. it is further not absolutely accurate. in certain cases the figures for 1924 have not been published and those for 1923, occasionally even 1922, have had country 1913 1924 1913 1913 1 united kingdom 3,214 5,047 16-49 17-89 2,557 united states of america 1,775 3,581 gil 12-69 2,448 ‘france . 1,625 2,099 8-34 7-44 1,328 ! germany 2,563 2134 fs°15 7-71 2,403 india 587 752 3°01 2-67 772 canada 619 789 3:18 2-80 432 japan 363 995 | 1:86 | 3:53 35 ' italy 704 845 | 3°61 3°00 485 1 belgium 895 815 4°59 2-89 702 china 416 8256 2:14 2-92 294 argentina 479 650 2°46 2°30 501 2 australia 380 642 1-95 2:28 375 spain 252 716 1-29 2-54 204 czechoslovakia te 469 ss 1-66 - dutch fast indies 187 261 0-96 0-93 272 straits settlements 258 437 i-32 1°55 212 switzerland 359 452 1-84 1-60 265 austria a 486 ‘ 1-72 a brazil 326 305 1-67 1-08 317 cuba 140 2g1 0 ae 1-03 164 sweden 22 378 i-17 1-34 219 denmark ' 208 365 p07 1-2 171 2union of south africa . 200 290 i-03 1-03 317 poland 285 3 1-01 - irish free state 301 oy 1-07 ; egypt 133 217 0-68 0:77 158 2 mexico . 96 151 0-49 0-54 154 new zealand . 102 214 0°52 0-7 102 1 russia 700 166 3°59 0-59 775 23 turkey igi 226 0-98 0-80 105 norway . i45 213 o74 0-75 102 chile 121 (1¥3) 0°62 (0-40) 149 12 rumania il4 13! 0°59 . 0-46 130 hungary oe 143 = o-5i korea 26 (129) o19 (0-46) 15 algeria 12 146 0:66 0:52 97 finland 96 119 o49 0-42 78 philippines 53 108 0-27 0-3 47 128. hh. s, (20) 106 (0-10) 0:38 (16) ceylon 60 98 0°31 0:35 76 12 greece 34 aa ke, 0-17 0°50 23 peru 29 eat o-15 0:26 a4 federated malay states : 44 50 0-23 0-18 7 formosa . 31 (54) 0-16 (0-19) 26 2 persia 59 66 0°30 0-22 2 uruguay 52 52 0:27 o18 70 2 colombia 29 2 0-15 0-18 34 portugal . g6 96 0-49 0-34 37 siam 33 58 0-17 6-21 aa nigeria at 47 0-16 o-17 35 morocco . 45 52 0-2 0-18 g latvia i 49 oe o-17 ; tunis 28 49 0-14 oly 34 ? bulgaria 36 40 0-19 o14 18 gold coast is 37 0-09 o13 ii austria-[fungary 712 k 3°65 607 other countries 44t 764 2-26 2-71 428 19,490 | 28,212 | 100 100 18,300 trade 199 trade of 1913 and 1924 reduced to dollars (000,000's omitted), merchandise only (figures in brackets are for the latest available previous year) 1 changes in territory. 2 [includes bullion and, in some cases, small amounts of specie. 3 the figures for ‘iraq, syria and palestine are included under turkey. in million $ | imports as % of total in million $ total as °% of total exports as °o of total in million $ 192 193 1924 3,520 | 13-07 | 12-96 | 5,771 15°47 4:498 | 13°38 | 16°57 | 4,222 14°59 2,168 | 7-26 | 7-98 | 2,953 7-71 1,555 | 13°13 chg: 4,966 6°73 1,182 4°22 4°35 1,359 3°49 1,070 2°36 3°94 1,051 3°36 728 1:72 2:68 678 3°11 62: 2-65 2:30 1,189 2:65 644 3°84 2°37 1,597 2-63 62 1-61 2°30 710 2-62 793 2-74 2:92 gso 2-61 62 2°05 2-32 790 2-30 374 pas 1-38 456 107 502 ; 1-85 er fe 585 1-49 2°15 459 153 395 1-16 1-45 470 1:50 364 1-45 1-34 62: 1°47 278 os 1-02 54 1-38 421 1°73 155 643 1231 $3. o-go 1-60 304 <4) 335 p20 1-23 446 ies 331 0°93 1-32 379 1-26 372 ye 1:37 517 1-20 244 0-90 0-96 221 - 0-31 0-94 296 0-86 1-09 291 0-93 354 0-84 1-30 250 o-oi 227 0:56 0-84 204 0-50 233 4-22 0-86 1,475 o72 151 0:57 0-56 296 0-68 145 0°56 0°53 247 0:65 (194) o-8i (0°71) 270 (0-55) 139 o7l 0-5! 244 0°49 117 y 0-43 . 0°47 (127) 0:08 (0-47) 51 (0:46) 104 0°53 0-38 226 0°45 125 0-43 o-46 174 o-44 135 0:26 ©-50 100 0-44 122 (0-09) odds (36) o-41 i21 o-4! o-45 136 0:40 62 0-13 0:2: 57 0°37 102 0-2 0-38 73 0-32 110 o-41 o-4i 120 160 0:32 0-29 (96)| o-n4 (0-35) 57 (150)| o15 (0-27) 75 or2. 0:28 io! i4i 0-27 0:25 89 0-38 0:33 122 i4t 0:32 0:25 86 0-19 0:32 63 138 o-l7 0-25 31 0-20 o-rl 133 127 0°35 0°23 64 o23 o:2¢ 76 122 0-20 0°22 64 0-19 0:2: 66 i4 o-18 0-20 s4 0:05 0-13 54 &6 o-i4 0-16 33 i 0-12 - 82 - o-15 30 0-19 o-ll 62 79 0-16 o-14 36 0-10 0-13 54 7 o-14 o-14 39 0-09 o-l4 34 7 0-09 o-ld4 3°32 1,319 -: 3°49 720 ee fl 2°05 869 1,454 2-30 2-68 27,153 100 100 37,790 | 55,365 100 100 to be interpolated; in others it proved impossible to exclude specie and gold bullion; in others general trade had to be given instead of special. in addition the statistics are subject to all the reservations and qualifications to which reference has already been made. all countries the total trade of which in 1924 was less then $75,000,000 have been grouped together. the netherlands have been omitted altogether, because the system employed in the compilations of their trade statistics was so radically changed in i917 as to render the returns before and after that year quite incomparable. the russian statistics for 1924 have been increased by 50%%, 7.e., by what would appear to be the approximate average rise in the value of goods con- stituting world trade, as the published figures are based on the average prices ruling in 1913. certain other minor adjustments of the published data have also been made. the total imports in 1924 of all the countries shown in the table are 145 > of the imports in 1913 and the total exports 148°, of the pre-war 1913 figure. these percentages are remarkably close to the probable change in value of goods and in so far as the figures con- stitute reliable evidence concerning the actual facts, would point to the conclusion mentioned above, that any difference which there may have been in the total quantum of world trade in the two years considered cannot have been very great. in this connection atten- tion must again be drawn to the fact that the countries of which the world is composed are no longer the same as hefore the war. what has been the effect on the trade of france of the accession of alsace or on the trade of belgium of the zollverein with luxembourg it is impossible to estimate. some of the international trade of the austro-hungarian succession states to-day was domestic trade 800 before the war: some pre-war forcign trade, as for instance that between transylvania and the old kingdom of rumania, has now become domestic. the balfour committee on industry and trade estimates that the existence of the irish free state resulted in an apparent inllation of the quantum of british exports in 1924 by 6%, anc it is probable that on balance the result of the new territorial divisions has been to raise the foreign trade statistics by the inclusion of a net amount of exports and imports which in 1913 would have been domestic trade. the distribution of international trade although the total quantum of world trade in 1924 was prob- ably not much less than before the war, the share which the various countries of the world could claim therein was widely different. the first place in the list of exporting countries had been surrendered by the united kingdom to the united states. the exports of canada, japan, china, cuba, the dutch east indies, mexico, new zealand, hawaii, colombia, all more than doubled during the period. the german percentage fell from 13-1 to 5-7; that of belgium from 3-8 to 2-4; that of russia, after raising the russian values which are expressed in terms of pre- war prices by the approximate average rise in gold prices, namely 50%, from about 4-2% to about 0-9°%. the share of the united kingdom was likewise slightly reduced from 13-97 to 12'96%, or if the necessary adjustments be made on account of trade with the irish free state probably to about 12:2°%. on the other hand, india and the british dominions, with the exception of south africa, gained ground. ‘the percentages of the more im- portant trading divisions of the british empire may with advan- tage be grouped together. percentages of world totals imports fe:xports total trade to 1913 | 1924 | 1913 |} 1924 united kingdom india : : canada australia . : straits settlements union of south africa . ; new zealand . ceylon. federated states total tm dwn 2~1o can qo on oon malay thus the total share of the british empire, exclusive of the smaller crown colonies, etc., slightly increased. the british percentages are based on the published oflicial figures without adjustments on account of irish trade. their contraction and the considerable augmentation of canadian and new zealand trade is typical of world movements and the shift of the centre of gravity towards america and the economically younger countries of the world. the change in the contribution of different quarters of the globe to the totality of world trade may be conveniently sum- marised by showing the percentage distribution of world trade by continental groups. percentage distribution of world trade imports | exports | total ——=—— 1924 | 1913 1924 | 1913 1924 . central and east- ern europe (included in [2]) . europe : . 3. north america . . caribbean . . south america . . africa . . asia . oceania total 2-8 trade the division of the states or trade statistical areas into the groups given is necessarily more or less arbitrary and opinion may well ditfer concerning the group into which this or that is~ land should be placed. the first division is supplementary to the others and consists of austria, bulgaria, czechoslovakia, estonia, germany, hungary, latvia, lithuania, poland, ru- mania, russia and the kingdom of the serbs, croats and slo- venes in 1924 and of austria-hungary, bulgaria, germany, ru- mania, russia and serbia in 1913. its share in world trade in 1924 had shrunk to about 62% of what it was before the war, despite the increase in the number of trading units. the european contraction is largely due to the great diminution in the international exchange of goods in the eastern and central countries; but the rest of europe had not quite recovered its position in this year. there has been a definite shift from the atlantic ocean to the pacific and that group of countries, the united states of america, canada, japan, china (in 1924) new zealand and australia, whose prosperity accounted in so great a degree for the elevation of the total volume of trade in 1924 to- wards the pre-war level, have tended to trade more with each other. this tendency may be illustrated by showing the distribu- tion of the trade of certain of these countries by continental groups. lixporis—perceniage distribution s © . 5] 8] § from: o &, = lo = cd ms s < zs <. = a ioe ae] : 4 wl eal z v wv} <q “t, u.s.a.) 1913 | go-4 ) 16-5 | 7:7 5°9 ii st |) 23 192 53°3 | 13°9 | 99 6-9 i°5 iil-2 | 3:4 india | 1913 | 57:9 9°5 | o-4 2-0 2:8 | 25-3] 2-0 192. 50-9 9°5 1-3 2-2 5°8 23:2 2:1 canada] 1913 | 54-7 | 39°0 | 1-8 o-9 i'o i: 15 1924 | 47°9 | 40°5 | 2°3 ig i-i 37 |||, 3220 china | 1913 | 25-2 9-2 } 0-0 0-0 0-0 | 65-4 | o- f924) 19-6. | ba\" 0-0 ovr o-a os +4 ov! aus- tralia if the imports be analysed in the same way, or the distribu- tion by countrics instead of by continental groups be taken, con- firmatory evidence of this shift of trade towards the pacific ocean will be obtained. there is no doubt, however, that european exports were appre- ciably greater in 1924 than in 1923 or 1922 and since 1918 a marked change has taken place in the balance of exports and imports. this change is illustrated for certain countries below :— exports as a percentage of imporis belgium czechoslovakia . denmark finland france germany italy. : netherlands norway rumania russia sweden switzerland united kingdom argentina australia new zealand south africa canada gs the gap between the total of exports and imports may be covered in a number of different ways (see balance of trade boards payments); but in the majority of cases the most important factors are capital borrowings, loans, interest on loans and freight. in 1919 europe was living to a large extent upon money bor- rowed in the united states of america and upon short term cred- its advanced by countries producing raw materials. by 1924 much more normal conditions had been restored. the younger countries of the world showed a slight excess of exports on account, not of credits they were advancing, but of interest payments on old loans; and europe showed a balance of imports and exports not greatly dissimilar from the pre-war balance. for a number of countries it is possible to obtain an approxi- mate idea of the changes which have taken place in the quantum of their commerce by dividing the statistics of trade by value by the trade price indices discussed above. the results are neces- sarily not exact, but in most cases they probably give a correct indication of the direction of recent movements. igi3 19191920 1g21't922 1923|192 : {import jroo} go} 88) gt] 113] 129) 130 denmark (export {1001 35{ 76{ go] 97] 131/134 ' import 100] 67] 53! 55] 75|102| 99 pipian¢ oe 100] 49| 69} 69] 94] 95) 113 : import 100 45 59] 45| 63 germany oe 100 37| (44)| o61] 53] 51 : import 100] 159/146] 88{ 103] 107] 105 norway ‘pene 100] 68] 90! 66] 94] 98| 105 : import 100 3] 15) 20] ii] 16 russia . tees 100 oo i s| 14] 20 import 100] 109/123] 78! or] 118] 133 sweden {ane 100| 62| 77] 53] 82] 811 93 (import 100! 88] 88] 74] 86] 961] 107' } [export 100/ 55] 71| 50] 69! 771) 8o! united kingdom |; re-export| 100} 78} go} 78] 81] 864) 96! | total export; 100} 59{ 741 55{ 71{ 784 83! import roo} 79] 85] 77] 78) 87) 8&1 canada eee 100] 123] 111 | 105| 151] 175] 161 ts x apes 100 129| 112] 141 | 146] 142 mn export 100 i129| 106] 99| 97| 110 import 100| 86] 100] 79] 85 |(109)| 123 uruguay ‘x 100] 119] 69} 83] 96| 108| 106 import too 142 | 160] 146] 162 japan. «tt anes 100 113| 134] 110| 140 1 approximate adjustments for the irish free state would give:— total exports imports i-xports re-exports a british enquiry— the (balfour) committee on industry and trade draws attention to the possibility that the british indices of the quantum of trade “ give somewhat too dark a picture of the recent and present trade position. ... there is ground for belief that some part of this wide divergence is due to a shift of export trade towards the higher and more expensive qualities of goods, which could not be fully taken into account in the calculation. ... exactly how much of the apparent rise is referable to this cause is difficult to estimate, but the avail- able indications would seem to support the view that the true rise of the level of export prices has not exceeded 80%. if the con- sequential modifications were made in the figures given above, we should find that the volume of our exports in 1923 was 79°% of the 1913 volume and that the corresponding figure for 1924 was 80%. meanwhile the volume of our imports in the same two years was 94'9% and 106-4 °% respectively of the 1913 volume.”’! ? the word “ volume \" tn the quotation is used in the same sense as ‘' quantum ” elsewhere in this article, 7.e., to mean value corrected for changes in price. soi these revised percentages refer to the figures given in the footnote to the table above adjusted for the change in the status of the irish free state. the reduction in the british quantum export index is in part ofiset by an increase in the average price of the exports greater than the rise in world prices. the same fact 1s true of sweden and switzerland and countries which like the united kingdom slowly brought their currencies back to par with the dollar by a painful process of protracted deflation. although the recovery from the after-effects of the war was not complete, great progress has been made since the slump of 1921. thus the quantum of exports, (7.e., the recorded values divided by the trade-price index) of denmark increased between 1922 and 1924 by 38%, of finland by 20%, of norway by 12%, of sweden by 13%. with the rise in prices in germany towards the world level during the last stages of inflation and after the stabili- sation of her prices, there was a contraction in the quantum of her trade, a contraction, however, which was more than counter- balanced by the higher prices at which she sold her wares. for france there is no quantum index, but her trade has grown stead- ily and is now greater than before the war the picture which the present state of world trade presents is similar to that which would be obtained from an array of the facts relating to the production of raw materials, or cereals or any other indicators of national prosperity. europe and feuro- pean production has been affected to some extent by agrarian reform, by tariffs and prohibitions, by the social revolution in russia. but the main cause of the change in the balance of importance of the great continental groups into which the world is divided is that whereas elsewhere the normal progress of a decade has been achieved, europe has still not recovered from the war and all the economic ills to which the war gave birth. see also balance of payments, and the sections on trade and industry in the articles on the various countries. bibliography.—annual statements of the trade of each country ; laws and regulations concerning customs and trade statistics in each country; . commerce year book (annual); committee on industry and trade. survey of overseas markets (stationery office, london, 1925); league of nations: memorandum on balance of pay- ments and foreign rade balances, rg10-24 (geneva, ay 7) ly.) trade boards.—in great britain a trade board is isa cnvatony body set up by the board of trade or since 1918 by the ministry of labour for the purpose of fixing minimum rates of wages in the industry for which it is established. under the trade boards act of 1909 trade boards were sect up in eight trades, but the scope of this act was greatly widened by an amending act of 1918 with the result that at the end of 1920 additional trade boards had been set up in 49 trades covering about 3,500,000 persons. the act of 1909 resulted from a long and sustained agitation, following the revelations as to the earnings and gen- eral working conditions of ‘‘ sweated ’’ workers, which were made in the late years of the last century and the first years of the present. the public conscience was stirred and action was motived by the humane desire to afford some protection to those suffering under the “ sweating ’’ system. while the prime motive was humane, the sociological and economic arguments for the protection demanded were not, of course, overlooked. regulation of wages.—the humane case for the prevention of sweating does not need elaboration. the sociological and economic arguments are interdependent and are based on the view that any industry must, if it is to maintain an economically sound position, pay to the workers engaged in it wages sufficient for the maintenance of those workers and their families. failure to do so means that the industry concerned is subsidised by so- ciety (° society ”’ including other industries), in so far as the workers employed in it ultimately become a charge on the state. the charge may be direct, by way of more than normal calls on the public health services, free school meals, or, often enough, through the poor law itself, or it may be indirect, taking the subtle form of the mental, physical and spiritual degradation of the workers and citizens who are “ sweated.” the decision to legislate against “‘ sweating ” is, however, only the beginning of the problem, and several important questions as 802 to the means to be adopted remain to be settled. is there to be one minimum for all the trades concerned or a separate minimum for each trade? if separate minima are to be fixed, what bodies shall be the fixing authorities? is the minimum to be a guar- anteed income or only a guaranteed rate of wages? on what basis shall the minimum be fixed? what shall be the relation be- tween men’s and women’s wages? shall district variations in the cost of living or the nature of the work be taken into account in fixing the minima? the multiplicity and diversity of these questions led to the conclusion that it was impossible to fix one minimum to apply equally to all “ sweated ” trades and, this being recognised, it was clear that each minimum might best be fixed by a body constituted of persons drawn from the trade itself. thus trade boards were established consisting of equal numbers of em- ployers’ and workers’ representatives, together with a small quota of neutral persons in order that a deadlock might be avoided. it was equally clear that the question of a guaranteed income could not be considered in relation to a comparatively small and ill-conditioned group of trades only, and hence the boards were empowered to fix, not guaranteed wages, but minimum rates of wages. on whatever basis the trade boards may choose to fix their rates—and on this point the acts give no specific guidance—the rates fixed are to be regarded strictly as minimum rates, to pay below which is an injustice to be remedied by the criminal law. thus there is nothing of the system of compulsory arbitration in trade boards. any worker, or his trade union on his behalf, is free to get as much more than the trade board rate as he can. but an employer may not pay less. the remaining questions were referred to the boards for settlement, and thus have been dealt with in accordance with the customs and circumstances of each trade. there can be no doubt that this was the wisest course and the one likely to cause least disturbance and friction in the trades concerned. it has been noted that the acts give no specific guidance to the boards as to the basis on which rates of wages shall be fixed. in some other countries in which minimum wage legislation is effective, principles for the fixing of such wages have been laid down more or less precisely by the legislature or have been for- mulated in the course of practice, but in great britain the boards have only the known intention of the acts to guide them. parliament, however, retains some control over rates fixed through the minister of labour, by whom all rates must be con- firmed before they become operative. it is an important point, however, that the minister’s power is restricted to the con- firmation or reference back to the board of rates submitted to him. he may not alter any rate submitted to him, nor may he fix a rate, and thus, subject only to the veto of the minister, the power to determine preciscly what rate shall operate lies solely with the trade board. as might be expected, the workers’ representatives on the boards lay stress on the “living wage ” argument in the pro- ceedings of the boards. employers’ representatives pay chief regard to “ what the trade can bear,”? it is the task of the independent members, with the intention of the acts in mind, to bring about some compromise acceptable to both sides, or in the last resort to vote with one side against the other. as a re- sult of this procedure the rate which is fixed may not produce in the full sense of the term a “ living wage.” particularly is this the case in the early stages of a trade board, when the immediate fixing of a rate which would adequately fulfil the purpose of the acts might cause disturbance of employment. in such cases, the final rate may be reached in two or more stages. in this way the trade board system enables the cir- cumstances of each separate trade to be considered when the rate is fixed. each trade moreover, is able to vary its own minimum rates at any time without waiting upon the remaining trades. again, the flexibility of the trade board system permits of the adjustment, in accordance with the prevailing customs of each trade, of the relation between men’s and women’s wages. while, owing to varying customs, there are some exceptions, in trade cycle general the rates fixed for women will be found to be round about 60% of those fixed for men, which is in accord with the pre- vailing custom of industry as a whole. a few, but only a few, of the boards have taken into account variations in the cost of living in different districts and have accordingly fixed varying rates for london, the larger centres of population and rural and other areas. basis of wage rates.—in view of the intention of the acts the levels of the rates fixed are themselves of some interest. the best standards by which the rates may be judged are, perhaps, mr. seebohm rowntree’s ‘‘ poverty line ” and “ human needs ” figures. it will be found that the majority of trade board rates fixed for the lowest grades of workers in the trades concerned fall much nearer to the “‘ poverty line ” than to the “‘ human needs ” figure. in a very few cases only does the rate reach the jatter figure. this fact leads to the consideration of the nature of the rates for “ special classes ”’ fixed by rather more than half the boards. these rates, higher than those fixed for the lowest grades of workers, apply to workers in skilled occupations. while such rates are still minima for workers of the class to which they ap- ply, they may, but do not necessarily, diverge from the strictest form of the minimum wage and tend to encroach upon the field of general wage regulation. indeed, as will be seen from a com- parison of the basis of the 1909 act with that of the 1918 act, the spirit of the latter act was considerably broader than that of the earlier, and was intended to meet the recommendation of the whitley committee that trades not sufficiently organised for adequate self-government should be provided with the means of regulation by the establishment of trade boards. the act of 1909, however, remains the “ principal act,” and within the narrower limits of the intention of that act there is scope for the fixing of differential minima for the varying grades of workers within a trace. mr. rowntree’s ‘‘ poverty line ” figure (pre-war) was 26s. per week for a man. his “‘ human needs ” figure was 35s. 3<., thus leaving the substantial figure of os. 3d. per week as a margin between the necessities of the merest animal existence and the rather austerely reasonable needs of a human _ being. owing to the rise in the cost of living this margin would be nearly twice as great in 1926. it is hardly tenable that the pur- pose even of the act of 1909, much less that of 1918, was limited to the fixing of “‘ poverty line ” wages where the trades concerned could reasonably pay something more, if only to skilled workers. where, therefore, as has happened in the case of most of the boards, the lowest rate fixed has been much nearer to the “poverty line” than to the “ human needs ” figure, a board may, without departing from the strict principles of the minimum wage, procecd to fix higher rates for workers of greater skill than the lowest grade up to the level of the latter figure. this view appears to be upheld by the clause of the agricultural wages regulation act of 1924—the only case in which parlia- ment has given guidance as to the basis on which minimum wages should be fixed—which provides that “fin fixing minimum rates a committce shall, so far as practicable, secure for able-bodied men such wages as in the opinion of the committee are adequate {o promote efliciency and to enable a man in an ordinary case to maintain himself and his family in accordance with such stand- ard of comfort as may be reasonable in relation to the nature of his occupation.”’ in so far as trade boards have fixed special rates which range beyond the ‘* human needs ” figure, it may be admitted that they have begun to enter the field of wage-regulation rather than minimum wage-fixing. such rates, however, are unusual, are almost invariably agreed between the employers’ and workers’ representatives on the board, have been fixed for the convenience of the trade as a whole and have resulted in the prevention of friction which might otherwise have occurred between employers and employed. gj. m.) trade cycle.—the phrases trade cycle, business cycle and cyclical fluctuation of trade are all convenient methods of label- ling those alternating upward and downward sweeps in the vol- trade cycle ume of business activity which have constituted, for at least a century and perhaps more, one of the outstanding phenomena of the modern business world. the most obvious manifestations of the trade cycle are a quasi-rhythmical fluctuation, extending over several years, in the level of prices, the level of money profits and the level of employment. in the absence of satisfactory statistics, it is difficult to be sure how far there occurs a corresponding fluctuation in the level of production and consumption, #.e., in the real income of the com- munity affected. while it is certain that these latter quantities fluctuate to some extent, it seems probable (a) that the fluctua- tions in output are less intense than the fluctuations in prices, (b) that the output of ordinary goods for immediate consump- tion fluctuates as a rule far less than the output of instrumental or constructional goods (typified by iron and steel), and (c) that the fluctuations in output do not entirely synchronise with the fluctuations in prices, but that, in the later stages of a “ boom ” of prices, production may cease to make any significant advance, while in the later stages of a “ depression ”’ of prices production may make a marked recovery. nor is it safe to dogmatise about the length of the trade cycle, or about the degree to which its phases synchronise in the lead- ing industries and the leading industrial countries. before the war there were indications that the normal period of the cycle had shortened from about 10 to about 6 or 7 years. the dates of “ crisis’ or turning-point from boom to depression, during the past century, are for england 1825, 1836, 1847, 1857, 1866, 1873, 1882, 1890, 1900, 1907, 1913, 1920; while in the united states the booms of the late eighties and ’nineties were pro- longed, somewhat precariously, to 1893 and 1903 respectively. again, the post-war boom, which in england and america broke in 1920, was prolonged in germany till 1923; and while the re- covery in america from the great slump of 1921 has been rapid and complete (with a slight set-back in 1923), recovery in eng- land has been partial and slow. again, the change-over from depression to prosperity, or prosperity to depression, does not affect all trades at the same moment, or even effect these in the same order. in the main, however, it still seems to be fair to describe the trade cycle both as a geseral movement and as a rhythmical one; and any explanation of its causes must take these two factors into account. very many such explanations have been offered,— too many toexpand or criticise fairly in the course of a short article. it must be enough to set out and classify certain roads of thought, as it were, along which economists have been led to travel in search of the truth. it must be understood that these roads are not mutually exclusive, but that they intersect and partially coalesce, so that most writers traverse parts of more than one of them. any comments made must be taken to reflect the tenta- tive views of an individual writer and not to embody the ex cathedra pronouncements of economic science, which in this matter, as in so many others, are still to seek. fotur mertirops of approach the psychological approach.—the first road leads into the domain of psychology. we are invited to find the chief ex- planation of the trade cycle in the nature of man himself, and especially of those men who are responsible for conducting and controlling the operations of modern industry, commerce and fi- nance. these business leaders are bound together not only by their business dealings but by ties of sentiment and environment: they operate, necessarily, in an atmosphere of uncertainty: and any error of forecasting which they make, whether of an opti- mistic or of a pessimistic kind, is apt to be magnified by their mutual contact into a great wave of erroneous judgment, which gathers strength for a time and then breaks, yielding place to an equally exaggerated movement in the opposite direction. there seems to be little doubt of the importance of this factor both in aggravating the amplitude of the trade cycle and in moulding it into its quasi-rhythmical shape. but we must be on our guard against supposing that all decisions made by business men to vary the scale of their purchases or their output are erroneous. many 803 such decisions are clearly in the true interest of those who make them, if not of society as a whole. and it may be incumbent on us to enquire whether even erroneous decisions did not have their starting-point in some real and rational cause. the monetary approach.—the second road leads into the tangled wood of monetary theory. those who follow it lay stress on the dependence of the scale of industrial activity on the gen- eral level of prices, and on the dependence of the latter, in its turn, on the monetary policy of the govt. and the banks. the inde- pendent leaders of business are advantaged during a period of ris- ing prices, because the rise in many of their money costs of pro- duction (such as debenture interest, salaries and in some degree wages) lags behind the rise in their money receipts. they are accordingly both enabled, and furnished with a real inducement, to expand the scale of their operations: and owing to their habit of concentrating their attention on the movement of the price of their own products, the inducement is likely to seem greater to them than it actually is. conversely, in times of falling prices, business men are both disadvantaged by the relative fixity of some of their money costs, and believe themselves to be more disadvantaged than they are: and they are impelled therefore to contract the scale of their operations. these price-movements, if left unchecked, act cusmilalively in both directions; for as long as prices are expected to go on rising, business men continue to rush in to buy; and as long as prices are expected to go on falling, business men continue to liquidate their stocks of goods, and to refrain from replenishing them. now modern currency and banking systems, even when an- chored to a gold standard, are of such a kind that, unless con- sciously operated with another end in view, they permit consid- erable play to these price movements. indeed they exaggerate them by displaying an excessive timidity in altcring those rates of interest whose magnitude has an important effect in determin- ing the volume of loans issued by the banks, and consequently the volume of purchasing power put, in the form of cheque cur- rency, into the hands of the public. in the last resort, therefore, it is held, both the unhealthy activity and speculative excesses of the period of boom, and the wasteful stagnation of the period of depression, are due to a faulty loan-policy on the part of the banks, or a faulty currency policy on the part of the govt. or a combination of the two. one objection to this explanation in its cruder forms is that the level of prices depends not only on the quantity of purchasing power issued to the public by the govt. and the banks, but on the willingness of the public to #se the purchasing power when it has got it; and that it does not seem certain that this latter, factor, especially in a time of deep depression, when everybody is deter- mined to hoard money rather than spend it, is entirely explicable in monetary terms or controllable by monetary means. never- theless, there seems little doubt that a monetary policy con- sciously aimed at keeping the general price level approxi- mately stable, would do a good deal to damp down the violence of the trade cycle; and a policy of this kind has appar- ently been followed with some success by the federal reserve board in the united states during the years 1922-5. instabilities inherent in an economic process.—the third and fourth groups of roads lead to an examination of certain real, as opposed to merely monetary or psychological, features of modern industry. the third group runs through a landscape of physical and technical features, the fourth through a landscape of /egal and social ones. let us consider the former by asking the question, “‘ what rational reasons are there why industry as a whole should automatically increase and diminish the scale of its output?” and glancing at three possible lines of reply. (1) because of a self-renewing rhythm in its real costs of produc- tion. during the later stages of a depression there is a progressive advance in the effectiveness of labour, a progressive writing-off of inflated capital charges, a progressive overhauling of methods of technique and organisation, which breed renewed activity. during the later stages of a boom there is a progressive recourse to inferior instruments of production, a progressive utilisation of over-tired and recalcitrant labour, wasteful methods of management and inferior business leadership, which ultimately breed collapse. 804 (2) because of variations, due to fluctuations in the bounty of nature, in the amount of agricultural produce offered in exchange for the products of industry. normally, the effect of good harvests is to stimulate industry and of bad harvests to depress it: but there seem to be exceptional cases (as perhaps in 1920) where an overabundance of agricultural products leads to such a fall in their price as to impair seriously the purchasing power of agricultural producers over the products of industry, and so to induce industrial depression, many attempts have been made to connect the trade cycle directly with a cycle of crop-yields dependent on meteorological phenomena: the most famous is that of prof. \\w.s. jevons to connect the supposed ten-year period of the trade cycle with the sun-spot period, and the most recent that of prof. h.c. moore to establish an eight-year period in economic affairs, depending on the behaviour of the planet venus. without accepting any such views, it is possible to hold that harvest variations, through their influence on the demand for transport and in other ways, frequently exercise an important influence in moulding the shape and the intensity of the trade cycle. it follows that the more numerous the sources of supply of any crop and the greater the facilities for carrying it over from year to year, the better for indus- trial stability; and it has been suggested in certain quarters that governmental purchase and storage of the leading crops would assist materially in the process of industrial stabilisation. (3) because of variations in the intensity of the desire for the fixed instruments of production and transport,—buildings, machin- ery, railways, ships, etc. these instruments are large and expensive: they take a long time to construct, but once a batch of them is con- structed, it will serve to satisfy the increased needs of the community for many years. investment in such instruments is therefore discon- tinuous, and their rate of output especially variable; and variations in the prosperity of the trades making them react severely on other trades. the rate of investment in instruments depends a good deal on the progress of technical invention, and it is tempting to connect a good many of the booms of the last century with inventions, e.g., that in england in 1847 with railway-building, -that of 1900 (espe- cially in germany) with electric transport, etc. it has been suggested that to counteract this cause of fluctuation, covernments (both central and local), transport companies and even manufacturing firms should plan ahead their programmes of con- structional work, and put them into operation so far as possible when times are slack. instability resulting from organisation of industry —we come finally to certain jegal and social features of modern industry which may be held to promote instability of prices and output. (1) there is first the fact of competition, which aggravates mis- calculation, since individual producers do not gauge correctly the share of an increased market which will fall to their own lot, nor the effect which their rivals’ action will have in driving up their own costs of production. it might be hoped, therefore, that the progress of the movement toward the formation of “ trusts ’’ and combines would damp down the violence of the trade cycle; but so far it is difficult to be sure that this hope has been fulfilled, partly because it is not always in the interest of combinations to promote stability, and partly because they are apt to interpret stability as stability of prices, which is not always consistent with stability of output and employment. (2) there is secondly the wage-system, which may lead to a real disharmony between the interests of the employing class, which dictate the course of production, and those of socicty as a whole. for generally speaking the employer has more interest in intensify- ing production during a boom and curtailing it during a depression than the workman, who suffers during the boom from speeding-up and during the depression from unemployment. (3) finally, there is the unequal distribution of wealth, which in the view of many writers leads to a chronic tendency to “ over-saving,”’ manifesting itself during the boom in the construction of more instru- ments than will be able ultimately to find remuncrative employ- ment, and during the depression in, among other things, a piling-up of idle bank-balances. the remedy proposed is to increase the pur- chasing-power of the wage-carner, whose desire for necessaries and comforts is hed to be steadicr and more elastic than the desire of the rich for luxuries and instrumental goods. it remains to add that much work has been done in recent years, especially in america, in compiling statistical data con- cerning the trade cycle, and attempting to forecast its course. the more accurate the forecasts can be made, and the more widely business men act upon them, the greater will be the extent to which the course of the trade cycle is smoothed and evened out under the influence of the forces of instructed self-interest. brsliograpuy.—m. wirth, geschichte der tfandelskrisen (1883); c. tuglar, des crises commerciales et de leur retour periodique (1889); w. c. mitchell, business cycles (1913); m. bouniatian, les crises economiques (1922); f. lavington, the trade cycle (1922); j. a. hobson, the economics of unemployment (1922); g. cassel, theory of social economy, part iv (1923); j. lescure, des trade facilities crises generales et periodiques de surproduction (1923); e. m. h. lloyd, stab:lisation.(1923). the monetary explanation is expounded in r. g. hawtrey, currency and credit (1919); crop theories in w. s. jevons, investigations in currency and finance (1909), and hf. l. moore, generating economic cycles (1923). see also aa. spicthoff, g. schmoller's jahrbuch fiir gesetsgebung (1902, 1903, 1909); and the monthly publications: the harvard university re- view of economic statistics and the london and cambridge economic service. (d. h. r.) trade facilities.—in great britain the trade facilities scheme formed part of the remedial measures laid before the ilouse of commons by the coalition government of the united kingdom in the autumn of 1921. prices were then at their lowest; trade was acutely depressed; and unemployment had reached an alarming figure. the policy of the government, as explained by mr. lloyd george in the house of commons on oct. 19 1921, was to find a remedy by expediting the restoration of trade. one of the factors retarding the recovery was the difficulty experienced in raising capital, and it was proposed to use the credit of the government 1o overcome this obstacle. the trade facilities act of 1921 empowered the treasury to guarantee the principal and interest, or either the principal or interest, of loans for capital purposes, subject to certain con- ditions. the treasury were only to act after consultation with an advisory committee; it must be demonstrable that the business was calculated to promote employment in the united kingdom; the proceeds of any guaranteed loan must be used solely for carrying out works of a capital nature and must be spent in this country. no loans could be made by the treasury, but with the aid of the government’s credit the applicant would of course be able to borrow his requirements on exception- ally favourable terms. under the original act the aggregate amount to be guaranteed was fixed at £25,000,000, but by sub- sequent legislation the amount has been added to from time to time. the act of 1926 raised the total to £75,000,000. similarly the period of operation has been extended to march 31 1927. results of the scheme.—the extent to which advantage has been taken of the scheme affords some indication of the stimulus which it has given to industry and toemployment. the quarterly return issued for the period ending dec. 31 1925 gives the total figure of guarantees approved by the treasury, after deduc- tion made on account of applications sanctioned but subsequent- ly cancelled by the applicants, at over £63,000,000. the greater part, in fact something over two-thirds of the whole, has been given for enterprises in great britain. a remarkable proportion has gone to the shipping industry, mainly for new shipbuilding. a considerable percentage has also been allocated for railway development, the london underground group alone having ob- tained some {12,500,000 for improvements and extensions. another prominent category is electrical propositions both at home and overseas. unquestionably, therefore, the undertaking of many projects of diverse kinds has been expedited through the operation of the acts, and they have thus served their pur- pose. doubts have, however, been felt in some quarters as to the repercussions of the stimulus so applied. shipping interests, for example, have expressed some anxiety as to the effect, at a time when the industry is peculiarly depressed, of the ship- building programmes which have been embarked upon as a re- sult of the cheap capital thus made available a cognate scheme relating especially to imperial development and arising out of the discussions at the imperial economic con- ference of 1923, has also been embodied in the trade facilities acts (act of 1924). the treasury has been empowered, subject to certain terms and conditions, to make a contribution of an amount not exceeding three-quarters of the interest payable in the first five years of the currency of a loan raised in the united kingdom by or on behalf of any public-utility undertaking in any part of the empire overseas. an important condition re- quires that the expenditure must be in anticipation of expenditure which would normally have been incurred at a later date. the scheme has currency for three years from its commencement— i.e., to may 14.1927, and the maximum amount payable by the treasury is not to exceed £5,000,000. cw. cr.) trade forecas ts—trade unions trade forecasts.—the expressions “‘ trade forecast,”’ com- monly used in great britain and “ business forecast,’’ commonly used in the united states, are synonymous and, unless qualified, refer to the outlook for business as a whole in a given country in the immediate future for, say, a period of not more than a year or a year and a half. the terms “ trade ” and “ business ” are used in their broadest sense to include all branches of economic activity, such as agriculture, mining, manufacture, forestry, building, transportation and wholesale and retail trade. general forecasts of business as a whole are, of course, frequently supple- mented by specific forecasts for sections of a country and for industrial groups, individual commodities, security markets or money conditions. the typical period.—a forecast, whether general or specific, begins properly with an appraisal of conditions at the time of forecast and follows with a prediction of the direction and mag- nitude of the movement during the immediate future. such a forecast may include estimates of prospective variations that are expected to appear with the round of the seasons, and the “normal,” or long-time, growth that is expected from one year to the next assuming no disturbing influences. but estimates of seasonal variation and the growth element are not usually the factors of primary importance in a business forecast. the factor of primary importance is the nature of the ensuing “ cyclical ” movement of business or (if objection is made to the use of the term “‘ cyclical ’’) of the “ state of trade.” the notion of a ‘‘ business cycle ” is at the basis of the great majority of business forecasts. (see trade cyclre). some busti- ness forecasters contend that business cycles are “‘ periodic’; in other words, they hold that an approximately uniform time in- terval exists between a given phase of each business cycle and the same phase in the succeeding cycle. they base their forecasts upon the assumption of a fixed period, but they are not all in agreement as to the length of the period. periods of 10, 8, 7, and 3 or 4 years have found support by different investigators. in the united states, for example, between 1879 (when that country resumed specie payments) and the world war severe business disturbances—during which a period of high or expand- ing business was followed by a period of contracting business— occurred in 1882, 1887, 1890, 1893, 1895, 1899, 1903, 1907, iqio and 1912. some of these years of business disturbance were fol- lowed by deep business depression (1884-5, 1893-4, 1896-7 and 1908), others by more moilerate depressions (1904 and 1911), and still others by periods of less pronounced business recession, not ordinarily thought of as veritable depressions (1887-8, 1891 and rooo0). forecasters who base their forecasts upon the assumption of a “‘ typical ” cycle of standard form, amplitude and length (say 40 months, with 25 months of expanding busihess and 15 months of contracting business) are obliged, in practice, to depart from the rigidity of the concept in order to make it consistent with history and to provide for the probability that future business cycles may prove to be as variable as those of the past. variations in time.—a second group of forecasters finds it more in accordance with business history to drop the concept of a “‘ typical ”’ periodic cycle and substitute therefor the concept of a business cycle of veritable time, duration, amplitude (inten- sity of cyclical deviation from normal) and form (reflected by the steepness of the recovery from depression and ascent into prosperity and by the swiftness of the subsequent decline). if this concept be adopted, forecasts must be made on the basis of uniformities or regularities other than time-duration, amplitude, or form of the cyclical movements. regularities have, in fact, been found in the sequence of the movements of various statis- tical series reflecting speculation, business and credit, a sequence which has been found to be much less subject to variation than the cycle itself. this sequence has been found in the united states, england, france and germany and it affords a valuable means of forecasting the movements of series of one type from a knowledge of the movements of series of other types. such forecasting requires a careful interpretation of the economic significance of the situation reflected by the various types of 805 movements and hence the sequence itself is not a sufficient means of forecasting. in other words, a mechanical application of the sequence doctrine may not give satisfactory results. par- ticularly, the systematic regulation of credit by banking authori- ties, gold movements and other factors operating on the money markets must be considered. other mcthods.—a third group of forecasters holds that (a) the alternation of business prosperity and depression and (4) the sequences between movements of individual statistical series are both so irregular that the concept of a business cycle should be discarded. in making business forecasts the members of this group rely upon general economic analyses of the current situa- tion and evaluations of the movements which they find, at any time, to be in progress. this group is, perhaps, less homogeneous than the others and its methoils are so general as to make them difficult or impossible of classification. a fourth group of forecasters rely upon mechanical statistical relationships (which can seldom be interpreted adequately in economic terms) as a basis for their predictions. for instance, forecasts have been made on the assumption that ‘‘ action and reaction are equal and opposite ” in business fluctuations as well as in mechanics. frequently, such forecasts are accompa- nied by general economic analyses that make them on their face indistinguishable from those of the third group. development of forecasting.—business forecasting has received its greatest development in the united states and the descrip- tion, just given, of methods of forecasting is based primarily on usage in that country. systematic forecasting, however, is being developed in england, france, japan and other countries. fore- casting is an outgrowth of statistical studies of business fluctua- tions rather than of the application of general theories of the causes of such fluctuations. a condition for satisfactory busi- ness forecasting is the existence of adequate business statistics, © promptly available at weekly or monthly intervals. this con- dition has been more fully met in the united states than in any other large commercial country. agencies publishing forecasts.—various agencies in the united states and some in other countries publish more or less definite forecasts of general business conditions. among such agencies in the united states are banks, journals, government bureaux (e.g., foreign and domestic commerce, agricultural economics, federal reserve board) and commercial farecasting organisa- tions. in other countries, forecasts are published by certain journals, but regular forecasting services have only recently been established outside the united states. there is such a service however, in japan. a development has been the establishment of economic services under the auspices of harvard university (harvard economic service) in the united states, under the london school of economics and political science and the de- partment of economics of the university of cambridge (london and cambridge economic service) in england, under the in- stitute of statistics of the university of paris (mouvement general des affaires en france et en divers pays) in france, and under the institute of statistics of the university of padua (italian economic index) in italy. these four services are asso- ciated. bibliography.—h. l. moore, forecasting the yield and price of cotton (1917), and generating economic cycles (1923); national bureau of economic research: business cycles and unemployment (1923); w. m. persons and others, problem of bustness forecasting (1924); h. b. vanderbiue, problems in business economics (1924); see also review of economic statistics (harvard university); the london and cambridge economic service (london school of eco- nomics). 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