Cyclical Fluctuations of the Volume of Manufacture

Abstract

Q UANTITATIVE analysis is disclosing the I fundamental significance of fluctuations in the physical volume of production. Earlier explanations of overproduction and underproduction were of a general and abstract character. For the most part, they dealt with the surface of things. Without interpretation, they charged overproduction when production was at a minimum, and underproduction, when production was at a maximum. Such blanket charges meant little. A more intensive and objective examination of production was needed. With the recent rapid increase of available statistical data and notable improvement of statistical methods, such investigation has finally become practicable. Much about cyclical fluctuations is to be learned from the records of any important line of production agriculture, forestry, mining, manufacture and from data given altogether in annual terms. But a large part of the ground has already been covered. The yearly records for agriculture (I879-I920), mining (I879-I9I9), and manufacture (I899-I9I9), were analyzed at length in the issues of this REVIEW from September, I920, to January, I92I; and in the REVIEW for July, I922, this analysis of the annual data was broadened and extended through I92I for agriculture and mining.' The more recent yearly records for manufacture still remain to be studied. More important still, the monthly production data now available in quantity call for comprehensive analysis. The present study will concern itself primarily with these monthly data.2 The monthly records of manufacturing output show better than any other data the real nature of cyclical changes in the volume of production. In the first place, agricultural data are inadequate because agricultural production assumes a yearly form, and records available only at yearly intervals do not give a clear picture of the character of the business cycle.3 During a single year business may pass through at least two distinct phases of the cyde. The opening of the year may find industry proceeding at top speed, and the close of the same year find it staggering into depression. A total or average for the year will disclose neither of these conditions. True, a general notion of ups and downs in the physical volume of production may be gathered from annual data, but the details of the picture are lost. Returns for shorter periods are necessary. Quarterly data hardly go far enough in this direction; weekly go farther than is necessary. Monthly data effect a satisfactory compromise and serve to throw all features of the business cycle into bold relief. From the nature of the case, then, data on agricultural production will not suffice. To secure monthly data, resort must be had to the records of manufacture and mining. Records of manufacturing output have the further advantage an advantage which they hold over the data of mining as well as agriculture of affording a recapitulation of the results