Frickey, Burns and Mitchell, and the Transport-Building Cycle

Abstract

N previous issues of this Review,1 one of the present authors presented material to demonstrate the occurrence of a seventeen-toeighteen year cycle in the development of the United States for the period I825-I933. This cycle was designated the transport-building cycle and was found to exist in such comprehensive and strategic series as transport development, immigration, urban population growth, bituminous and anthracite coal production, pig iron production, wholesale prices, and building, and in the general growth of Chicago. At approximately the same time as that material was presented, the outstanding work of Professor Edwin Frickey, Economic Fluctuations in the United States,2 appeared in which the conclusion was reached that within the geographic and temporal setting, of the study, there is analytical evidence of the presence of one, and only one, definite pattern of fluctuation. 3 And a few years later the monumental volume, Measuring Business Cycles, by Professor Wesley Mitchell and Professor Arthur Burns 4 was published in which the authors maintained that there was no compelling reason at the present time, nor even any real justification, for organizing cyclical measures of our time series on the assumption that business cycles undergo cyclical swings within periods of long building ' which periods correspond closely to the periods of transportbuilding cycles. In the light of such statements by these authorities, the existence and significance of transport-building cycles might be doubted, a priori. But upon further scrutiny, the statistical material embodied in Frickey's study is found to lend considerable support to, rather than discredit, the hypothesis of transportbuilding cycles in United States experience. And further it is found that Burns and Mitchell arrive at the cited conclusion by employing a test which is neither good nor relevant. First consider Frickey's data. For his series to show evidence of a transport-building cycle, averaging roughly seventeen-to-eighteen years in duration, it might be expected, following Schumpeter's and Hansen's classifications of cycles, that each transport-building cycle should include two Juglar 6 or major 7 cycles. Further, since it has been maintained that the correspondence is of such a form that the depression phase of every other Juglar or major cycle coincides with the depression phase of a transportbuilding cycle,8 it should be expected that in series in which Juglar or major cycles are superimposed upon transport-building cycles, every other Juglar or major cycle depression would be unusually severe and long. More specifically, since Frickey's study covers the period i866I9I4, and since troughs of transport-building cycles have been observed to have occurred roughly during the years, I860-64, I875-79, I894-Io90, and I9I4-i8, depressions of unusual length and severity should be expected in various time series some time during the years I875-7Q and I8Q4-I90oo.9