Knowledge that Transforms

Business men measure prosperity by the demand for their products. Indeed, rising prosperity is nothing more nor less than an increased demand for goods. If we can determine the source of this extra demand we have put our finger on the source of prosperity. Conversely, industrial depression is a general shrinkage of demand for commodities. If we can discover why demand contracts, the cause of industrial depression is revealed. It is my contention that this extra demand for goods is primarily for promotion purposes. In other words, it is a demand for capital goods to enlarge industries and to establish new ones. The activity of promotion in England is best measured by the applications for capital in the London market.' Less satisfactory promotion data are available for the United States-listings of stocks and bonds on the New York Stock Exchange.2 For recent years, however, computations have been made of the new securities issued in the United States.3 Promotion moves in cycles. For example, promotion, as evidenced by the capital applications in the London market, increased from i867 to a maximum in i873, decreased from i874 to i876; increased from i877 to i88i, decreased from i882 to i885; increased from i886 to i889, decreased from i890 to i893; increased from i894 to i900, decreased from i90i to I903; increased from I904 to I905, decreased in i906. The cyclical movement is very apparent throughout this entire period. Because promotion takes the cyclical form there are corresponding movements in credit, prices, production, transportation, commerce, wages, employment, and so on. The combination of all these movements is recognized as a prosperity cycle. Unprogressive countries in which there is little promotion do not have these

Many and varied factors have been assigned as the cause of crises. Some writers, it seems, have mistaken effect for cause. Others have singled out one factor as the cause, ignoring others of equal or greater importance. Still others have recognized the com? plexity of a crisis situation and given recognition to many factors, but one places emphasis on one, another on another. Indeed it is probable that the problem in connection with crises now is not altogether the development of new theories. We have theories in abundance. Instead, it is to determine the degree of truth in each, for most theories of crises appear to have some scientific foundation, and then to determine the relative importance of each. After this has been done there remains the task of combining these theories into a harmonious whole. The situation would be less complicated if writers on the subject of crises avoided the use of vague or poorly defined terms.