Knowledge that Transforms

notable for other features, particularly the sharp and decisive collapse of values which swept away in a few months the inflation of as many years. Yet, despite such allurements, little effort has hitherto been expended in the investigation of business conditions during these years; and the present study was originally undertaken in an endeavor to break ground. The interval under consideration may be stated more precisely to extend from the close of those troubled years, I836-43, to the commencement of Greenback inflation in I862. To supply an indispensable element in the analysis of these two decades, inquiry has been made into the course of commodity prices. Information previously available to historians concerning the movement of such values has been limited to annual indexes such as that prepared by Falkner as a part of the well-known Aldrich Report.' Adequate treatment, however, of the vicissitudes in American business during these

I N September I92I, the Harvard Economic Service first published its Unadjusted Monthly Index of the Volume of Manufacture. This unadjusted index was published currently until the following March when the adjusted monthly index was first presented. It was not until August I922, however (shortly after preliminary data from the I9I9 Census of Manufactures became available), that the index appeared as a combination of the three subordinate indexes registering fluctuations in the physical volume of output of (I) basic materials, (2) equipment and vehicles, and (3) consumption

A MONG few statistical series pertaining to American banking experience which have hitherto escaped adequate analysis are those revealing condition of New York City banks in forties and fifties, and that showing volume of clearings in New York City itself after I853. Of these series, former are result of governmental supervision which, after disasters of period I83 7-42, grew in ever-increasing thoroughness; and latter is a by-product of that growing spirit of co6peration which in end led to acceptance of Federal Reserve System. Supervision of banking in New York State began relatively early when, by law of I829, a Board of Bank Commissioners was set up, which collected certain information from State banks. Then in April I843, this Board of Commissioners was abolished, and a substitute was provided in form of quarterly reports from all banks, whether operating under safety-fund law or not reports which were to be called for and published by Comptroller of State. No regular system of summarizing and presenting these data seems to have been set up, especially with reference to a differentiation between those of New York City and those for State as a whole; but occasionally material on New York City banks was separated from rest and, accordingly, we have discontinuous data for New York City banks in period subsequent to I843. Supervision was made more effective by a law of December I847, according to which it became the duty of Comptroller, Secretary of State, and Treasurer, on or before first Tuesday of January, April, July, and October in each year to fix upon and determine some Saturday in quarter of year then ended in respect to which every incorporated bank, banking association, and individual banker in State shall make a report of character specified in act. Such reports were duly required, pertaining usually to last or next-to-last Saturday in each quarter. data relative to New York City banks were, it seems, brought together independently by editor of Hiunt's Aferchants' Magazine, summarized, and presented as aggregates for benefit of his readers.' At any rate, substantially regular quarterly data on various indicia of banking conditions in New York City are procurable after middle of 1848. Beginning with I853, still better information is available. By a law of that year, which seems to reflect growing importance of New York City as a banking center, each bank in City of New York was required to publish on morning of every Tuesday, in a newspaper printed in said City, a statement, under oath of President or Cashier, showing amount of loans and discounts, specie, deposits, and circulation, for next preceding week. Two months after this law went into effect, August i, I853, New York clearing house was organized; and, under its direction, reports of individual banks were consolidated to form aggregates for City institutions as a group. These consolidated statements, together with its own new data upon volume of clearings for City banks, were given to public press, and they were duly published in newspapers and in successive numbers of Hunt's Merchants' Magazine.2 Other series are available which in divers ways supplement those on varying circumstances of New York City banks. Material may be secured on a monthly basis concerning movement of specie into and out of port of New York and on course of discount rates in City; and weekly figures record fluctuations of both foreign and domestic exchange rates. Allthese series are helpful, either in explaining phenomena of banking experience itself, or in 1 See, for example, Hunt's Merchants' Magazine, vol. 24 (I850), p. 604: As official summary of these statements will not appear for some time, we have compiled a summary presenting principal items . . . ; or again in vol. 25, p. 597: The returns from New York City banks have already been compiled (unofficially) and we present a summary. In fact, official returns even for these years, as given in State Documents, frequently fail to differentiate data on New York City banks from those for State as a whole. 2 I am much indebted to Dr. Homer B. Vanderblue for laying groundwork for this study. He first called my attention to weekly material on New York City banking conditions, secured its transcription, and made a beginning in its analysis. Only pressure of other work prevented him from completing investigation which he had thus launched.

T HE Census of Distribution taken in eleven cities a little over a year ago was of the nature of a practice effort for the Census of Distribution to cover the entire country, which it is hoped may be a part of the regular Decennial Federal Census of 1930.1 This preliminary census, therefore, has three sources of interest to the statistician: first, as an indication of what may be expected from this expansion of census efforts into a new field; second, as a means for classification of prevailing ideas about what such a census might cover and how; and third, as a source for a new group of data concerning distribution activities.

THE use of the moving average has become widespread because of the simplicity of its application in the computation of the trend of statistical time series. This method, however, has two essential disadvantages, which make it applicable only in a limited degree. The first of these is that cxtrapolation is impossible with a moving average; that is to say, it is not possible to estimate from the moving average the probable ordinate of trend even for the immediate future, unless the estimate is based upon other considerations quite unrelated to the moving average. Even for the last time-interval of the series, for which an actual item is displayed, it is not possible with a moving average to determine exactly the ordinate of trend, because the item pertaining to the next consecutive time-interval, which is the minimum necessary for the formation of an average, is not given. With this question of extrapolation I propose to deal fully in a subsequent article. In the present article I shall consider a second disadvantage of the moving average, which lies in the fact that

IN no other country in the world is it possible to keep so closely in touch with current monetary developments as it is in the United States. The reports of the condition of the reserve banks and of the member banks furnish a fertile field of research for the economic statistician. Although much has been done in the interpretation of the forces at work in the banking system, it is safe to say that much remains to be done, and important additions to banking theory will arise from further study of the interactions within our complex financial mechanism. The statements for the member banks which report weekly furnish promptly available data for a group of banks with assets including about three-fifths of the total assets of all member banks. Since all member banks in turn comprise about 6o per cent of all banks in respect to total assets, it will be seen that reporting-memberbank figures are a 3 5-40 per cent sample of similar items for all banks. The reporting member banks are not a random sample, but their reports furnish a trustworthy picture of changes in the credit situation, and, since they are available weekly, have an obvious advantage over the reports for all member banks and for all banks. Although their movements should occasionally be checked against those of more comprehensive aggregates, one may depend upon reportingmember-bank data to furnish a good view of current developments in the credit situation. The solid lines on Charts i and 2 show total loans and investments of all member banks and of reporting member banks respectively for the period I922 to date, and it is apparent that the fluctuations are simi ar. For a measure of the amount of credit expansion in recent years it is possible to look either to the asset or to the liability side of the balance sheets which furnish our current banking statistics. Since reserves are computed as a percentage of deposits, it might seem more logical to look to deposits as an index of the degree of inflation in bank credit. The choice of loans and investments rather than of deposits can be defended practically by saying that after all it makes little difference. The two upper curves on Chart i support this conclusion. Thus, in the period under discussion the movements of total deposits of all member banks have been essentially similar to those for total loans and investments. A more pronounced seasonal movement in the deposits curve makes the resemblance somewhat less apparent than it otherwise would be. Hence, one objection to the use of deposits as a measure of credit expansion is that their significant movements are partly obscured by their

extent and direction of the month-to-month fluctuations were substantially accurate, the general level of the index was somewhat too low. The current revision was undertaken therefore in order to correct this discrepancy in level and, at the same time, to improve the several industry indexes. Chart i presents the revised mining index, monthly, for the period since August 1922, in comparison with the unrevised index which is shown for the interval since January 19I9. The tie-on between the old and the new index was made in August 1922, the closing month of the prolonged coal strike in the bituminous coal and anthracite fields. The two indexes were then practically coincident. The higher level of the revised index is accounted for in the main by revisions in the normal lines for output of anthracite and bituminous coal and for shipments of iron ore. The technique of the analysis has in general been similar to that of the revision of the index of the volume of manufacture which was discussed in detail in the May 1929 REVIEW. The revised index, like the old, is a weighted arithmetic average of relatives, the weights being based upon average values of the minerals over a period of years. The fuels and metals group indexes have been retained and are shown in graphic form on Chart 2. The fluctuations in the