THE PAST TWENTY-FIVE YEARS
SINCE the outbreak of the World War in 1914 there have been six business cycles in this country, including the present one that is still incompleted as this is being written in the summer of 1939. All of them, or perhaps all except one, have differed in important respects from most of the prewar cycles. Cycle U began shortly after the outbreak of the war. There was an increase in the volume of new security issues which got under way just before the business upturn, and that increase followed upturns in bond and stock prices in normal fashion. Nevertheless it is clear that the business recovery of 1915-16 was not mainly financed by funds derived from the sales of new securities. It was instead chiefly financed by the huge purchases of the warring nations overseas.
Following the close of the war there was the short Cycle V which began after an exceptionally sharp increase in the volume of new security issues, and came to its end after the flow of new issues had largely decreased. Nevertheless it seems clear that the principal motivating force which brought Cycle V into being was the unexpected post-war demand from Europe for all sorts of goods which were urgently needed to make good the shortages that had developed there during the war years. The cycle came to an end in the post-war depression of 1921 which followed the sudden declines of commodity prices that took place in most countries throughout the world in the summer and autumn of 1920.
Cycle W, which lasted from the serious depression of 1921 to the brief one of 1924, is the one cycle of the past 25 years which appears to have been a fully normal cycle when considered in the light of business cycle theory. It began with a vigorous increase in the volume of new security issues, which got under way after bond