HB 3711 
 
 iri-'': : ;,' 
 
 . '■ t ' - / « , » 
 
 :•'' 'isii 
 

 
 J. o , * - 
 
 ^ * o , o ' -^"^ 
 
 .0 
 
 ^ o 
 
 4 o 
 
 ^^^ ,,, V *««oO ^^ O .,,,-^ 0' 
 
..^^ .^^ 
 
 
 ./%. 
 
 
 
 O N O ■' .<S 
 
A Century of Cycles 
 In Business 
 
 By 
 JOSEPH H. LYNCH 
 
 Copyright, 1911 by the 
 
 Hamilton Publiskingf and Reportmgf Co. 
 

 ^f 
 '«^. - 
 
 ©Ci.A297639 
 
* "Ample and accurate information is tke first 
 step towards success'. 
 
 J. J. Hill 
 
PREFACE. 
 
 It is a great desideratum to know when 
 good times will commence, and it is also im- 
 portant to know how long they will continue, 
 and when we may expect the next reaction 
 in general business. Believing that human 
 affairs move in cycles as certain as the laws 
 of nature, and believing in the axiom, **His- 
 tory repeats itself," and that statistics con- 
 firm this belief, and as these cycles in busi- 
 ness have been too numerous, regular and 
 persistent to allow for a theory of fortuitous 
 circumstances, this volume has been written 
 in the hope that some light may be thrown 
 on the future, in setting forth what has taken 
 place in the past. In the belief that the aver- 
 age reader prefers not to be confronted with 
 a mass of statistics, the volume has been made 
 as concise ad possible, and the aim has been 
 to group the cycles together with only abso- 
 lutely essential data, as a ready reference for 
 the busy man who cares to contrast the past 
 with the present, and to compare history with 
 what is transpiring in the present, that he may 
 resolve upon right conclusions, as to how and 
 when the cycles will repeat themselves in the 
 future, for his guidance, and if in this, it shall 
 in any way succeed in aiding in the slightest 
 degree, the wish of the author will be grati- 
 fied. 
 
 4 
 
"A CENTURY OF CYCLES 
 
 IN BUSINESS." 
 
 To decipher the handwriting on the wall, 
 to foretell the future intelligently, and to se- 
 cure ample and accurate information in re- 
 gard to supply and demand, production and 
 consumption, is the great want that finance 
 and commerce are at this time battling with 
 and trying to solve. 
 
 Statistics prove that the price of commodi- 
 ties and the contraction and expansion of busi- 
 ness work in a systematic order, and occur 
 in an established succession as certain and 
 regular as the laws of nature. All nature is 
 found to be the servant of law: spring, sum- 
 mer, autumn and winter succeed each other 
 in unchangeable regularity, and the recur- 
 rences of the various convulsions of nature 
 are being determined on scientific principles; 
 none of these things happen by chance, but 
 all of them according to some law which as 
 yet remains unsolved. 
 
 The axiom "History repeats itself" implies 
 a cyclical movement in human affairs, and as 
 it is a generally accepted opinion that every- 
 thing moves in cycles, especially in nature, 
 from the facts given herein, showing the cy- 
 cles between the years of good business, and 
 the years of depression and their regular re- 
 turn, it is obvious that "History does repeat 
 itself" and that human affairs move in cycles 
 as certain as the laws of nature. The only 
 theory for this that can be advanced is, that 
 the business community has a tendency to go 
 from one extreme to the other. As a whole, 
 it is either contracting business under a belief 
 that prices will be lower, or expanding under 
 the belief that prices will be higher, bringing 
 to pass in unchanging regularity the cycles 
 5 
 
from the point of too much confidence, or over- 
 expansion, to the point of hopelessness and 
 depression. 
 
 The Iron Trade is the chief and ruling in- 
 dustry of this country if not in the world, and 
 is accepted as one of the best indicators of 
 the general course of the country's activity. 
 Iron is the most useful of all metals; in fact, 
 the foundation of our civilization and the most 
 important factor of progress. As the iron in- 
 dustry rises and falls in the scale of prosperity, 
 so does the general business of the country. 
 Pig iron is the barometer of trade, and the 
 periodical downward swings in the price of 
 this commodity indicate depression, general 
 stagnation and panic, in the same manner and 
 as positively, as the sudden falling of the mer- 
 cury in the barometer denotes violent changes 
 in the atmospheric world. It is on the sta- 
 tistics of this commodity and on the periodical 
 return of the high and low priced years that 
 the business cycles are based, and after care- 
 ful consideration it must be confessed that 
 they most assuredly have a legitimate bearing 
 on the future, and it must also be confessed 
 that the cycles have been too numerous, regu- 
 lar and persistent to allow for a theory of for- 
 tuitous coincidence, which seems to be the 
 opinion held by some writers. 
 
 Facts are the data for all just reasoning, the 
 primary elements of all real knowledge. 
 Knowing that history never fails to repeat 
 itself and given the facts of the past, it is not 
 necessary to possess the gift of prophecy to 
 formulate an infallible rule, which if taken 
 at the advance leads to success; and, if taken 
 at the decline, leads to bankruptcy and ruin. 
 
 The "Ups and Downs" of prices have refer- 
 ence to a series of years as distinguished from 
 daily and weekly fluctuations, and it will be 
 noticed that the "Ups and Downs" in the 
 
yearly prices of pig iron in a series of years 
 are very noticeable, and while revulsions that 
 occur from time to time may have a tempor- 
 ary influence to depress prices below their 
 natural position, they do not in their effects 
 change the general course of prices in their 
 cycles. It takes a number of years to com- 
 plete an "Up and Down." An "Up" consists 
 of a period of years in which the price ad- 
 vances from the low point and reaches its 
 maximum, and a "Down" of a period of years 
 in which the price declines from its maximum 
 to the lowest. The advances, it will be found,"^ 
 are in the series of two years, four years, three 
 years and repeat : the declines are in the series 
 of six years, five years, seven years and re- 
 peat, making a major cycle of twenty-seven , 
 years. It must not be expected that the cycles 
 terminate exactly at the end of each specific 
 year, as the low prices of a "Down" period 
 may extend into a fraction of the first year of 
 an "Up" period and vice versa, but in the 
 period of time covered by a major cycle of 
 twenty-seven years it will be found that they 
 equalize each other, and as in nature we find 
 that one season may and does extend beyond 
 the prescribed limits for a short time. 
 
 It will be noted that the cycles of adversity 
 and prosperity alternate inside of every ten 
 years, and but few of these prosperous decades 
 come to any person in an active business life. 
 That these recurrences have taken place is 
 not a debatable question, and while the argu- 
 ment has arisen, that as this country is young 
 and growing that there will gradually be a 
 slowing down in both methods and effects, 
 nevertheless the fact remains that these cycles 
 have occurred in older countries like England 
 and France with the same regularity thatj 
 they have in the United States, which dis- 
 proves the theory that age and seasoning pro- 
 
duce any appreciable improvement. 
 
 It is useless to wait the greater part of our 
 lifetime for the results of our own experience; 
 we must act upon what others know. We can- 
 not afford to make any mistakes or miss any 
 opportunity; therefore, on these periodic de- 
 clines it is useless to waste our strength or 
 impair our energies. Commercial depressions 
 afford the best opportunity for profitable in- 
 vestment, and capital invested at the top and 
 culmination of a speculative era will be lost 
 beyond the hope of recovery. 
 
 * AXIOMS. 
 
 Prices are high when they are above the cost 
 of production on a declining market. 
 
 Prices are low when they are below the cost 
 of production on an advancing market. 
 
 When the price of an article declines be- 
 low cost, production will diminish until de- 
 mand increases and prices advance. 
 
 When the price of an article advances above 
 cost, production will increase until demand 
 ceases and prices decline. 
 
 The cost of production is the wages of 
 labor, interest on capital and wear of land and 
 machinery. 
 
 When the cost of pig iron is thirty dollars 
 per ton, it may be either high or low, and like 
 a certain game with cards, the points depend 
 upon the trumps that are out. 
 
 If the cost of production is above on a de- 
 clining market, then thirty dollars per ton is 
 high; if the cost of production is below on an 
 advancing market, thirty dollars per ton is 
 low. * BENNER. 
 
 Period, 1819—1823. 
 Down Cycle — 5 years. 
 
 1819 $39.75 per ton, January. 
 
 1820 „ 35.00 " Average. 
 
 1821 35.00 
 
 8 
 
1822 „ 35.00 
 
 1823 35.50 " November. 
 
 The data compiled dates from the year 1819, 
 and commences with a down cycle of five 
 years. In the year 1819 occurred a commercial 
 panic which produced a disastrous revulsion 
 in trade, and caused the failure of a majority 
 of the merchants in the country, and two- 
 thirds of the real estate passed from the hands 
 of the owners to their creditors. Ruin was 
 spread over the land and multitudes of banks 
 and individuals were broken. The panic was 
 the result of a tremendous contraction of bank 
 circulation. The year 1820 was characterized 
 by great financial distress throughout the 
 country owing to excessive importation and a 
 deranged currency. 
 
 During the years 1820, 1821 and 1822, the 
 average price of pig iron remained stationary, 
 and continued so until the month of Novem- 
 ber, 1823, when the price advanced fifty cents 
 per ton, marking the end of the depression and 
 bringing to a close the down cycle of five 
 years. 
 
 Period, 1824—1827. 
 Up Cycle — 4 years. 
 
 1824 $37.25 per ton, January. 
 
 1825 46.75 " Average. 
 
 1826 46.50 
 
 1827 47.50 " March. 
 
 The year 1824 ushered in an Up Cycle of 
 four years, and the price of pig iron advanced 
 from. $35.50 per ton in November, 1823, to 
 $37.25 per ton by January, 1824. The protec- 
 tive tariff enactments of 1824 were followed 
 by a general inflation in all lines of business, 
 although the European crisis of 1825 caused 
 a diminished demand for American products 
 and led to fractionally lower prices in 1826 
 and some money stringency. The effect, how- 
 ever, was temporary, and prices again ad- 
 
 9 
 
vanced, reaching the maximum price of $47.50 
 in March, 1827, which year ended the Up 
 Cycle of four years. 
 
 Period, 1828—1834. 
 Down Cycle — 7 years. 
 
 1828 $35.00 per ton January. 
 
 1829 35.00 " Average. 
 
 1830 35.00 '' " 
 
 1831 35.00 " ** 
 
 1832 35.00 
 
 1833 38.50 " " 
 
 1834 28.50 '' December. 
 
 The period from 1828 to 1834 is the second 
 Down Cycle of the series, and the price of 
 pig iron which had taken the descending 
 scale in 1827, by January, 1828, had reached 
 the price of $35.00 per ton, marking a Down 
 Cycle to continue seven years. The year 1828 
 was marked by many failures among the 
 manufacturers and trades. In 1833 the tariff 
 of twelve dollars and one-half was reduced. 
 During the latter part of the year business im- 
 proved somewhat and the average price of 
 1833 is higher than the five preceding years, 
 during which time the price remained passive, 
 but by December, 1834, the price had again 
 declined to $28.50 per ton, with business in all 
 branches of trade depressed, and the aggregate 
 duties on all imports collected the lowest 
 in many years. 
 
 Period, 1835—1837. 
 Up Cycle — 3 years. 
 
 1835 $29.25 per ton January. 
 
 1836 41.50 " Average. 
 
 1837 47.00 '' June. 
 
 In accordance with the cyclical law the per- 
 iod from 1835 to 1837 was an Up Cycle and 
 the second of the series in accordance there- 
 with. Prices again took the ascending scale 
 and by January, 1835, had advanced to $29.25 
 per ton. Prices continued to advance and the 
 
 10 
 
Up Cycle continued its sway until the year 
 1837, when the price reached the maximum of 
 $52.50 per ton in February. In May, 1837, a 
 commercial panic swept over the country for 
 which there was abundant cause. It will be 
 noted the price of pig iron had turned in 
 February, three months previous to the panic, 
 and therefore the turning point cannot be 
 attributed to this cause. There had been rapid 
 industrial and commercial growth with a mul- 
 titude of enterprises established ahead of 
 time. Crops were deficient and breadstuffs 
 were imported. The refusal of the govern- 
 ment to extend the charter of the United 
 States bank caused a radical change in the 
 banking business of the country, while the 
 withdrawal of public deposits and their lodg- 
 ment with State banks had given the founda- 
 tion to abnormal speculation, and the ruinous 
 fall in prices involved the fortunes of mer- 
 chants, and all persons engaged in the trades. 
 Period, 1838—1843. 
 Down Cycle — 6 years. 
 
 1838 $35.00 per ton January. 
 
 1839 30.00 
 
 1840 32.75 
 
 1841 28.50 
 
 1842 27.75 
 
 1843 25.00 ** August. 
 
 The year 1838 was the beginning of the 
 third down cycle, to continue six years. From 
 the opening to the close of this cycle the 
 price of pig iron continued to decline with 
 methodical regularity, and from $35.00 per ton 
 in January, 1838, had declined $10.00 per ton, 
 to $25.00 in July, 1843. The latter year was a 
 remarkable one for the extreme depression in 
 prices that prevailed for all staple articles. 
 Period, 1844—1845. 
 Up Cycle — 2 years. 
 
 1844 $27.00 per ton January. 
 
 11 
 
1845 _ 32.00 " August. 
 
 Just like nature bringing to pass the dif- 
 ferent seasons, an Up Cycle was again due 
 in 1844, and the price of pig iron which had 
 declined to $25.00 per ton in July, 1843, by 
 January, 1844, had advanced to $27.00 per ton, 
 reaching the maximum price in May, 1845, of 
 $36.50 per ton, which ended the Up Cycle of 
 two years, and also marked the culmination of 
 a Major Cycle of twenty-seven years from 
 1819 to 1845. 
 
 Prices declined five years from 1819 to 1823; 
 advanced four years to 1827; declined seven 
 years to 1834; advanced three years to 1837; 
 declined six years to 1843, and again advanced 
 two years to 1845. 
 
 Decline 
 
 1819 ) 
 
 1820 ) 
 
 1821 ) 5 years 
 
 1822 ) 
 
 1823 ) 
 
 1828 ) 
 
 1829 ) 
 
 1830 ) 
 
 1831 ) 7 years 
 
 1832 ) 
 
 1833 ) 
 
 1834 ) 
 
 1838 ) 
 
 1839 ) 
 
 1840 ) 
 
 1841 ) 6 years 
 
 Advance 
 
 1824 ) 
 
 1825 ) 
 
 1826 ) 4 years 
 
 1827 ) 
 
 1835 ) 
 
 1836 ) 3 years 
 
 1837 ) 
 
 12 
 
1842 ) 
 
 1843 ) 
 
 1844 ) 
 
 1845 ) 2 years 
 
 It will be noted the declines are in the 
 series of six years, five years, seven years and 
 repeat; the advances are in the series of two 
 years, four years, three years and repeat. 
 Also, it will be noted that in the Major Cycle 
 of twenty-seven years there are nine years of 
 advances and eighteen years of declines, mak- 
 ing the ratio of declines to advances as two to 
 one. 
 
 "Ascertaining the truth and dismissing from 
 our minds all prejudice and preconceived opin- 
 ions, let us have the wisdom and courage to 
 be guided by it." 
 
 WILLIAM McKINLEY. 
 Period, 1846^1850. 
 Down Cycle — 5 years. 
 
 1846 $28.00 per ton January. 
 
 1847 30.25 " Average. 
 
 1848 26.50 
 
 1849 22.75 
 
 1850 20.00 " July. 
 
 The price of No. 1 pig iron is used from the 
 beginning of this Down Cycle of five years, 
 the first Down Cycle of the second Major Cy- 
 cle, No. 1 pig iron having become standard 
 at that time. The year 1846 was the cyclical 
 year for the Down Cycle to become operative, 
 and from May, 1845, the price declined from 
 $36.50 per ton to $28.00 per ton in January, 
 1846. On April 24th, 1846, the war with Mexi- 
 co was declared and continued until July 4th, 
 1848. During this period the influx of gold 
 from California also took place. The Down 
 Cycle continued until 1850, the lowest price 
 being quoted in July of that month. Our war 
 with Mexico during 1846, 1847 and 1848, and 
 the influx of gold from California did not 
 
 13 
 
have the effect of changing the direction of 
 the price of iron, as it continued after the war 
 and after peace was declared. A change for 
 the better did not take place until after the 
 lowest price of $20.00 per ton was reached in 
 July, 1850, which year ended the Down 
 Cycle. 
 
 Period, 1851—1854. 
 Up Cycle — 4 years. 
 
 1851 $21.50 per ton January. 
 
 1852 22.62 " Average. 
 
 1853 36.12 
 
 1854 38.00 " August. 
 
 The year 1851 ushered in an Up Cycle of 
 four years, and the discovery of gold in Cali- 
 fornia during the Down Cycle just closed, had 
 many important bearings on this period of 
 prosperity into which the country entered in 
 1851. Hope and courage were instilled into 
 the people, land values increased, and a 
 stimulus was given to the extension of rail- 
 roads to the Pacific coast. Shipping was de- 
 veloped, immigration was encouraged, the 
 manufacture of mercantile goods was stimu- 
 lated, as well as transportation and other pur- 
 suits. 
 
 Owing to the rising tide of immigration and 
 the general prosperity of all enterprises, rail- 
 roads were extended throughout the entire 
 country on an unprecedented scale. Every 
 branch of domestic business was extensively 
 active, and merchants and manufacturers were 
 vying with each other to extend credits, and 
 to do everything to increase the prosperity 
 then in existence. 
 
 By the discovery of gold the wealth of the 
 country had been suddenly increased, and 
 every inhabitant was either directly or indi- 
 rectly helped thereby, and unconsciously felt 
 the impulse given both by this suddenly in- 
 creased production of gold and a rapid rise in 
 
 14 
 
prices. This was a great encouragement to 
 enterprises of all kinds and an incentive to 
 further speculation, as it is natural for people 
 to feel when prices are rising they will con- 
 tinue to go up. The high price of $38.00 per 
 ton was the maximum and was reached in 
 August, 1854, ending the Up Cycle of four 
 years. 
 
 Period, 1855—1861. 
 Down Cycle — 7 years. 
 
 1855 $35.12 per ton January. 
 
 1856 27.12 
 
 1857 26.75 
 
 1858 22.25 
 
 1859 23.37 
 
 1860 22.75 
 
 1861 „ 18.67 " October. 
 
 At the beginning of 1855 the iron trade an- 
 ticipated a continuation of the good prices and 
 business of the preceding four years, but the 
 law of cycles^ ordained otherwise, and the 
 price of iron which had reached $38.00 per 
 ton in 1854 had declined by January 1st, 1855, 
 to $31.12 per ton, and continued to decline to 
 the end of the seven year cycle ending in 1861. 
 The year 1857 brought forth a commercial 
 reaction and financial difficulties, a panic of 
 the first magnitude. Railroad building had 
 been conducted on a broad scale, and the pro- 
 portion of specie held by the banks was very 
 small in proportion to the loans and deposits. 
 The tariff was reduced in 1857, and owing to 
 the deficiency in the revenue in 1858 the gov- 
 ernment was compelled to borrow twenty mil- 
 lions of dollars. The general direction of busi- 
 ness continued downward, reaching a climax 
 in the depression of 1861, when in the spring 
 of that year the war of the rebellion burst 
 upon the country like thunder from a clear 
 sky, creating disturbance in all business, and 
 producing general consternation and stagna- 
 
 15 
 
tion in the iron trade. The seven years cover- 
 ing the period from 1855 to 1861 were very 
 disastrous to the iron trade and prostrated 
 more furnaces than any period of declines in 
 the history of the country to this date, and can 
 well be likened to the seven lean years of 
 biblical history. 
 
 Period, 1862—1864. 
 Up Cycle — 3 years. 
 
 1862 ,. $20.00 per ton January. 
 
 1863 35.25 
 
 1864 75.25 " September. 
 
 By January, 1862, in accordance with the 
 law of cycles the price of iron had advanced 
 to $20.00 per ton. Trade improved and was 
 very active during the war of the rebellion, 
 prices reaching the high water mark in Sep- 
 tember, 1864, of $75.25 per ton. In February 
 of that year speculation in stocks was wild 
 and rampant, and on April 18, a semi-panic 
 took place in Wall street. 
 
 Period, 1865—1870. 
 Down Cycle — 6 years. 
 
 1865 „ $58.12 per ton January. 
 
 1866 „ 46.87 " Average. 
 
 1867 44.12 
 
 1868 39.25 
 
 1869 _ 40.67 
 
 1870 31.25 ** December. 
 
 Beginning with the year 1865 the Down 
 Cycle was in the ascendant, to continue for 
 six years. In April, 1865, the war of the rebel- 
 lion y^^as brought to a close, and on April 14th, 
 President Lincoln was assassinated. The Lon- 
 don panic in 1866 was followed by a heavy 
 drop in prices on the Stock Exchange here, 
 and in February, 1866, it seemed as if every- 
 body wanted to borrow money and no one 
 was willing to lend. Friday, September 24th, 
 1869, was known as the Black Friday gold 
 panic, and was due to the operations of a spec- 
 ie 
 
ulative clique of New York operators, the 
 members of which created a corner in gold. 
 In 1869 the unsettled state of the finances of 
 the country, and the uncertainty in regard to 
 the action of Congress in relation to the re- 
 sumption of specie payments greatly paralyzed 
 trade, being one of the most unsatisfactory 
 and unprofitable years experienced since 1837. 
 Period, 1871—1872. 
 Up Cycle — 2 years. 
 
 1871 $34.25 per ton March. 
 
 1872 53.87 '' September. 
 
 During the Up Cycle 1871-1872 the country 
 was prosperous as never before, railroad lines 
 were being extended in every direction, mark- 
 ing the most gigantic railroad expansion the 
 world ever beheld, creating an extraordinary 
 demand for iron that had no parallel in this 
 or any other country. 
 
 The Up Cycle of two years 1871-1872 brings 
 to a close the second Major Cycle of the series, 
 dating from the year 1819. 
 
 Prices declined five years from 1846 to 1850; 
 advanced four years 1851 to 1854; declined 
 seven years 1855 to 1861 ; advanced three years 
 1862 to 1864; declined six years 1865 to 1870 
 and advanced two years 1871 to 1872. 
 
 Decline 
 1846 ) 
 
 1847 ) 
 
 
 1848 ) 5 years 
 
 
 1849 ) 
 
 
 1850 ) 
 
 
 
 Advance 
 
 
 1851 ) 
 
 
 1852 ) 
 
 
 1853 ) 
 
 4 years 
 
 1854 ) 
 
 1855 ) 
 
 1856 ) 
 
 1857 ) 
 
 17 
 
1858 ) 7 years 
 
 1859 ) 
 
 1860 ) 
 
 1861 ) 
 
 1862 ) 
 
 1863 ) 3 years 
 
 1864 ) 
 
 1865 ) 
 
 1866 ) 
 
 1867 ) 6 years 
 
 1868 ) 
 
 1869 ) 
 
 1870 ) 
 
 1871 ) 
 
 1872 ) 2 years 
 Period, 1873—1877. 
 
 Down Cycle — 5 years. 
 
 1873 $45.17 per ton January. 
 
 1874 30.25 '' Average. 
 
 1875 25.50 
 
 1876 22.25 
 
 1877 18.00 " December. 
 
 The year 1873 was the beginning of the first 
 Down Cycle of the series of the third Major 
 Cycle, and in the summer of this year it be- 
 came evident that the demand for iron was 
 decreasing, the railroads were not taking as 
 many rails as formerly and pig iron was be- 
 ginning to accumulate at the furnaces. On 
 September 19th, there burst upon the country 
 a commercial as well as a stock exchange 
 panic, which was the outcome of an enormous 
 conversion of floating into fixed capital, and 
 at this time the country was producing ano 
 importing more iron than it was consuming. 
 Prices continued on the downward course in 
 just as a decided manner, as the advance of 
 1871 and 1872 was unexpected and bewilder- 
 ing, and while there is no question that prices 
 would have continued downward had the 
 panic not occurred, the panic precipitated a 
 
 18 
 
more sweeping result. During 1874 the iron 
 business did not improve, and at the end of 
 the year the iron trade of the country was in 
 a condition of greater depression than at any 
 time since the panic, and the same condition 
 existed throughout all the other industries. 
 It was estimated that at least a million of 
 skilled workmen and women were out of em- 
 ployment because there was no work for them 
 to do. At this time fifty-three per cent, of 
 the furnaces were out of blast. The excessive 
 importation of iron during these two years 
 added greatly to the severity of the panic by 
 glutting the market with foreign iron and 
 closing home furnaces and rolling mills. 
 
 During the year 1877 there was an increased 
 demand for iron, but this was neutralized, how- 
 ever, by the marked decrease in prices, which 
 were too low to be profitable, and more than 
 one-half the furnaces and many of the rolling 
 mills were idle the whole year; failures and 
 suspensions being frequent. The Down Cycle 
 came to a close with this year with hardly a 
 rift in the dark clouds, and prices for iron 
 and steel never so low excepting in colonial 
 days. 
 
 Period, 1878—1881. 
 Up Cycle — 4 years. 
 
 1878 $18.50 per ton January. 
 
 1879 21.75 " Average. 
 
 1880 28.50 
 
 1881 26.25 
 
 After such a depressing period as the trade 
 passed through in the Down Cycle of five 
 years from 1873 to 1877, it was some time 
 before the effect was entirely offset, and 
 while production was greater and business 
 more active in 1878 prices did not advance. 
 In 1879 the Government resumed specie pay- 
 ments, giving an impetus to business, and due 
 to this fact prices were temporarily higher 
 
 19 
 
than the average prices of the succeeding year. 
 In this cycle we have an example of the first 
 year of an Up Cycle being dominated by the 
 after effects of a downward period, and a 
 temporary effect causing higher prices in one 
 year than in the succeeding year. This cycle 
 ended with the year 1881 with the iron in- 
 dustries in full force. 
 
 Period, 1882—1888. 
 Down Cycle — 7 years. 
 
 1882 $25.75 per ton March. 
 
 1883 22.42 
 
 1884 19.81 
 
 1885 17.99 
 
 1886 „.. 18.71 
 
 1887 20.93 
 
 1888 18.00 
 
 The extraordinary activities of the iron in- 
 dustry of the last Up Cycle ceased early in 
 1882, which was the commencement of a 
 Down Cycle of seven years. The wants of 
 the consumers were less urgent, and a reac- 
 tion set in, so gradual and tranquil, that not 
 only, for some time excited no apprehension, 
 but was actually imperceptible to many manu- 
 facturers, but prices continued to drop as fore- 
 told by the rule of cycles. The year 1884 wit- 
 nessed a stock exchange panic, and the failures 
 of the Metropolitan and Marine Banks were 
 accompanied by a fall in prices. 
 
 The cycle ended in 1888 with iron quoted 
 at $18.00 per ton in June, and the iron world 
 beset with widespread stagnation. 
 Period, 1889—1891. 
 Up Cycle — 3 years. 
 
 1889 $18.50 per ton November. 
 
 1890 19.90 
 
 1891 17.75 
 
 The tide turned in 1889 and after the in- 
 auguration of President Harrison, business 
 men became more confident; however, owing 
 
 20 
 
to the many idle factories, mills and furnaces, 
 the result of the Down Cycle just passed, it 
 was some months before the turn in business 
 affairs became apparent — the outlook indeed 
 was very brilliant. The Baring financial panic 
 in London, which occurred in November, 1890, 
 the shock of which was felt in all the stock 
 markets of the country, blighted the brilliant 
 hopes and the higher prices so apparent in 
 1890. The Baring panic demonstrated the 
 folly of overtrading with borrowed capital, 
 and the effects of this financial disturbance, 
 lack of sufficient expansion of the currency, 
 and the restrictions of the national currency 
 laws, hampering the banks from extending ac- 
 commodations to legitimate business interests, 
 restricted any extraordinary movements in 
 trade, and due to this fact the year 1891 was 
 a year of reaction in the productive industries 
 of not only this, but of almost every other 
 country, and the production of manufactured 
 goods was seriously interrupted. However, 
 being an Up Cycle, there was no general clos- 
 ing of manufacturing establishments, and 
 hence very few workmen were thrown out of 
 employment. As the year wore on the pan- 
 icky feeling and the general distrust of the 
 future subsided and money could be more 
 easily obtained for legitimate business pur- 
 poses, but the prosperity of the Up Cycle had 
 been blighted, and discouraged the large en- 
 terprises of production. Business men were 
 conservative and there developed a wide- 
 spread conviction that caution and patience 
 must be exercised everywhere. It will be seen 
 from this cycle ending in 891 that we are 
 coming down rapidly from the top. 
 Period, 1892—1897. 
 Down Cycle — 6 years. 
 
 1892 $17.50 per ton January. 
 
 1893 14.52 
 
 21 
 
1894 12.66 
 
 1895 13.10 
 
 1896 12.95 
 
 1897 11.75 
 
 1892, the commencement of a Down Cycle of 
 six years found production in many many 
 manufacturing industries restricted, although 
 the large crops of the summer and autumn of 
 1891 and the extraordinary European demand 
 for the surplus excited hopes for higher prices. 
 They were not realized, however, and prices 
 continued to sink to lower levels, bringing 
 many failures. Thirty-six railroads with 
 10,508 miles in operation and $368,000,000 of 
 stocks and bonds went into the hands of re- 
 ceivers, and this within the year after the 
 harvesting of the greatest crops ever grown. 
 This cycle witnesseses a parallel which had 
 not existed in forty years, which was, that the 
 presidency and both branches of congress 
 passed into the hands of the democratic party. 
 Radical legislation was promised by the demo- 
 crats and thoughful business men feared that 
 this legislation, if accomplished, would be in- 
 jurious to the manufacturing interests of the 
 country. 
 
 Europe's need of gold drained the country 
 of sixty millions of dollars, and in 1893, the 
 repeal of the Silver purchasing law gave busi- 
 ness confidence a shock that nearly broke the 
 whole country. In this same ye^r another 
 panic came upon the country, caused by the 
 currency situation, withdrawal of foreign in- 
 vestments, and the fear of radical tariff legis- 
 lation. In 1894 the country suffered one of 
 the most severe droughts known, seriously 
 reducing both the wheat and corn crops, and 
 cotton touched the lowest price known for a 
 generation. The following year in December, 
 President Cleveland's ill-starred Venezuela 
 message was sent out; the effect was instan- 
 
 22 
 
taneous and a dread of coming calamity spread 
 over the country, and the minds of the peo- 
 ple were filled with a feeling of distrust, and 
 the dreadful specter of war hovered in the air. 
 Credit was broken down and the war scare 
 was felt by all. Prices continued to decline, 
 and the Down Cycle ended in 1897. 
 
 It will be noted from this cycle that we are 
 sinking lower at the bottom. 
 
 Period, 1898—1899. 
 Up Cycle — 2 years. 
 
 1898 $12.00 per ton January. 
 
 1899 25.00 *' December. 
 
 An Up Cycle of two years was inaugurated 
 with the year 1898, and in this year business 
 was larger than in the very best of all past 
 years, but the improvement was more in the 
 volume of trade than in the rise of prices. 
 During 1899 labor troubles were numerous, 
 having a tendency to check the progress of 
 business. It will be noticed that business re- 
 vivals are growing weaker, and that the tides 
 of speculation are being held back, and it is 
 very evident that there is lacking a sufficient 
 amount of money in this country to induce 
 great speculation. The banks repeatedly have 
 to call in their loans by reason of their ex- 
 hausted reserves. Something is fundamentally 
 wrong in the financial world which is con- 
 stantly operating to hold down prices. 
 
 With the year 1899 comes to a close the 
 present century, and finds the world vastly 
 different from what it was at the close of the 
 last century; steam had not moved a boat or 
 car ; electricity had not begun talking or melt- 
 ing; steel was known chiefly as good material 
 for swords and razors; no oil wells were giv- 
 ing light to the world. From 1800 to 1899 
 has been the longest step the human race has 
 taken on this planet. To the amazing prog- 
 ress which has really created a new world this 
 
 23 
 
country has contributed more than its share. 
 Fulton started steamboats on the Hudson; 
 Morse made wires talk and Field abolished 
 the difference of a week between the old 
 world and the new. Titusville started lights 
 all over the world, and more gold than all the 
 world possessed a century ago has come from 
 the mines, not then but now in the United 
 States. This country does not quite feed the 
 world, but in exporting over 420,000,000 
 bushels of wheat and corn in the year just 
 closed, the United States gives it more food 
 than it could well get along without. There 
 is no other land in the world, which does not 
 owe something, in one way or another, to this 
 new country which had scarcely a being and 
 was of no consequence in the affairs of na- 
 tions when the century began. 
 
 Of all the wonderful progress of the century 
 this country performed its full share and more, 
 and it would take too much space to men- 
 tion the useful inventions which the world 
 owes to Americans of the past century. Amer- 
 ica has revolutionized the world. Modern 
 facilities have brought the ends of the earth 
 together, and in turn have developed well de- 
 fined cycles in business and prices governed 
 by a law beyond the control of men. 
 
 Prices declined five years from 1873 to 1877; 
 advanced four years 1878 to 1881; declined 
 seven years 1882 to 1888 ; advanced three years 
 1889 to 1891; declined six years 1892 to 1897; 
 and advanced two years 1898 to 1899. 
 
 Decline 
 
 1873 ) 
 
 
 1874 ) 
 
 
 1875 ) 5 years 
 
 
 1876 ) 
 
 
 1877 ) 
 
 
 
 Advance 
 
 
 1878 ) 
 
 24 
 
1879 ) 4 years 
 
 1880 ) 
 
 1881 ) 
 
 1882 ) 
 
 1883 ) 
 
 1884 ) 
 
 1885 ) 7 years 
 
 1886 ) 
 
 1887 ) 
 
 1888 ) 
 
 1889 ) 
 
 1890 ) 3 years 
 
 1891 ) 
 
 1892 ) 
 
 1893 ) 
 
 1894 ) 6 years 
 
 1895 ) 
 
 1896 ) 
 
 1897 ) 
 
 1898 ) 
 
 1899 ) 2 years 
 Period 1900—1904. 
 
 Down Cycle — 5 years. 
 
 1900 $20.00 per ton June 
 
 1901 15.87 
 
 1902 22.19 
 
 1903 19.92 
 
 1904 14.94 " July 
 
 With 1900 the Down Cycle was in the 
 ascendant, to remain five years. In the early 
 part of the year the good prices of 1899 con- 
 tinued, but by June the price had commenced 
 to ebb. In this year took place the anthra- 
 cite coal strike and the Galveston flood. In 
 September, 1901, President McKinley was 
 assassinated, and in November the Northern 
 Pacific financial panic took place. In June, 
 1903, occurred what was known as the "Tight 
 Money" panic, and in this same year began 
 the agitation for Trust regulation. In 1903, 
 however, the iron trade experienced quite a 
 
 25 
 
boom, owing to the reconstruction of the rail- 
 roads, big cars and big locomotives, necessi- 
 tating heavier rails, new bridges and new ter- 
 minals, also, on account of the steel frame 
 buildings. The pace was too rapid to last and 
 ended with unexpected severity in the latter 
 part of the year, the financial reaction together 
 v^ith the labor agitation discouraging all new 
 enterprise. The year 1903 was also conspic- 
 uous as marking the culmination and collapse 
 of the great Trust movements. The Down 
 Cycle ended in 1904, the lowest price being 
 reached in July. 
 
 Period 1905—1908. 
 Up Cycle — 4 years. 
 
 1905 $17.75 per ton January 
 
 1906 20.91 " average 
 
 1907 23.14 
 
 1908 18.75 " February 
 
 The slow recovery which began in the lat- 
 ter part of 1904 began to strike a rapid pace 
 in 1905, ushering in an Up Cycle of four years 
 with a vigorous and active trade revival. 
 From the year 1906, the price No. 2 Pig Iron, 
 which became standard at this period, is 
 taken as the basis. Prices continued to im- 
 prove notwithstanding the national and state 
 anti-corporation legislation, which had a 
 haiinful and injurious effect on capital and 
 business. In 1906 the government filed a suit 
 against the Standard Oil Co., and in this same 
 year the Railway Rate bill was passed. Dur- 
 ing the same year there was a strain on the 
 capital resources of the world, due to the 
 enormous demands for trade and speculation, 
 and to the exceedingly rapid rise in prices for 
 raw material and labor. There was wild 
 speculation by all classes, particularly in land, 
 mining shares and stock exchange securities. 
 During the middle of the year the capitalists 
 of the country entered into stock speculation 
 
 26 
 
and used most unscrupulously their power 
 over company finance to help along their pur- 
 pose. The grain harvests in 1906, as a whole, 
 were never paralleled. 
 
 In May, 1907, the country passed through 
 the throes of an urgent money stringency 
 called the ''Silent Panic," and in August com- 
 menced what was known as the "Roosevelt 
 Panic." The acute money stringency of this 
 year caused quite a sudden reduction in the 
 working force or running time of factories all 
 over the country, though industrial failures 
 were very few. The money stringency was 
 made more acute by the withdrawal of Eu- 
 ropean capital loaned us the previous year; 
 the partial v/ithdrawal of the interior markets 
 from Wall Street ; the distress of wealthy cap- 
 italists who had tied themselves up in the 
 speculation of the year previous; unsound 
 banking practices, and the insolvency of sev- 
 eral large industrial companies and numerous 
 banks. 
 
 During 1908 there was spasmodic and irreg- 
 ular recovery in trade and the working forces 
 were increased to about normal capacity; and 
 in this year in spite of the signs of industrial 
 depression there was a constant spirit of 
 optimism, expressing itself in the formation of 
 Prosperity Leagues, but the opportunity had 
 ended with 1908, which brought to a close the 
 Up Cycle of four years with the Railroads 
 abandoning new projects and cutting down 
 improvements. 
 
 Period 1909—1915. 
 Down Cycle — 7 years. 
 
 1909 $17.75 per ton January 
 
 1910 16.86 " average 
 
 1911 „ 15.75 " to date 
 
 1912 
 
 1913 „ 
 
 1914 „ 
 
 27 
 
1915 
 
 A seven-year Down Cycle according to the 
 cyclical law is in order commencing with 
 1909. In the early months of the year the 
 demand for iron and steel and the numerous 
 products was so contracted that severe price- 
 cutting on the part of the so-called independ- 
 ent producers took place, and in the month 
 of February the whole country was startled 
 by the announcement that an "Open Market" 
 for iron and steel had been proclaimed. Af- 
 ter this announcement pig iron prices imme- 
 diately dropped from fifty to seventy-five 
 cents per ton. During 1909 there was a rapid 
 increase in the cost of the necessities of life, 
 affecting food, clothing and rent; there was 
 also speculation of great magnitude in stocks, 
 and as a result of the tying up of capital in 
 speculation, and in the simultaneous specu- 
 lation of interior markets in land and prod- 
 uce, there was a severe strain in the autumn 
 on bank reserves. 
 
 The year 1910 has been far from satisfac- 
 tory to the iron trade, and business con- 
 tracted steadily from January to December. 
 The spirit of enterprise was checked and con- 
 fidence was shaken by the renewal of the gov- 
 ernment campaign against consolidations. 
 Although the production of pig iron reached 
 the total of 27,250,000 tons, which was con- 
 siderably more than the previous high record, 
 nevertheless, this large production does not 
 indicate that the iron companies have pros- 
 pered. The output has far exceeded consump- 
 tive requirements and during the greater part 
 of the year the average profit on pig iron has 
 amounted to but very little. At the beginning 
 of the year furnace operators predicted it 
 would be a banner year, but they failed to 
 take into consideration the large amount of 
 construction of work completed over the last 
 
 28 
 
few years of the Up Cycle, which naturally 
 resulted, as at other periods, in over produc- 
 tion and lower prices. Shipments of the 
 United States Steel Corporation reached a 
 new high level during the year, but the earn- 
 ings were some $15,000,000 below those of 
 1907, and the unfilled tonnage of this corpora- 
 tion has been on the decline during the whole 
 year, and at the close amounted to only about 
 2,650,000 tons, and the output barely amount- 
 ing to fifty-five per cent, of capacity. 
 
 The high cost of living has naturally re- 
 sulted in a general demand for higher wages, 
 which has borne especially heavy on the rail- 
 roads, some of whom announced a proposed 
 advance in freight rates, but were prevented 
 by an injunction secured by direct interven- 
 tion of the government, which had the imme- 
 diate effect of stopping the purchase of rail- 
 road equipment and supplies. 
 
 The Copper industry suffered from over 
 production and 1910 will go down in history 
 as one of disappointment to the copper pro- 
 ducing interests. Consumption was rather 
 large, however, the prices for the metal were 
 low and the margin of profit was compara- 
 tively small, and the probabilities are that 
 there must be a further curtailment in pro- 
 duction to prevent an accumulation of surplus 
 metal. 
 
 In the coal trade the year has been one of 
 small progress. 
 
 Leather conditions during the year were 
 exceptionally poor; the volume of sales was 
 greatly decreased and prices were low. 
 
 In the dry goods trade, the year was very 
 unsatisfactory, particularly in the manufac- 
 turing end. Sales were in fair volume, but 
 profits were small. 
 
 With the Packing Companies net profits 
 were reduced as a result of high prices of sup- 
 
 29 
 
plies, and profits from the meat part of the 
 industry were narrow and fluctuating. 
 
 Stock Exchange sales were small through- 
 out the year, and by September dwindled to 
 the smallest volume of any month since 1904, 
 and in the bond market inactivity was even 
 more pronounced. 
 
 The high prices of all commodities, the 
 widespread extravagance, the speculation in 
 western lands, which may yet have serious 
 consequences, have brought about a credit 
 situation throughout the country, the real po- 
 sition of which was shown in the Comptrol- 
 ler's statement regarding the interest received 
 from leans by the various classes of banks. 
 National banks averaged 7.33 per cent; State 
 banks averaged 7.73 per cent, and Trust Co.'s 
 averaged 6.66 per cent. A country's money 
 market may be serene under such circum- 
 stances, but they certainly cannot be called 
 easy or promotive of enterprise, and it is ob- 
 vious that business has not only been laboring 
 under a burden of necessity inspired by devel- 
 opments at Washington, but also under costly 
 capital. 
 
 The year 1911, the third year of this Down 
 Cycle, brings us face to face with the follow- 
 ing facts: First and foremost the cost of liv- 
 ing has persisted in staying upon a most un- 
 healthy and deplorable level, saturating the 
 country with public discontent, which was 
 clearly shown in the results of the late elec- 
 tion in November, 1910. President Taft has 
 declared that the tariff will have to be revised 
 on the piecemeal system, and it is not so long 
 since that the country was asked to believe 
 that the best tariff ever enacted had been 
 escrolled upon the statute books. The coun- 
 try has never been alarmingly prosperous un- 
 der tariff revision. 
 
 We are still laboring under a defective 
 
 30 
 
monetary system, which places this country 
 at a disadvantage in handling its share of the 
 world's trade. Secretary MacVeagh in his an- 
 nual report of the Treasury Department says: 
 **Our system can fairly be called a panic-breed- 
 ing system, whereas every other great na- 
 tional banking and currency system is panic- 
 preventing. As long as we continue under 
 our present system we are liable to panics 
 and the devastations of panics reach repub- 
 licans and democrats alike. We have no sys- 
 tem of reserves. It concentrates in New York 
 what are pretended to be reserves and then 
 forces the New York banks to lend and abol- 
 ish them. Now, a reserve is necessary to the 
 very idea of banking, but our system instead 
 of building up a reserve destroys it as fast as 
 it inclines to accumulate." 
 
 Another factor having a restraining influ- 
 ence is the uncertainty concerning the legal 
 status of corporations. If the decisions mod- 
 ify the present form of conducting large en- 
 terprises, then the whole machinery for per- 
 forming the business of the country may be 
 violently thrown out of gear with such re- 
 sults as no one can or dare predict. 
 
 The action of the Interstate Commerce 
 Commission on the new freight schedules 
 filed by the railroads is still another factor. 
 The probabilities are that a majority of the 
 increases will not be granted, in which event a 
 readjustment of wages is inevitable, which 
 will not be accomplished without resistance 
 on the part of the labor organizations. If 
 these factors develop, the effect will be con- 
 traction in business, continued timidity on the 
 part of capital, and involuntary economy on 
 the part of corporations and individuals. 
 
 Mr. James J. Hill, to whom the financial 
 district frequently looks for forecasts of the 
 general business outlook, has expressed the 
 
 31 
 
belief that there would almost inevitably be 
 a want of employment during the year 1911; 
 he states : "We have sown the wind and must 
 expect to reap the whirlwind. Those who 
 have nothing to sell but their time will be out 
 of employment. There will be a shutting 
 down of the mines because iron and coal and 
 other minerals that go into production of com- 
 mercial articles will not be in demand." 
 
 Price cutting in the iron and steel trades 
 and the unfilled tonnage orders sinking to 
 lower and lower levels are unmistakable indi- 
 cations of dwindling business. The latter in 
 itself shows that the trend of the times is 
 downward, and better times cannot come for 
 general business, until the price for iron shows 
 that it is in demand in the industries of the 
 country. 
 
 A careful analysis of the conditions abroad 
 will show the majority of European countries 
 in a pessimistic state of mind. 
 
 England has a very much strained political 
 situation; the colonies are becoming restless, 
 India especially causing much annoyance. 
 
 In France, the increased cost of living is 
 looming up as an economic fact; the recent 
 floods caused a tremendous loss, greater than 
 any of the kind during the past three hundred 
 years. As a result of the floods and the con- 
 sequent loss, France has been very much dis- 
 tressed and naturally so. 
 
 In Germany, which has grown greatly in 
 wealth, commerce and power, there is also an 
 unsettled state of affairs. Underneath the 
 surface the prevailing opinion seems to be, 
 that there is a growing revolt amongst the 
 people against the heavy taxes which are 
 yearly increasing for a great navy and a larger 
 army. 
 
 In Russia past conditions remain unchanged, 
 and the country is progressing very slowly. 
 
 32 
 
Norway and Sweden have plans under way 
 to increase their standing armies. 
 
 Italy is progressing rapidly, but has its 
 clerical troubles. 
 
 Spain succeeded in quelling its revolution, 
 but Portugal was not so fortunate and the 
 monarchy was overthrown. 
 
 Brazil was threatened by its mutinous navy, 
 and our neighbor, Mexico, had an uprising 
 which succeeded in overthrowing the govern- 
 ment and bringing to an end the rule of Dic- 
 tator Diaz. 
 
 The Government has handed down the de- 
 cision in the Standard Oil and Tobacco Trust 
 cases, and as had been generally supposed the 
 decisions were against the Trusts. Whether 
 the result will be beneficial to the country 
 cannot be foretold at this time, but the opin- 
 ion of Associate Justice Harlan, given here- 
 with, seems to give the logical outcome. 
 
 In a formal opinion dissenting from the 
 judgment of the United States Supreme Court 
 in the Standard Oil case. Associate Justice 
 John M. Harlan characterizes as "judicial 
 legislation" the action of his colleagues in that 
 court in writing into the law the qualifying 
 words "unreasonable" and "undue" as describ- 
 ing restraints upon commerce and attempts 
 at monopoly that contravene the Sherman 
 anti-trust law. 
 
 "In my judgment," says Justice Harlan, 
 "the decree below should have been affirmed 
 without qualification." He declares that the 
 opinion of the majority of the court as stated 
 by the chief justice informs the subsidiary 
 companies of the Standard Oil Co. of New 
 Jersey in effect "that although the New Jersey 
 Corporation being an illegal combination must 
 go out of existence, they (the subsidiaries) 
 may join in an agreement to restrain com- 
 merce among the states if such restraint be 
 
 33 
 
not undue." 
 
 Justice Harlan's formal dissent is little short 
 of sensational. He declares in effect that the 
 Standard Oil decision, by over-reaching the 
 action of Congress through judicial construc- 
 tion, is a "blow at the integrity of our gov- 
 ernmental system, and in the end will prove 
 most dangerous to all." 
 
 Justice Harlan expresses the conviction 
 that the Standard Oil decision, instead of giv- 
 ing rest and quiet to the business of the coun- 
 try, will throw business into confusion and 
 invite litigation. On this point Justice Harlan 
 says : "The disposition of the case under con- 
 sideration according to the views of the de- 
 fendants, will, it is claimed, quiet and give 
 rest to *the business of the country.' On the 
 contrary, I have a strong conviction that it will 
 throw the business of the country into con- 
 fusion and invite a widely-extended and haras- 
 sing litigation, the injurious effects of which 
 will be felt for many years to come. When 
 Congress prohibited every contract, combina- 
 tion or monopoly in restraint of commerce, it 
 prescribed a simple, definite rule that all could 
 understand, and could be easily applied to 
 everyone wishing to obey the law and not to 
 conduct their business in violation of law. 
 
 But now, it is to be feared, we are to have, 
 in cases without number, the constantly re- 
 curring inquiry— difficult to solve by proof — 
 whether the particular contract, combination 
 or trust involved in each case is or is not an 
 "unreasonable" or "undue" restraint of trade. 
 
 Congress, in effect, said that there should be 
 no restraint of trade, in any form, and this 
 court solemnly adjudged many years ago that 
 Congress meant what it thus said in clear and 
 explicit words, and that it could not add to the 
 words of the act. But those who condemn 
 the action of Congress are now, in effect, in- 
 
 34 
 
formed that the courts will allow such re- 
 straints of interstate commerce as are shown 
 not to be "unreasonable" or "undue." 
 
 Justice Harlan quotes the following from 
 the words of Chief Justice White as sustain- 
 ing the conclusion he quotes above as to the 
 limitation upon future commercial activities 
 of the subsidiary companies: "It does not 
 necessarily follow that because an illegal re- 
 straint of trade or an attempt to monopolize 
 or a monopolization resulted from the com- 
 bination and the transfer of stocks of the sub- 
 sidiary corporations to the New Jersey corpor- 
 ation, that a like restraint or attempt to mo- 
 nopolize or monopolization would necessarily 
 arise from agreement between one or more of 
 the subsidiary corporations after the transfer 
 of the stock by the New Jersey corporation." 
 
 Reviewing the condition of popular senti- 
 ment that led to the passage of the Sherman 
 anti-trust law, Justice Harlan said: "All who 
 recall the condition of the country in 1890 
 will remember that there was everywhere, 
 among the people generally, a deep feeling of 
 unrest. The nation had been rid of human 
 slavery — fortunately, as all now feel — but the 
 conviction was universal that the country was 
 in real danger from another kind of slavery 
 sought to be fastened on the American people, 
 namely, the slavery that would result from 
 aggregations of capital in the hands of a few 
 individuals and corporations controlling for 
 their own profit and advantage exclusively the 
 entire business of the country, including the 
 production and sale of the necessaries of life. 
 
 "Such a danger was thought to be then im- 
 minent and all felt that it must be met firmly 
 and by such statutory regulations as would 
 adequately protect the people against oppres- 
 sion and wrong. Congress, therefore, took up 
 the matter and gave the whole subject the 
 
 35 
 
fullest consideration. All agreed that the na- 
 tional government could not by legislation 
 regulate the domestic trade that was carried 
 on wholly in the several states, for power to 
 regulate such trade remained with, because 
 never surrendered by, the states. But under 
 authority expressly granted to it by the Con- 
 stitution, Congress could regulate commerce 
 among the several states and with foreign 
 states. Its authority to regulate such com- 
 merce was and is paramount, due force being 
 given to other provisions of the fundamental 
 law devised by the fathers for the safety of the 
 government and for the protection and safety 
 of the essential rights inhering in life, liberty 
 and property, by way of judicial legislation 
 and exception not placed there by the law- 
 making branch of the government." 
 
 "This," the court said, "as we have seen, we 
 cannot and we ought not to do. It thus ap- 
 pears that fifteen years ago, when the purpose 
 of Congress in passing the anti-trust act was 
 fresh in the minds of the courts, lawyers, 
 statesmen and the general public, this court 
 expressly declined to indulge in judicial legis- 
 lation by inserting in the act the word *unrea- 
 sonable' or any other word of like import. It 
 may be stated here that the country at large 
 accepted this view of the act, and the federal 
 courts throughout the entire country enforced 
 its provision according to the interpretation 
 given in the freight association case." 
 
 Justice Harlan then reviewed the next great 
 case involving the anti-trust act, the Joint 
 Traffic Association case, considering the con- 
 ditions under which this case arose. Justice 
 Harlan said: 
 
 "But those who were in combinations that 
 were illegal did not despair. They at once 
 set up the baseless claim that the decision of 
 1896 disturbed the 'business interests of the 
 
 36 
 
country,' and let it be known that they would 
 never be content until the rule was established 
 that would permit interstate commerce to be 
 subjected to reasonable restraint. Finally an 
 opportunity came again to raise the same 
 question which this court had, upon full con- 
 sideration, determined in 1896." 
 
 Repeating that the Supreme Court in that 
 case again refused to write the qualifying 
 word "unreasonable," into the law. Justice 
 Harlan says: "These utterances, taken in 
 connection with what was previously said in 
 the trans-Missouri freight case, show too 
 clearly and affirmatively to admit of doubt that 
 this court, many years ago, upon the fullest 
 consideration, interpreted the anti-trust act as 
 prohibiting and making illegal not only every 
 contract or combination, in whatever form, 
 which was in restraint of interstate commerce, 
 without regard to its reasonableness or un- 
 reasonableness, but all monopolies or attempts 
 to monopolize, any part of such trade or com- 
 merce. 
 
 "Now this court is asked to do that which 
 it has distinctly declared it could not and 
 would not do, and has now done what it then 
 said it could not constitutionally do. It has 
 by mere interpretation modified the act of 
 Congress and deprived it of practical value as 
 a defensive measure against the evils to be 
 remedied. On reading the opinion just deliv- 
 ered the first inquiry will be, that as the court 
 is unanimous in holding that the particular 
 things done by the Standard Oil Company and 
 its subsidiary companies in this case were 
 illegal under the anti-trust act, whether those 
 things were in reasonable or unreasonable 
 restraint of interstate commerce, why was it 
 necessary to make an elaborate argument as 
 is done in the opinion to show that according 
 to the 'rule of reason' the act as passed by 
 
 37 
 
Congress should be interpreted as if it con- 
 tained the word 'unreasonable' or the word 
 *undue.' 
 
 "The only answer which, in frankness, can 
 be given to this question is that the court in- 
 tends to decide that its deliberate judgment, 
 fifteen years ago, to the effect that the act per- 
 mitted no restraint whatever of interstate 
 commerce, whether reasonable or unreason- 
 able, was not in accordance with the "rule of 
 reason.' In effect the court says that it will 
 now, for the first time, bring the discussion 
 under 'the light of reason' and apply the 
 'rule of reason' to the question to be decided. 
 I have the authority of this court for saying 
 that such a course of proceedings on its part 
 is 'judicial legislation.' " 
 
 In conclusion Justice Harlan said: "After 
 many years of public service at the national 
 capital, and after a somewhat close observa- 
 tion of the conduct of public affairs, I am com- 
 pelled to say that there is abroad in our land 
 a most harmful tendency to bring about the 
 amending of constitutions and legislative en- 
 actments by means alone of judicial construc- 
 tion. As a public policy has been declared 
 by the legislative department in respect to in- 
 terstate commerce, over which Congress has 
 entire control under the Constitution, all con- 
 cerned must patiently submit to what has been 
 lawfully done until the people of the United 
 States, the source of all national power, shall, 
 in their own time, upon reflection and through 
 the legislative department of the government, 
 require a change of that policy. 
 
 "There are some who say that it is a part 
 of one's liberty to conduct commerce among 
 the states without being subject to govern- 
 mental authority. But that would not be 
 liberty, regulated by law, and liberty which 
 cannot be regulated by law is not to be de- 
 sired. The supreme law of the land which is 
 38 
 
binding alike upon all — upon presidents, con- 
 gresses, the courts and the people — gives to 
 Congress, and to Congress alone, authority to 
 regulate interstate commerce, and when Con- 
 gress forbids any restraint of such commerce 
 in any form, all must obey its mandate. To 
 over-reach the action of Congress merely by 
 judicial construction — that is, by indirection 
 — is a blow at the integrity of our governmen- 
 tal system, and in the end will prove most 
 dangerous to all." — N. Y. Commercial. 
 
 It would seem that before finance and trade 
 can start right on another era of sound pros- 
 perity, there must be liquidation in commer- 
 cial and industrial circles. Conditions in gen- 
 eral leave much to be desired, and does not 
 offer anything to refute the theory of the law 
 of cycles that business will be on the down- 
 ward trend, and judging the future by the 
 past, and reasoning from what we know, the 
 future does not promise great prosperity. 
 1911 is the third year in this Down Cycle of 
 seven years; therefore, we must have four 
 years more of decline after 1911 to fill up the 
 cycle of seven years, and no doubt "History 
 will repeat itself" here as it has done in other 
 cycles heretofore. 
 
 The year 1912 is Presidential year, and with 
 part of the republicans banding together and 
 forming the "National Progressive League," 
 it would seem as though there would be poli- 
 tical changes in 1912, and whether or not it 
 will be for the country's good only Father 
 Time can tell, but as before stated, whatever 
 the political situation may develop, better 
 times can not come for general business, until 
 the price of iron shows that it is in demand 
 in the industries of the country. 
 
 In conclusion the following editorial, which 
 appeared in the New York Globe, in the issue 
 of August 19, 1910, is worthy of repetition, 
 and perhaps the reader after a perusal of the 
 
 39 
 
cycles in business, will find a striking simiia^- 
 ity in the advice of one of the country's mjst 
 successful men, and what has been set forth 
 herein : 
 
 " The Twentieth Century Wizard." 
 
 "A great many people are not half so much 
 interested in the kings of finance as they are 
 in the wizards of finance. Yesterday Mr. 
 John D. Rockefeller spoke almost as a sor- 
 cerer — and the people to whom he spoke are 
 as much concerned because of his words as a 
 Greek might have been by the words of an 
 oracle. 
 
 "Mr. Rockefeller was driving his car 
 through the country near Cleveland, Ohio. 
 Stopping by the road to get a drink, he asked 
 of the woman who brought it to him whether 
 her husband owned the little farm. 
 
 " *No,' she said, *but we're going to build 
 across the road next spring.' 
 
 '* 'Excuse me for giving advice,' put in Mr. 
 Rockefeller, 'but you had better wait two 
 years before building.' " 
 
 CONCLUSION. 
 
 The subject in tl^.volume is not, and could 
 not be, strictly Original; much herein con- 
 tained h^s ^ipady been used and presented 
 more abl3»5^ others, although the endeavor 
 has been ^present the subject in an original 
 form. In some cases the language of other 
 writers has been freely adopted, perhaps too 
 literally, but the idea has been to present, as 
 concise as possible, a review that will enable 
 the reader to observe the trend of the Busi- 
 ness Cycles, and be guided thereby in his fu- 
 ture undertakings. 
 
 It would be impossible to enumerate all the 
 sources and authorities from which the data 
 has been drawn, but to all I freely and grate- 
 fully acknowledge my thanks.— The Author. 
 
 40 
 
• a o • ^O 
 
■-o< 
 
 o V 
 
 c *' 
 
 
 ■--o'^ 
 
 , „ DOBBSBROS. ^ - I ^ 
 
 S O LIIRARV BINDINQ ^\!^ q jO V\ 
 
 MOV- M^* ^0^ \