The application of a scientific review of economic statistics to business concerns of the United States during the past five years, and its possible application to national and international affairs in the future, were the chief topics discussed on Saturday night at the fifth annual conference of the Harvard University Committee on Economic Research, at a dinner held in the Harvard Club of Boston. After the dinner a group of speakers prominent in business and in economic research addressed the 200 subscribers to the Harvard Economic Service who were present.
After a brief introductory address by President Lowell, in which he commended the members of the committee for their service in developing economics from an inexact to an exact science. Professors Warren M. Persons and Charles J. Bullock, both of the committee, spoke, describing the growth and development of the Bureau of Economic Research at Harvard.
Persons Discusses Business Cycles
Professor Persons first described the theory of recurring business cycles, on which the Harvard Economic Service is based. Perpetual change, he showed, is an inherent feature of modern industrial enterprise. Prices rise and fall; markets expand and contract; production increases and decreases; orders accumulate beyond capacity and then seem to vanish altogether.
And yet, he said, the course of business is not purely fortuitous or haphazard. By studing the price movements in the United States for the past 20 years, an index of trade for the United States has been obtained. This chart reveals a well defined ebb and flow of prosperity and depression. First comes a period of business depression, then a recovery; this is followed by a period of prosperity followed by financial strain, which ultimately brings about a financial crisis. These five phases, each leading into the other, are known as the business cycle.
"In 1915," he said, "the Harvard Economics Department started to investigate statistical data concerning past business cycles. From this data we were able to make accurate generalizations concerning past business cycles and inferences for the future."
Discusses Development of Service
Professor Bullock showed how the Harvard Economic Service has developed during the past five years, and cited the increase in its number of subscribers to show its increasing value to the business houses of the United States.
"The old haphazard methods of business belong to the prehistocic ages of five years ago when we were in the business wilderness," next decared Mr. Howard Coonley '98, president of the Boston Chamber of Commerce, and of the Walworth Manufacturing Company. He said that since he had discovered that the sales of the Walworth Company followed almost precisely the sales graphs prepared by the Harvard Economic Service, his company had been able to discard the old uncertain method of irregular production. By following the Harvard forecast, they had been able to estimate sales for each phase of the business cycle, and plan their production and financial programs accordingly."
"The Economic Service," he said, "gives a perspective to business. It is an executive airplane that enables a man to see his business from afar in relation to other businesses, and deal with it accordingly."
Turning from the past accomplishments of the Economic Service, the remaining speakers developed the further possibilities of a Bureau of Economic Research.
Mr. Jesse Isadore Straus '93, president of R. H. Macey and Company, urged the application of the economic study of statistics to legislative problems of the country. A study he said of the economic effects of traiff and taxation on commerce might produce results that would cause even Congress to give heed to the findings of the Harvard Research Bureau in preparing its legislation.
Professor Thomas N. Carver, chairman of the Department of Economics at the University also spoke of the need of conducting national affairs by scientific economic principles.
"Already," he said, "two great countries of the world are on the rocks largely because the men in control were illiterates in economics."
Professor Bullock, the concluding speaker, emphasized the importance of the international study of economic statistics. He said that a research bureau similar to that at Harvard had already been established by London and Cambridge Universities, and that one would soon be started at the Institute of Satistics of the University of Paris. By the cooperation of these three bureaus, he said he hoped that long strides would be taken towards a better understanding of economics and business conditions throughout the world.