CAUSES OF CRISES AND CYCLES 193

clare it a matter of common knowledge that “revulsions in commerce
 have become a sort of periodical epidemic in our times,
whose periods and returns can be safely affirmed by all, while the
shrewd financier is tolerably aware of their precise times.” !

Recognition of the fact that crises occur with a certain degree
of regularity called for some more satisfying theory of their nature
than that which referred each to the fortuitous events preceding,
or that which merely indicated the bearing that sales on credit
and the psychology of business men have upon the cycle.? From
(825 on, the fluctuating character of bank currency was most
commonly regarded as the cause of variations in business prosperity.
 Attention began to be given also to the business cycle as
a whole, as well as to its climax in the “revulsion.” Thus Eleazar
Lord, in 1829, after giving a description, already commonplace,
of the alternating periods of rising prices, speculation, prosperity,
and of falling prices and depression, added that “nothing can
be more certain than that this train of disastrous results originates
 in an excessive issue of paper. The flexible quality of paper
currency, its capacity of sudden and indefinite expansion while
confidence is maintained, and of contraction when distrust or
necessity requires, is the root of the difficulty.” 3
Gouge held that the remedy was to do away with banks of
issue. By inflating the currency, he asserted, they raise prices
above the level of other countries, inducing an unfavorable
balance of trade and gold exports. As the notes are presented to

* J. B. Turner, “Banking,” New Englander (1844), ii, 50. Virtually no attempt
was made to apply anything like modern statistical methods to the problem of the
business cycle. It was here that such writers as Jevons and John Mills made their
chief contribution. As for the explanation of the causes of the cycle, it is probably
just to say that these men showed less insight than some of our own writers who had
preceded.
? As already indicated, many writers concerned themselves only with crises,
without realizing that they were but one phase of a complete cycle. In some of my
generalizations I have used the word “cycle” while recognizing that some of the
writers referred to dealt with only part of the cycle. There is virtually no danger
of ambiguity in the reader’s mind, and any loss in formal precision seems more than
offset by the gain of avoiding the cumbersome repetition of the phrase “cycles and
crises.”
3 Lord, Principles of Currency and Banking (1829), p. 46.