xvi

Introduction

prices.” But I did not at that time believe that there
would be anything in the nature of a serious crash.
I had said, in an article published in many newspapers,
 May 12, 1929, that the so-called “Hoover
boom” in the stock market had about reached its
climax. The “Hoover market” had risen above the
forecast line, calculated by the Karsten Statistical
Laboratories in New Haven, by from 12 to 25 per
cent from the time of Mr. Hoover's election to his
taking of the oath of office on March 4th, after
which, up to the close of April, it receded to 18 per
cent above the line. In this article I remarked that
all previous departures from the Karsten so-called
“line of fundamentals” had returned within a short
period to this forecast line, and added:
“The ‘Hoover Market’ can hardly go much further
 above the forecast line. It may fall below, but
in that case it will fall to a higher level than the
peaks of the previous booms.”
This opinion was fulfilled. As the Karsten chart
shows (with the white zone bounding the recorded
average of the market each month) the continuous
forecast line, based on previous records of various
items of business conditions, represents with fair
accuracy the long swings of the market. The departures
 from the line, up or down, represent the “psychological”
 short swings, as shown on the accompanying
 chart. These characterized the collapse of
the stock market at the onset of the war in 1914;
the war boom of 1915-1916; the marked depression
of 1917, during the period of Federal financing