Current Situation

Students of business know that there are many kinds of business cycles. Some run their course quite quickly, others take several years for their completion.

The summer and fall of 1924 marked the transition from the first stage of easy money and dullness to the second stage of easy money, active stock-market speculation, stationary or declining bond prices and reviving industry. The sequence of these phases of the business cycle are familiar to all; the question thus is one of their velocity and probable duration. Moreover, no two business cycles have ever been exactly alike except in their general economic principles; and granted the whole business-cycle theory, elaborate analysis of each given indus-try still remains necessary.

The present cycle seems likely to endure for some time yet, because of its tremendous base of easy funds. Time money, it is true, has hardened up somewhat; but the disparity between long term investments and short term loans in yield is still too great for the "creeping bull market" on the Stock Exchange to halt sharply as yet. Moreover, industrial recovery, while genuine, is nevertheless slow because of surplus productive facilities. In 1922-23 and again in 1923-24, the business cycle was an annual affair, and quickly completed. But the cycle dating from last August in its secondary phase is very evidently an affair of larger proportions.