In my two chapters on American production, consumption, and scale of living enjoyed by the people I have also entered a new field with iconoclastic hands. The commonly prevailing idea is that during the last 10 years the people of the United States have advanced greatly in their production and consequently their general scale of living. In earlier papers I have expressed doubt respecting these conceptions. The prevalent ideas did not appear to be supported by the collateral evidence. In the new papers I feel that I have gone a long way toward establishing the contrary. Should we just emerging from a war, that was stupendously costly and wasteful even to us, expect anything otherwise?
In 1919–20 we had a false boom. In 1920–22 a very real and intense depression. In 1922–23 a sharp revival. The study of the depression that was undertaken by the National Bureau of Economic Research for Secretary Hoover’s committee was finished after the revival was well under way. The doctrine of business cycles was elaborated in it. In reviewing the work I submitted the following words of warning, which I think it well to reprint here:
As one of the directors of the National Bureau of Economic Research I approve the publication of the report on “Business Cycles and Unemployment” as it has been submitted to me in manuscript, in common with other directors of the Bureau. I feel constrained, however, to append a note to the effect that the study of conditions and events that has been made does not give adequate attention to fundamental economic motivations that are beyond control. I refer to such things as broad national enterprises that may prove to be mistakes, to deep rooted and widely extending alterations in the conditions of production and consumption, to general wars, and to changes in social conditions.
In illustration of my meaning I cite too premature building of railways in the West of the United States, the greatly increased production of silver by fortuitous discovery and improvements in the arts of mining and metal