Sun-spots and panics;

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VOL. IV NEW Y O R K , J U L Y 15, 1921 No. 7
Commercial crises, according to certain
economists, occur every fourteen years.
The economists point with confidence to
the fact that experience proves the truth
of the statement. Did not this country
suffer a panic in 1893; and again in 1907?
Does not the depression of the present year
indicate that 1921 will bring forth a panic
in conformity with the contention?
There is no theory back of the conten­tion,
so far as is known, except in the case
of Jevons, an English economist, whose
reasoning tended strongly to bring econo­mics
into relation with physical science.
Jevons maintained that there is a connec­tion
between commercial crises and sun-spots;
that given sun-spots of sufficient
size, panics are bound to ensue. The
reasoning was somewhat involved and had
to do with the diminution of the heat from
the sun and its effect upon crops, etc. The
theory has never been accepted by con­servative
economists and is attributed
generally to Jevons's fertile imagination.
Sun-spots were observed in 1893. They
were also observed in May of this year,
when they are reported to have covered an
area of nearly two billion square miles.
There were none, so far as can be ascer­tained,
in 1907, those nearest to that year
being 1905 and 1909. Coxey's army
moved on Washington in 1893, and another
contemplated advance under Coxey's
leadership was reported recently. Whether
this is a mere coincidence or the effect of
sun-spots is problematical.
The appearance of the sun-spots this
year is said to be seven years in advance of
the time anticipated, since they are ex­pected
to appear every eleven years and
were last observed in 1917. The recent
spots have been blamed for unprecedented
electrical disturbances and in some locali­ties
caused, in addition to a number of
fires, considerable damage to electrical
equipment. That there were panics grow­ing
out of this manifestation is undoubted,
but they were local and individual, and
not of the kind to which Jevons referred.
The crisis which is usually known as the
"panic of 1893" was brought about
primarily by what amounted to lack of
confidence in the ability of the Govern­ment
to redeem its obligations in gold and
to maintain the parity between gold and
silver. During the year 1893 bank failures
to the extent of 567 were reported. De­posits
fell off enormously. Production of
many basic commodities decreased. Com­mercial
failures multiplied. Some of the
most important railroads in the country
went into the hands of receivers. Un­employment
was general and labor troubles
complicated the situation. Crop failures
following served to intensify the diffi­culty.
Sun-spots and Panics