. Cycles of prosperity and depression in the United States, Great Britain and Germany; a study of monthly data 1902-1908 . 1902 1903 1904 1905 1906 1908 ing power due to a depreciating money standard. On the otherhand stocks participate in the larger earnings and increasedvalue of business assets which normally result from risingprices. Again the current rate of interest on long-time invest-ments tends to rise with rising prices, and therefore the fixedinterest rate of bonds is capitalized at higher and higher rates,and bond values are correspondingly reduced. Hence, while HANSEN—CY
. Cycles of prosperity and depression in the United States, Great Britain and Germany; a study of monthly data 1902-1908 . 1902 1903 1904 1905 1906 1908 ing power due to a depreciating money standard. On the otherhand stocks participate in the larger earnings and increasedvalue of business assets which normally result from risingprices. Again the current rate of interest on long-time invest-ments tends to rise with rising prices, and therefore the fixedinterest rate of bonds is capitalized at higher and higher rates,and bond values are correspondingly reduced. Hence, while HANSEN—CYCLES OF PROSPERITY AND DEPRESSION 59 the short-time fluctuations of bonds correspond with the move-ments of the business cycle, the long-run tendency is the oppo-site of the movement of stocks and commodity prices. CHART 8: BOND PRICES 110 11C 109 100 WEST SHOBE BONDBRITISH CONSOLPBUSSIAN CONSOL. 1902 1903 1904 1909 1906 1907 1908 E. The British and German Barometers Exports, imports, and traffic receipts are the British serieswhich fall in the industrial group. Traffic receipts howeverfail to register any cyclical fluctuations. The receipts followa level course until the close of 1905 when a sudden drop oc-curs after which the receipts continue relatively constant again. 60 UNIVERSITY OF WISCONSIN STUDIES Only two series, therefore, remain for the industrial group,imports and exports. The relative numbers are given inTable G. The coefficients of correlation between the two seriesare as follows: Imports precedes 1 month -K816 0 +.882 lags behind 1 +.759 High concurrent correlation is evident. In the case of theUnited States, exports were found to lag considerably behindthe rest of the industrial group. In Great Britain, becauseof the extraordinary importance of her foreign trade, exportsas well as imports constitute a sensitive indicator of prosperityand depression. Of the mon
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