SCIENTIFIC ECONOMIC FORECASTS PRACTICABLE

The University Committee on Economic Research has proved the practicability of a scientific effort to forecast business conditions. Since 1917 the committee has been making an intensive study of fundamental business statistics with a view to extending their scope and usefulness for commercial and scientific purposes. In 1919 the idea had proved to be of such value that the committee started the publications which have developed in the present system of weekly letters outlining in a simple understandable style the economic conditions, business fluctuations, and any issues of timely interest in the business world.

The committee was organized on a purely experimental basis and was devised to form a connecting link between the University and the business world. Its purpose is twofold: first, to promote the progress of economic research, and second, to cooperate with the business interests and to keep them informed of the trend of economic activities. Moreover the committee furnishes valuable assistance to other colleges by supplying them, at a reduced rate, with statistics and service which are important in the proper instruction in courses of business cycles, money, banking, and so forth. Its establishment has filled a broad gap between the practical business world and theoretical study.

To organization of the enterprize makes it especially suitable to carry on this dual role, as the activities are under the direct supervision of a board of business men which is conected with the College Corporation. The first tests were performed in 1917, when the committee undertook to demonstrate that the movement of general business conditions is controlled by economic forces which are within the range of scientific measurement. An index was constructed covering the period from 1903-1914 and was arranged to cover the general business conditions of this time.

The work at that time consisted fundamentally in gathering statistics and making forecasts based upon the laws developed in the early test period. These forecasts were based entirely upon the scientific statistics and personal opinions and prejudices were not allowed to enter their formation. The results were entirely satisfactory. The boom of 1919 and acute depression of 1920 were anticipated several months before their occurrence. The same principles are now applied to the extension of the economic service which was organized on the first of this year. The Committee issues a weekly letter outlining the current business situation and forecasting the scientific formulated probabilities. These bulletins with a quarterly magazine giving a thorough review are issued only to subscribers who pay for the yearly service of the committee, and are used by the concerns subscribing as a help in planning for any business depreciations that may arise.