BOOK REVIEW
BY GREGORY DL MORRIS
A History of American Business Cycles
By Thomas Kevin Swift SE Publications , 2023 330 pages with charts and bibliography
History in general , and American financial history in particular , is often taught as episodic . There is the Gilded Age , the Technology Age and so forth . It ’ s almost as if history is an archipelago of last years , with the major events as islands in an otherwise empty sea .
But that sea has waves , with endless crests and troughs , and it is on that sea that most business is done . The important reminder of this book is that business cycles are as relentless as they are variable . As J . P . Morgan noted sardonically when asked how the stock market will react to a particular development , “ it will fluctuate .”
There is a bracing effect to have the historical focus on the continuity of cycles while the usual lead items — elections , wars , inventions — are merely mentioned in passing . Each broader trend had its epicycles . The Roaring ’ 20s and the Clinton expansion in the ’ 90s had their stumbles , corrections and collapses . The Great Depression had its success stories .
The through line is an index of real gross output where 2017 = 100 , starting in the year 1780 . There are also industryspecific charts showing the growth of production in key commodities .
It is startling to see that by 1880 the index has only reached two . It spiked to seven in 1929 , tumbled below four at the depths of the Great Depression and recovered to a bit better than 12 by the end of World War II . The instructive perspective of Swift ’ s continuous-cycles approach highlights that the index of gross output took 165 years to go from zero to 12 , and then just 60 years to go from 12 to 120 ; half the time for an order of magnitude of growth .
Swift earned a bachelor ’ s degree in history from Ashland College , a master ’ s in economics from Case Western Reserve , and a doctorate in business administration from Anglia Polytechnic University ( today Anglia Ruskin University ) in England . He was vice president of the Freedonia Group consultancy and then chief economist at the American Chemistry Council trade group .
Most readers of this publication are familiar with the terse language of the market summary : This average was up this much , that average was down that much . The price of oil rose , the price of steel fell and so on . Swift applies that staccato style to his grand tour of American business cycles .
That makes this book an excellent spot reference , especially for years or periods that are not as well known . For example , the mere mention of 1929 brings images flooding to mind . But 1839 ? That ’ s Cycle 10 : a brief boom , the Panic of 1839 and American ’ s first great depression .
That same staccato briefing style makes the book a bit challenging to read through . Narrative non-fiction this is definitely not . If anything , the prose is almost too spare . Until it isn ’ t .
Swift is mostly even-handed between labor and capital , at least through the first 33 cycles . Tariffs , always contentious , are noted as being advocated by , or benefiting one sector or another , but not broadly characterized as good or bad . That said , there are glimmers of an inclination towards capital . For example , in 1902 , under Theodore Roosevelt , “ confidence was shaken by anti-trust agitation and persecution of trusts .” Persecution ? As if trusts were an oppressed ethic group ?
Cycle 34 begins with the election of FDR . Swift is broadly positive about New Deal reforms for four pages before asserting that “ although some measures were good and necessary , in the aggregate , price fixing and government largesse lengthened the Great Depression by creating tax and regulatory burdens on the economy by fostering uncertainty .” Uncertainty for business perhaps ; maybe less so for the millions no longer on breadlines ?
With typical brevity , Swift records that “ in April 1933 President Roosevelt abandoned the gold standard . There was no pressure nor shortness of gold .” Then the gloves come off : “ The abandonment represented bad faith on the part of the government .” Suddenly the just-the-facts economist is making value judgments .
The gloves stay off the rest of the book . Swift dismisses Johnson ’ s Great Society initiatives — including Medicare , Medicaid , Head Start and the Mass Transit Act — writing “ it is questionable if the economy needed this stimulus , and the new spending caused increased inflation .”
In contrast , a mere five pages earlier Swift states without comment that under the terms of the 1956 Federal Aid Highway Act , “ the federal government would pay 90 % of the cost of expressway construction .”
This reviewer is unclear how lavishing billions on highways goes unquestioned as an unalloyed good , but basic healthcare , education and public transportation are disparaged as needless largesse .
It finally comes clear on page 283 . “ Supply-side economics emerged in the 1970s in response to the failure of Keynesian economics ,” Swift writes . “ Supply-side economists cited high taxes , burdensome regulation and an extensive welfare state for the economic malaise of the decade .”
As the topic is the ’ 70s , the reader may wonder if the Clean Air Act of 1970 , or the Clean Water Act of 1972 are the burdensome regulation in question . Or is the burden retroactive to the Pure Food & Drug Act of 1906 when we first read about the agitation and persecution of trusts ?
42 FINANCIAL HISTORY | Fall 2023 | www . MoAF . org