would pay premiums varying according to their labor-turnover rates. These premiums would be used to provide unemployment allowances for employees discharged for no fault of their own. The central idea, however, is less to mitigate the misery of the man out of work than to prevent men from being discharged for lack of work. For by making his premium depend upon his labor turnover this bill gives the employer an inducement to stabilize his working force. Just as compulsory accident insurance has led to a large reduction in the number of accidents, so it is believed that compulsory unemployment insurance would lead to a large reduction in the number of the unemployed.

Concerning other plans for stabilizing economic activity-the improvement of employment offices, out-of-work benefits by labor unions, a greater centralization of banking, stabilizing the dollar, and the like, I shall say nothing—not because of lack of interest but because of lack of time. One matter however so nearly concerns our profession that I must dwell upon it-the need of increasing our knowledge of the business cycle and putting this knowledge to better use.

IV

All of us who have followed the crisis of 1920 and the prolonged liquidation which it started have had brought home to them the large speculative element in their thinking about the subject. For example, we have heard a great deal about "frozen credits" as a factor of the first magnitude in retarding recovery. We have read much about how these credits became "frozen" and how they may be "thawed." But if the factor is of first-rate importance we ought to know what a "frozen credit" is, what proportion of bank credits answers to the definition, what proportion of credits is frozen in ordinary times. The latter point is particularly significant and yet has been little attended to by bankers or economists. So far as I know no adequate analysis has ever been made of bank loans from this point of view. Certainly our insight into the difficulties which we are confronting and therefore our ability to meet these difficulties with success would be increased if our banking authorities would compile and publish statistics of this character.

In general American banking statistics rank high in comparison both with statistics from other fields at home and with banking statistics from other countries. But they present a second

lamentable gap. Some 10,000 banks are connected with the Federal Reserve System, and concerning their condition we get reports five times a year. But there are 20,000 other banks concerning which we have but one report a year, and that a meager one. It is true that these 20,000 state and private banks all put together have only half the resources of the 10,000 member institutions. But in such a situation as the present, when the financial position of the farmers counts so heavily in all reckonings, it is ill that we have to conjecture facts which we might know. The Federal Reserve Board or the Comptroller's Office would render a great service if they would fill this gap.

Once again, this year has taught us how poor are our statistics of unemployment, of wages, of earnings. When an attempt was made last autumn to find how many men were out of work, the Bureau of Labor Statistics and the Advisory Committee of the President's Conference on Unemployment could not get within a million of each other's estimates. About part-time employment we know almost nothing. The prices of labor are always a matter of the first consequence, and in the present time of readjustments there is especial need of current data—a need so pressing that it is hard to be grateful for the fragmentary surveys made from time to time by the Bureau of Labor Statistics. And even if we had comprehensive statistics of wage rates we should still be unable to make out changes in the economic position of the working classes or to get much light on the "buyers' strike" which is alleged to have precipitated the crisis unless we had data for pay-roll disbursements and family earnings. All our comparisons between wages and cost of living are rendered doubtful because the fluctuations of wages may be very imperfect representations of fluctuations in family incomes.

Then there is the whole field of merchandising-a big section of our economic life which is so obscure that we cannot say even approximately how many retail and how many wholesale stores there are in the country. This field is a difficult one, but is it really more difficult than agriculture, manufacturing, mining, or even transportation? Yet if one puts the current reports from a few department stores and mail-order houses which are published in the Federal Reserve Bulletin and the Survey of Current Business beside the material in the Year Book of the Department of Agriculture, the Census of Manufactures, the Geological Survey's reports on Mineral Resources, and the publications of the Interstate Com

merce Commission, how slight the merchandising figures seem! And how difficult it is to see even a little bit into the business future when one has to guess at what is happening in the great processes of distributing merchandise. And how can we intelligently attack the problems of economic waste without a chance to follow goods beyond the walls of the factory and the cars of the railways?

There are few members of our Association who have not felt the lacks which I have lamented and other lacks besides. Most of them are lacks we cannot fill by individual enterprise. But we can do something as individuals by seizing every opportunity to use the data which are already available in our discussions of economic problems and to coöperate with the various agencies, public and private, which are striving to improve the range and character of statistical reporting. In this effort we have many allies. There is a rapidly growing sentiment among business men in favor of statistical publicity. Indeed the recent converts from this side sometimes err from an excess of zeal and propose impossibly elaborate inquiries-questionnaires that would require months to fill out. The statistical offices of the federal government—it is not invidious to mention especially the bureaus of the Department of Commerce and the research organizations of the Federal Reserve Board and the Federal Reserve banks are showing a degree of enterprise which is most gratifying. Everything which we can do to increase interest in their output, and to answer their numerous calls for service, is a professional duty.

V

But to do what in us lies toward the improvement of statistical data is by no means the whole of our opportunity. After all, the endless tables of statistics which we need are only raw materials from which we are to construct a more serviceable account of economic behavior-an account that will serve better all efforts to raise the standards of social welfare. Among these efforts the effort to control the business cycle is but one, though one that is in a most hopeful stage at present. Here is a really progressive line of economic research. The books in this field rapidly go out of date, because the later writers have new things to say; they really have more knowledge, keener insight, better technique than their predecessors. And yet we are far from being within sight of the solution of our problem.

You remember Carlyle's description of the situation of England

in 1843 when he spent the first seven weeks of the year in writing Past and Present.

"England is full of wealth," he wrote, "of multifarious produce, supply for human want in every kind; yet England is dying of inanition. With unabated bounty the land of England blooms and grows; waving with yellow harvests; thick-studded with workshops, industrial implements, with fifteen millions of workers, understood to be the strongest, the cunningest, and the willingest our Earth ever had; these men are here, the work they have done, the fruit they have realized is here, abundant, exuberant, on every hand of us: and behold, some baleful fiat as of Enchantment has gone forth, saying, "Touch it not ye workers, ye master-workers, ye master-idlers; none of you can touch it, no man of you shall be the better for it; this is enchanted fruit.'

It is true that Carlyle made the grave mistake of supposing that this condition of affairs was a chronic instead of an intermittant disease of the body politic; but for all that his description applies as well to the United States in 1921 as to England in 1843. And this description points straight to the heart of the difficulty which we must face in our efforts to control the business cycle.

This past year millions of us have been idle when we wished to work, billions of dollars worth of plant and machinery have stood unused when the owners longed to start their furnaces, and what we wanted to produce we needed to consume. The Edict of Enchantment which forbade us to do what we wished was pronounced by the Money Economy. We are periodically mastered by this social machinery we have made, and stand idle and needy at its bidding. For with all its efficiency the Money Economy has a fundamental defect-it warps the aim of our economic activity. What we want as human beings is to make serviceable goods. What we are compelled to do as citizens of the money economy is to make money. And when for any reason it is not profitable to make goods we are forced to sacrifice our will as human beings to our will as money makers. That is the heart of the paradox.

If I am right about this fundamental matter, I can hardly be wrong in taking an optimistic view of the future. For since the money economy is a complex of human institutions, it is subject to amendment. What we have to do is to find out just how the rules of our own making thwart our wishes and to change them in detail or change them drastically as the case may require. Not that this task is easy. On the contrary, the work of analysis

is difficult intellectually and the work of devising remedies and putting them into effect is harder still. But one has slender confidence in the vitality of the race and in the power of scientific method if he thinks a task of this technical sort is beyond man's

power.

To do our large share in this work as economists we must develop our contribution to the theory of human behavior along three lines. First, we must make an increasingly thorough use of quantitative analysis, coöperating vigorously in the efforts at securing better statistical data on the one side, and on the other side utilizing such data as we have to the best advantage. Secondly, we must be clear in our own minds about the role which institutions play in guiding our behavior. Among these institutions none is more important than the money economy. No one cares deeply for what Professor Fetter calls "price economics" on its own account. All of us agree with him that our ultimate aim is social welfare. But we cannot promote social welfare effectively without finding where our dominating pecuniary institutions serve us well and where they serve us ill. So we have the best of reasons from the viewpoint of "welfare economics" itself for devoting much of our attention to the technical exigencies of the price system. Finally, I think we must adopt a courageously constructive attitude toward our problem. "Social science seems to me," said John Dewey in 1917, "to stand about where physical science stood three centuries ago in the early years of the seventeenth century. There is the same halting and obstructed tendency to move from the attitude of the outside. spectator, classifier, and justifier of things as they are outwardly given to that of the active participant and modifier, from that of wholesale organization to that of retail reorganization." Let us join whole-heartedly in that movement, cultivating an experimental habit of mind, and endeavoring to add our mites to the knowledge that may some day give mankind control over their own behavior.

5"The Need for Social Psychology," Psychological Review, July, 1917; XXIV,

275.