This proportion

business done outside the state.1 could readily be determined by the tax commission, and could be applied as well to the bonds of foreign corporations, the assessment of which would, however, have to depend mainly on personal declaration. It must be admitted that political expediency might force the imposition of similar taxes on domestic investments; but such taxes would be more equitable as among the owners of intangible property, and hence less objectionable, than those now imposed by the law.

For such a system of taxation there is much to be said on both theoretical and practical grounds. To a large extent, it will do away with the double taxation of property and wealth. Even where double taxation is not abolished, it will at least be mitigated by the lower rates on intangible property, and by the nearer approach to universality which may be expected to result from low rates and competent administration. There will then be less warrant for the cry of "unjust" double taxation, and the ethics of tax-paying will tend to reach a higher plane. Finally, the revenue results of such a system are not to be despised. From bank deposits alone, a tax of three mills would yield in the neighborhood of $2,500,000, or about two-thirds the yield of all taxes levied upon intangible property in Ohio in 1912 or 1913. The proposal made for the taxation of the securities of foreign corporations would not effect any material permanent reduction in the revenue from security holdings in foreign corporations, for the amount of such securities heretofore taxed has been relatively

1 In the light of the principle of "economic allegiance," the present exemption of the shares of domestic corporations, regardless of the location and taxation of their property, is indefensible. Nor can the franchise tax of three-twentieths of one per cent on the capital stock of corporations be held fairly to offset this exemption.

The writer believes that the distinction between the terms property" and "wealth" should be strictly observed. Such phrases as "intangible wealth" have no meaning with reference to the taxation of moneys, credits and investments.

small. It does not seem extravagant to expect that under such a system as is here proposed, the yield from intangible property would be greater than can be permanently drawn from it under even the best administration of the general property tax.

OLIVER C. LOCKHART.

OHIO STATE UNIVERSITY.

STATISTICAL INDICES OF BUSINESS

CONDITIONS

SUMMARY

Importance of studying statistical indices of business conditions, 522. -I. Available Statistics: Imports of merchandise, 524. — Exports of merchandise, 525. — Immigration, 526. — Bank clearings, 527. — Railroad gross earnings, 528. — Idle cars, 529. — New building, 530. Commodity prices, 531. Business failures, 531. Stock market, 532. Money rates, 534. Bank loans, 534. — Pig iron, 535. - Copper, 536.- Print cloth and cloth margins, 537. — Silk, 539. — Tin, 539. – Hides and leather, 540.— Crops, 540. — Other items, 541. — II. Some Methods of Business Forecasting: Babson's Composite Plot, 543. Brookmire's system, 552. — III. Suggested Method of Obtaining Indices: explanation, 554. - Need of more comprehensive statistical records, 562.

It is the purpose of this article to discuss the use of statistics for indicating the trend of business conditions. The first task is to ascertain what available statistics are symptomatic of business changes; the second to examine critically some of the methods by which statistics are being used at the present time for business forecasting; and the third to suggest an improved method. The subject is large and the work is still in an experimental stage; hence all conclusions must be considered tentative.

This subject obviously is not merely academic, but of large practical interest. Bankers, financiers, and the heads of manufacturing and mercantile enterprises must constantly study present conditions and future prospects. Many manufacturers, for example, buy raw materials and start manufacturing operations months before the finished goods are placed upon the market.

Plans must be made and production regulated according to the conditions which such producers expect to encounter at a later time. If they err in judgment, they are placed at a disadvantage which may prove serious. The maladjustment which occurs during a period of crisis may be disastrous. If manufacturers and merchants can be forewarned, fewer will be caught unawares and the severity of the shocks will be alleviated.

It is now generally agreed by students of the subject that the ups and downs of business prosperity are due to deep-seated influences, and business men are more and more giving up the long persisting notion that changes in business conditions are caused primarily by tariff acts, political happenings, or court decisions. More attention is being given to the symptomatic statistics currently published in the financial journals, trade publications, and daily papers. Some executives have statistical reports carefully prepared for their own businesses in order to make comparisons with previous periods and with the external statistics for other industries and trade.

The published statistics, altho inadequate for a complete analysis, furnish ample material for experimentation. Each set of statistics, however, requires careful examination; some are worthless. Moreover, of those statistics which appear to be reliable barometers of business changes, only those which are available daily, weekly, or monthly can ordinarily be used. A business man wishes current information; for him statistics which are a year old are more or less antiquated. And in studying long time fluctuations and the large trade cycles, annual figures are unsatisfactory because of the impossibility of determining to what extent the figures represent the antecedents and to what extent they represent the effects of important events happening

within the calendar or fiscal year. The annual statistics for the years 1873, 1893, and 1907, for instance, are not properly comparable in a study of crises, since the panic of 1873 began in the middle of September, that of 1893 in May, and that of 1907 in October. In the annual figures for these years the antecedents and the effects of the panics are thrown together in unequal proportions. In most instances a monthly basis of comparison seems to give the best results. With these considerations in mind we can proceed to an examination of the statistics.

I. AVAILABLE STATISTICS

(1) Imports of Merchandise. The statistics for the value of merchandise imported into the United States correlate with business conditions. During periods of prosperity more raw materials are bought for our manufacturing plants and the imports of finished goods for immediate consumption are also larger. During periods of depression, on the other hand, our purchases in foreign markets fall off. Altho the import statistics are affected by general changes in price level, short time comparisons can safely be made. Their most serious defect is in their susceptibility to the influence of tariff changes; but this does not destroy their worth as an index to general conditions.

In order to show the course of imports during a portion of a typical business cycle, the monthly statistics for the years 1903-08 have been plotted on Chart I. Final conclusions cannot, of course, be drawn from statistics for so short a period, but for experimental purposes these years seem to be representative.

The

1 Import and export statistics are published in the Monthly Summary of Commerce and Finance and in various financial journals.