Forecasting & Business Charts [Slideshow]

The slideshow below, assembled by Walter Friedman, author of Fortune Tellers: The Story of America’s First Economic Forecasters, brings together several forecasting and business charts from the early twentieth century.

More information on many of these charts and the forecasters themselves is in Friedman’s book which you can sample here. If you would like to download a PDF of these images and captions, please right click and save this file.

Fortune Tellers 2
Fortune Tellers 1
1 The Babson Compositplot, 1921
2 Irving Fisher's Diagram of the Equation of Exchange, 1912
3 Irving Fisher's Diagram of the Equation of Exchange, 1912
4 John Moody's View of the Economy, 1904
5 James H Brookmire's Barometer, 1907
6 Brookmire's Barometer Chart
7 Harvard Economic Service Chart
Karl Karsten's Map of Business Conditions
9 Brookmire's Cycle Chart of Business and Banking
10 Malcolm Rorty's Depiction of the Business Cycle
11 Babson's Map of the United States for Merchants and Bankers, 1911
12 Brookmire's survey of business conditions in the United States

A new type of forecasting

The years from the turn of the century to World War I were a fertile time for many business analysts, including the scientific management exponent, F. W. Taylor. While some experts sought to improve the inner workings of firms, other tried to make sense of the very atmosphere in which business operated.

Who were the Fortune Tellers?

After the Panic of 1907, economic forecasters began producing newsletters.

Roger W. Babson published Babson’s Reports, which featured the Compositplot of ups and downs. In 1909, John Moody, who is today remembered for his credit rating company, started his own weekly market report. In 1910 Irving Fisher, a pioneer of mathematical economics, published the first of several charts, intended for economic prediction, in the Journal of Economics. Around this same time, James Brookmire, the son of a grocer in St. Louis, founded the Brookmire Economic Chart company and began publishing forecasts on a regular basis.

The most influential forecasting chart of the period belonged to the Harvard Economic Service, which, in 1922, founded a weekly newsletter that featured its A-B-C curve. Along with these charts were other efforts to map economic activity, including Malcolm Rorty’s sketch of the business cycle and several attempts to capture the geography of business within the U.S.

The Babson Compositplot, from 1921

The large shaded areas marked A, B, C, D, E, F, and G, represent depressions below and expansions above the “normal” line. Babson believed that areas of expansion (B, for instance), would be equal to areas of recession (C, for instance) that followed. The chart also contained a wealth of other information, including stock prices, bond prices, and commodity prices.

Source: Roger W. Babson, Business Barometers Used in the Accumulation of Money (Wellesley Hills, Mass: Babson Institute, 1921), insert.

Irving Fisher’s Diagram of the Equation of Exchange for use in forecasting, 1912

While Fisher did not produce a forecasting chart, he did create a diagram to illustrate the Equation of Exchange (MV + M’V’ = PT), which he depicted showing a mechanical balance. The left side of the balance symbolized the left side of the equation, with a small weight standing for M, the money in circulation, and a larger bank book standing for M’, deposits in checking accounts. The distance to the left of the fulcrum of the weight represented the velocity of circulation (V) and the distance of the bankbook, the velocity of circulation of bank deposits (V’).

(continued in the next slide)

Irving Fisher’s Diagram of the Equation of Exchange for use in forecasting, 1912

The volume of trade (T) was represented by a tray on the right, with the index of prices (P) at which these goods were sold, represented by the distance of the tray to the right. The diagram showed the changes in the values for all the components of the Equation of Exchange from 1896 to 1911. To predict the future, Fisher thought, one needed to look especially at recent changes in the bank deposits, which, if rising rapidly, indicated a coming crisis.

Source: Irving Fisher, “‘The Equation of Exchange,’ 1896-1910,” The American Economic Review 1:2 (Jun 1911): p. 299.

John Moody’s view of the economy

In this 1904 chart, Moody encapsulates a firm-centered view of the economy, in this case showing the dominance of the Morgan banking interests and Rockefeller’s Standard Oil. Moody wrote at the top of the chart, “The large circle in the center of the chart indicates the dominant position of the Trust-formed industries of the Nation; directly linked to and representing this dominant force we find two groups of capitalists, the Standard Oil, or Rockefeller, and the Morgan groups.” Moody’s diagram resembled something of a family tree of capitalism.

Source John Moody, The Truth about The Trusts: A Description and Analysis of the American Trust Movement (New York: Moody Publishing Company, 1904), between pages viii and ix.

James H. Brookmire’s Barometer, close-up

James H. Brookmire’s Barometer depicted three indexes of economic sectors—business activity, the stock market (an index of thirty-two stocks), and banking resources. The small print reads, “Condition of business, banking, and the stock market in February, 1907, foretelling the panic of October, 9 months later.”

Source: The Brookmire Economic Chart Company, A Graphic Record of Fundamental, Financial and Business Conditions Since 1885 (St. Louis: Brookmire, 1913).

Brookmire’s Barometer Chart

Here, Brookmire combined his barometer with a chart of values over time for general business (a black line), average stocks (in shaded line), and banking (in sold red).

Source: The Brookmire Economic Chart Company, A Graphic Record of Fundamental, Financial and Business Conditions Since 1885 (St. Louis: Brookmire, 1913).

Harvard Economic Service Chart

Harvard Economic Service Chart, like Brookmire’s Barometer, was a leading indicator model. Persons believed that Group A (representing stocks) forecast Group B (representing business activity); in turn Group B forecasted Group C (representing banking). In this way, the three indexes together created a view of overall business conditions and, in Person’s words, “future tendencies.” The graph above showed historical values from 1903 to 1908.

Source: Warren M. Persons, “The Index: A Statement of Results,” Review of Economic Statistics 1:2 (April 1919): 112.

Karl Karsten’s “Map of Business Conditions”

Economist Karl Karsten showed American states in relative proportion to their population and shaded according to condition of “business activity,” with the darkest states (New Hampshire and Vermont) representing poor levels. The chart revealed the relative geographic distribution of business activity and population—still very weighted toward New England, Pennsylvania (with the rise of the steel industry in Pittsburgh), and Illinois (with the growth of Chicago and its meatpacking plants and grain industry).

Source: Karl Karsten Papers, Library of Congress, Washington, D.C.

Brookmire’s Cycle Chart of Business and Banking

This chart shows how the ups and downs of business activity tended to deplete and then free up banking resources. As business activity ran from “normal” to “prostrate,” banking resources climbed from “normal” to “abundant” and even “plethoric.” When business activity subsequently climbed to “feverish” and “hazardous,” at the peak of the cycle, banking resources fell to “overextended” and even “critical.”

Source: The Brookmire Economic Chart Company, A Graphic Record of Fundamental, Financial and Business Conditions Since 1885 (St. Louis: Brookmire, 1913).

Malcolm Rorty’s depiction of the business cycle

In this graph, capitalist economies had four discernible phases: revival, prosperity, liquidation, and depression. Above each of these four, Rorty included a list of economic conditions common to each to help readers determine the end of one phase and the start of the next. Note that the chart showed an especially sharp drop of business activity during times of liquidation or crisis.

Source Rorty, Some Problems in Current Economics (1922).

Babson’s Map of the United States for Merchants and Bankers, 1911

The map showed regions where failures were increasing (shown in squares) and business declining (shown in circles).

Brookmire’s survey of business conditions in the United States

Regions were color-coded to indicate whether crop production was good, fair, or poor. Cities were marked with stars if they were numerous business failures, with diamonds if they held dull opportunities for salesmen, and ampersands if the opportunities for salesmen were improving.

Source: The Brookmire Economic Chart Company, A Graphic Record of Fundamental, Financial and Business Conditions Since 1885 (St. Louis, Mo., 1912).

Fortune Tellers 2 thumbnail
Fortune Tellers 1 thumbnail
1 The Babson Compositplot, 1921 thumbnail
2 Irving Fisher's Diagram of the Equation of Exchange, 1912 thumbnail
3 Irving Fisher's Diagram of the Equation of Exchange, 1912 thumbnail
4 John Moody's View of the Economy, 1904 thumbnail
5 James H Brookmire's Barometer, 1907 thumbnail
6 Brookmire's Barometer Chart thumbnail
7 Harvard Economic Service Chart thumbnail
Karl Karsten's Map of Business Conditions thumbnail
9 Brookmire's Cycle Chart of Business and Banking thumbnail
10 Malcolm Rorty's Depiction of the Business Cycle thumbnail
11 Babson's Map of the United States for Merchants and Bankers, 1911 thumbnail
12 Brookmire's survey of business conditions in the United States thumbnail

 

 

Diane Coyle becomes Manchester Professor

Coyle_GDP_author photo
Princeton author Diane Coyle, one of the UK’s leading economists, is to become a Professor at The University of Manchester. She will teach undergraduates at the university, give a public lecture each year and work with academic colleagues and policy makers. Diane, who is Vice Chair of the BBC Trust and a former Economics Editor of The Independent newspaper, will take on the part-time role in September 2014.

 

A Harvard PhD graduate, she runs the consultancy Enlightenment Economics.

Awarded an OBE in 2009, her books include ‘The Economics of Enoughand ‘The Soulful Science, as well as the forthcoming ‘GDP: A Brief but Affectionate History‘.

She said: “It’s a privilege for me to have this opportunity to teach undergraduates at Manchester, and I hope to offer them a distinctive perspective on economics from somebody who has been involved in the world of public policy as well as research and writing. Economics is particularly exciting and important when it engages with real world events, and I’m looking forward to debates with students as well as my new colleagues.”

Head of the University’s School of Social Sciences Professor Chris Orme said: “We are delighted that Diane has been able to accept this substantive academic appointment in Economics. Apart from the significant and important contribution to research and the wider current economic policy debates, she will also deliver her own research-informed economics teaching to undergraduates and assist us in curriculum innovation.”

 

The Buzz on Angus Deaton Events

The Great EscapeAngus Deaton, author of The Great Escape: Health, Wealth, and the Origins of Inequality recently did a podcast with Russ Roberts to talk about our standard of living and The Great Escape. Deaton surveys the improvements in life expectancy and income both in the developed and undeveloped world. Inequality of both health and wealth are discussed as well. The conversation closes with a discussion of foreign aid and what rich nations can do for the poor.

The interview was then discussed on another popular economics blog, Café Hayek, which includes an excerpt of the interview.

He will also be at an event at the World Bank on December 2nd at 12:30. Unfortunately, there isn’t an event page for this anywhere yet, but we’ll sure to post more about it when we can!

Martin Ruhs to Speak on Panel at Kellogg University of Oxford

The Global Governance of International Migration: What Next?

The Global Governance of International Migration: What Next?

The regulation of international migration and migrant rights are among the most contested public policy issues around the world. In 2013-14 a series of high-level policy meetings (including the High-Level Dialogue on Migration and Development in New York, and the Global Forum on Migration and Development in Stockholm) will debate the global governance of migration, migrant rights and development. Do we need more global governance of international migration? If so, why and what should it aim to achieve? How, if at all, should international migration be integrated in the post-2015 development agenda? Come and join the debate!

Chair: Robin Cohen (Kellogg College and International Migration Institute, Oxford)

Panellists:

Timetable:
17.00-18.30 Panel Discussion in the lecture hall at the University of Oxford Museum of Natural History
18.30-19.30 Drinks Reception at Kellogg College
19.30-21.30 Dinner at Kellogg College

Both the panel discussion and drinks reception are FREE of charge. The dinner at Kellogg College is £15.00 per person.

To book please email: bookings@kellogg.ox.ac.uk
Please specify whether your booking pertains to the discussion, drinks and/or dinner. Include names of all guests and any dietary requirements.

Event details:

Fri, 29/11/2013 – 5:00pm – 9:30pm

Anat Admati & Martin Hellwig Are Shortlisted for 2013 German Business and Economics Book Award

Anat Admati & Martin HellwigThe Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It
Shortlisted for the 2013 Deutsche Wirtschaftsbuchpreis (German Business and Economics Book Award), sponsored by Handelsblatt, the Frankfurt Book Fair, and Goldman Sachs.
The Bankers' New ClothesWhat is wrong with today’s banking system? The past few years have shown that risks in banking can impose significant costs on the economy. Many claim, however, that a safer banking system would require sacrificing lending and economic growth. The Bankers’ New Clothes examines this claim and the narratives used by bankers, politicians, and regulators to rationalize the lack of reform, exposing them as invalid.

Admati and Hellwig seek to engage the broader public in the debate by cutting through the jargon of banking, clearing the fog of confusion, and presenting the issues in simple and accessible terms. The Bankers’ New Clothes calls for ambitious reform and outlines specific and highly beneficial steps that can be taken immediately.

Anat Admati is the George G. C. Parker Professor of Finance and Economics at Stanford’s Graduate School of Business. She serves on the FDIC Systemic Resolution Advisory Committee and has contributed to the Financial Times, Bloomberg News, and the New York Times. Martin Hellwig is director at the Max Planck Institute for Research on Collective Goods. He was the first chair of the Advisory Scientific Committee of the European Systemic Risk Board and the cowinner of the 2012 Max Planck Research Award for his work on financial regulation.

Princeton University Press Nobelists

600px-NobelPrizeJust in case you haven’t heard, Robert J. Shiller, a professor at Yale University, has won the 2013 Nobel Prize in Economics along with Eugene Fama and Lars Peter Hansen. Both Shiller and Hansen have published books with Princeton University Press before, so we are specially excited about this news!

To read a little more about these authors and this incredible accomplishment, click here.

In honor of these amazing gentlemen, we’ve put together a list of all 48 of the Nobel Prize winners that the Press has published. Some of the highlights include Woodrow Wilson, former President of Princeton University and the 28th President of the United States, and Albert Einstein, who published more than 300 scientific papers throughout his astounding academic career.

S. Y. Agnon
George Akerlof
Philip W. Anderson
Kenneth Arrow
Robert J. Aumann
Baruch S.Blumberg
Robert Coetzee
Peter A. Diamond
Manfred Eigen
Albert Einstein
Robert Engle
Richard Feynman
Val L. Fitch
Milton Friedman
Clive W. J. Granger
Günter Grass
David J. Gross
François Jacob
Lars Peter Hansen
J. J. Heckman
William Arthur Lewis
Mario Llosa
Maurice Maeterlinck
Daniel L. McFadden
Hervé Moulin
John Nash
Douglass C. North
Elinor Ostrom
Luigi Pirandello
Christopher A. Pissarides
Edmund S. Phelps
Alvin E. Roth
Thomas J. Sargent
George Seferis
Amartya Sen
Lloyd S. Shapley
William F. Sharpe
Robert Shiller
Vernon Smith
Robert Solow
Michael Spence
Joseph Stiglitz
Wislawa Szymborksa
Hermann Wey
Eugene P. Wigner
Frank Wilczek
Woodrow Wilson

In the past three years alone, five authors published with the Press have won the Nobel Prize, all of which were for the Economic Sciences:

1) Robert J. Shiller is the best-selling author of Irrational Exuberance and The New Financial Order (both Princeton University Press titles), among other books. He is the Arthur M. Okun Professor of Economics at Yale University and a 2013 Nobel Prize winner.

2) Lars Peter Hansen is the David Rockefeller Distinguished Service Professor at the University of Chicago, where he is also the research director of the Becker Friedman Institute. He is a 2013 Nobel Prize winner. His most recent book, Recursive Models of Dynamic Linear Economies, was co-authored with Thomas J. Sargent, another Nobel laureate on this list.

3) Alvin E. Roth is the George Gund Professor of Economics and Business Administration in the Department of Economics at Harvard University, and in the Harvard Business School and the the Craig and Susan McCaw Professor of Economics at Stanford University. He won the Nobel Prize in 2012 and is the author of The Handbook of Experimental Economics.

4) Lloyd Stowell Shapley is a Professor Emeritus at UCLA, affiliated with departments of Mathematics and Economics. He won the Nobel Prize in 2012 “for the theory of stable allocations and the practice of market design.”

5) Thomas J. Sargent is professor of economics at New York University and a senior fellow at the Hoover Institution at Stanford University. His books include Rational Expectations and Inflation and The Conquest of American Inflation. Hansen and Sargent are the coauthors of Robustness. He was awarded the Nobel Prize in economics in 2011.

Financial Times Interview Angus Deaton

Angus Deaton, author of The Great Escape: Health, Wealth, and the Origins of Inequality, recently did an interview with John McDermott of Financial Times. Deaton spoke about his book and the past and present of global inequality.

Alan Greenspan Calls The Battle of Bretton Woods “Excellent”

Alan Greenspan, former Chairman of the Federal Reserve, recently recommended The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order in an interview for the Associated Press, calling it “excellent”. The author of the book, Benn Steil, was delighted to see this tweet from Liberty News a few days ago, spreading the news of this exciting endorsement. You can read the full article from the Associated Press here.

Liberty News

Noam Wasserman Named Finalist for 2013 George R. Terry Book Award

Noam Wasserman – The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup
Finalist for the 2013 George R. Terry Book Award, Academy of Management

The George R. Terry Book Award is granted annually to the book judged to have made the most outstanding contribution to the advancement of management knowledge. Books recognized for this award have been published during the previous two years and have made a significant impact on management theory, conceptualization, research or practice.

For more information and announcements about finalists and winners, click here.

The Founder's DilemmasOften downplayed in the excitement of starting up a new business venture is one of the most important decisions entrepreneurs will face: should they go it alone, or bring in cofounders, hires, and investors to help build the business? More than just financial rewards are at stake. Friendships and relationships can suffer. Bad decisions at the inception of a promising venture lay the foundations for its eventual ruin. The Founder’s Dilemmas is the first book to examine the early decisions by entrepreneurs that can make or break a startup and its team.

Drawing on a decade of research, Noam Wasserman reveals the common pitfalls founders face and how to avoid them. He looks at whether it is a good idea to cofound with friends or relatives, how and when to split the equity within the founding team, and how to recognize when a successful founder-CEO should exit or be fired. Wasserman explains how to anticipate, avoid, or recover from disastrous mistakes that can splinter a founding team, strip founders of control, and leave founders without a financial payoff for their hard work and innovative ideas. He highlights the need at each step to strike a careful balance between controlling the startup and attracting the best resources to grow it, and demonstrates why the easy short-term choice is often the most perilous in the long term.

The Founder’s Dilemmas draws on the inside stories of founders like Evan Williams of Twitter and Tim Westergren of Pandora, while mining quantitative data on almost ten thousand founders.

People problems are the leading cause of failure in startups; The Founder’s Dilemmas offers solutions no entrepreneur can afford to ignore.

Noam Wasserman is an associate professor at Harvard Business School.

The Festival of Ideas Brochure Is Available!

BFOI_web_logo_URL_900The 2013 Bristol Festival of Ideas aims to stimulate people’s minds and passions with an inspiring programme of discussion and debate throughout the year.

The authumn 2013 brochure can be found in PDF form here. A Princeton University Press author, Martin Ruhs, will be at one of the events to speak about his book, The Price of Rights: Regulating International Labor Migration at The New World Economy discussion on November 22nd (see page 7 of the brochure).

The following is a description of the discussion from the brochure:

The idea that the world’s centre of economic gravity is moving to the BRIC nations – Brazil, China, India and Russia – and other economies formerly known as ‘developing’ has become familiar. But what are the implications for the West of this historic shift in economic power, towards the countries with the majority of the world’s population and resources? Equally, what are the challenges and opportunities ahead for the fast-growing economies of Asia and Africa?

 Be sure to check out all of the great speakers and events, and to keep checking back at the Festival of Ideas website for updates and more information.

NYU Book Launch for Author Angus Deaton

 Deaton_Great_author photoThe NYU Development Research Institute presents a book launch: The Great Escape: Health, Wealth, and the Origins of Inequality

Featuring author Angus Deaton:

  • Dwight D. Eisenhower Professor of International Affairs and Professor of Economics and International Affairs at the Woodrow Wilson School and the Economics Department at Princeton

With an introduction from William Easterly

  • Professor of Economics at New York University and Co-director of the NYU Development Research Institute
Thursday, October 24, 2013

REGISTER HERE for free!
5pm-6pm: Wine and cheese reception at 44 Washington Mews
6pm-7pm: Talk and Q&A with Angus Deaton across the street at 14A Washington Mews
7pm-7:30pm: Book Signing at 14A Washington Mews


The Great EscapeThe world is a better place than it used to be. People are wealthier and healthier, and live longer lives. Yet the escapes from destitution by so many have left gaping inequalities between people and between nations. In The Great Escape, Angus Deaton–one of the foremost experts on economic development and on poverty–tells the remarkable story of how, starting 250 years ago, some parts of the world began to experience sustained progress, opening up gaps and setting the stage for today’s hugely unequal world.

“This is a must-read for anybody interested in the wealth and health of nations.”–Daron Acemoglu, coauthor of Why Nations Fail

Deaton describes vast innovations and wrenching setbacks: the successes of antibiotics, pest control, vaccinations, and clean water on the one hand, and disastrous famines and the HIV/AIDS epidemic on the other. He also considers how economic growth in India and China has improved the lives of more than a billion people. Deaton argues that international aid has been ineffective and even harmful. He suggests alternative efforts–including reforming incentives to drug companies and lifting trade restrictions–that will allow the developing world to bring about its own Great Escape.

To go to the event page, click here.

Jeremy Adelman’s “Worldly Philosopher” One of Financial Times Econ Books of 2013

Jeremy Adelman – Worldly Philosopher: The Odyssey of Albert O. Hirschman
One of Financial Times (Alphachat)’s Econ Books of the Year for 2013

Diane Coyle and Tyler Cowen of Alphachat, a podcast of Financial Times Alphaville, listed their top picks for economic books published in 2013. They both placed Worldly Philosopher:The Odyssey of Albert O. Hirschman at the top of their lists of five books.

Worldly PhilosopherWorldly Philosopher chronicles the times and writings of Albert O. Hirschman, one of the twentieth century’s most original and provocative thinkers. In this gripping biography, Jeremy Adelman tells the story of a man shaped by modern horrors and hopes, a worldly intellectual who fought for and wrote in defense of the values of tolerance and change.

Born in Berlin in 1915, Hirschman grew up amid the promise and turmoil of the Weimar era, but fled Germany when the Nazis seized power in 1933. Amid hardship and personal tragedy, he volunteered to fight against the fascists in Spain and helped many of Europe’s leading artists and intellectuals escape to America after France fell to Hitler. His intellectual career led him to Paris, London, and Trieste, and to academic appointments at Columbia, Harvard, and the Institute for Advanced Study in Princeton. He was an influential adviser to governments in the United States, Latin America, and Europe, as well as major foundations and the World Bank. Along the way, he wrote some of the most innovative and important books in economics, the social sciences, and the history of ideas.

Throughout, he remained committed to his belief that reform is possible, even in the darkest of times.

This is the first major account of Hirschman’s remarkable life, and a tale of the twentieth century as seen through the story of an astute and passionate observer. Adelman’s riveting narrative traces how Hirschman’s personal experiences shaped his unique intellectual perspective, and how his enduring legacy is one of hope, open-mindedness, and practical idealism.

Jeremy Adelman is the Walter Samuel Carpenter III Professor of Spanish Civilization and Culture and director of the Council for International Teaching and Research at Princeton University. His books include Worlds Together, Worlds Apart: A History of the World and Sovereignty and Revolution in the Iberian Atlantic (Princeton)