The large black areas on the adjoining chart are formed by combining and plotting current figures on New Building, Crops, Clearings, Immigration, Total Foreign Trade, Money, Failures, Commodity Prices, Railroad Earnings, Stock Prices and Politics in order to give a composite view of business in the United States. (When Interstate Commerce reports of earnings of all United States railroads became available, January, 1909, this record was substituted in place of the earnings of ten representative roads which had been used previous to that time. Revised scales for monetary figures were also introduced, in August, 1912.)
The line X-Y represents the country's net gain or growth. Based on the economic theory that "action and reaction are equal when the two factors of time and intensity are multiplied to form an area," the sums of the areas above and below said line X-Y must, over sufficiently long periods of time, be equal, provided enough subjects are included, properly weighed and combined. An area of prosperity is always followed by an area of depression; an area of depression in turn is always followed by an area of prosperity. The areas, however, need not have the same shapes.
It will be seen that each area is divided into halves by a narrow white line. This is to emphasize the fact that the first halves of areas below the X-Y line are really reactions from the extravagance, inefficiency and corruption which existed during the latter half of the preceding "prosperity" area. Contrariwise, the first halves of areas above the X-Y line are really reactions from the economy, industry and righteousness developed during the hard times just preceding. The high points of the stock market have come in the early part of the prosperity areas and the low points have come about the beginning of the depression areas. In 1914 the war held down prices of all securities. The highest prices of bonds have usually come about the end of the depression areas and high money rates, and lowest bond prices at about the end of the prosperity areas.
But what causes these fluctuations in business and prices? Statistics show that panics are caused by spiritual causes, rather than financial, and that prosperity is the result of righteousness rather than of material things. Hence, the importance to industry and commerce of the forces already mentioned. These spiritual forces are the true fundamentals of prosperity. This in turn leads us to consider from where they come and upon what we are to depend for their further development. The following pages will give the answer.