William Stanley Jevons (1835-1882)
English economist and logician
Jevons developed the theory explaining the period of the trade cycle with variations in solar activity. In his lifetime, the commercial crises had occurred at intervals of 10-11 years (1825, 1836-39, 1847, 1857, and 1866), which broadly matched the average solar cycle length. In his papers, Jevons carried back this history of “commercial crises” at 10-11 year intervals almost to the beginning of the XVIII century (Jevons, 1875, 1878, 1879). This "beautiful coincidence," as he called it, produced in him a strong conviction of causal nexus, going from cyclical solar activity through crop-harvest fluctuations to commercial trade cycles. He linked the crises first to harvests in Europe and subsequently to Indian harvests, which, he argued, transmitted prosperity to Europe through the greater margin of purchasing power available to the Indian peasants to buy imported goods (Keynes, 1936).
However, there were several significant flaws in Jevons’ theory and calculations. First, he assumed that the solar cycles were highly regular, while in fact their length varied considerably. When he later obtained the actual sunspot number series, he discovered that the “commercial crises” identified by him landed in various phases of solar cycles, thus breaking the perception of the "beautiful coincidence" (Jevons, 1882). Second, he devoted insufficient attention to the exact dating of deficient harvests in relation to the dating of commercial crises. As a result, some of the bad harvests identified by Jevons appeared to have happened after the “commercial crises” that they were supposed to explain. These apparent flaws exposed Jevons’ theory to strong criticism. Also, they diverted attention from his core proposition of the “commercial crises” relationship to the solar cycle to the question of solar influence on crops and agriculture (Garcia-Mata and Shaffner, 1934).
Citing John Maynard Keynes:
“… It is often forgotten how comparatively late in his career Jevons developed the theory of solar variation as the explanation of the period of the Trade Cycle, which is immortally associated with his name. It was published in two papers read before the British Association in 1875 and 1878. The first of these papers is brief and goes little further than to suggest a matter for enquiry. In 1801 Sir William Herschel had "endeavoured to discover a connection between the price of corn and the power of the sun's rays as marked by the decennial variation of the sun's spots." In 1861 R. C. Carrington, "in his standard work upon the sun, gave a diagram comparing the price of corn with the sunspot curve during portions of the last and present centuries." The results of both these enquiries were negative. But Arthur Schuster, Jevons's colleague at Owens College, revived the matter by pointing out "that the years of good vintage in Western Europe have occurred at intervals somewhat approximating to eleven years, the average length of the principal sunspot cycle." Thorold Rogers' History of Agriculture and Prices in England, which began to appear in 1866, provided Jevons with material for analysing wheat prices over a long period. The commercial crises in his own lifetime had occurred at intervals of ten or eleven years: 1825, 1836-39, 1847, 1857, 1866. Might there not be a connection between these things? "I am aware," Jevons concluded, "that speculations of this kind may seem somewhat far-fetched and finely-wrought; but financial collapses have recurred with such approach to regularity in the last fifty years, that either this or some other explanation is needed."? Nevertheless, he soon repented of publishing what was no better than a bright idea. "Subsequent enquiry convinced me that my figures would not support the conclusion I derived from them, and I withdrew the paper from publication."
“The virus, however, had entered into his system. No one who has once deeply engaged himself in coincidence-fitting of this character will easily disembarrass himself of the enquiry. In 1878 Jevons returned to it in his second paper before the British Association, and in an article contributed to Nature in which the argument was recapitulated. Three new discoveries were his excuse. In the first place, he had succeeded in carrying back the history of commercial crises at ten- or eleven-year intervals almost to the beginning of the eighteenth century. In the second place, he was now advised by his astronomical friends that the solar period was not 11 years, as he had previously supposed, but 10.45 years, which fitted much better his series of commercial crises. In the third place, he now abandoned European harvests, the price statistics for which yielded negative results, as the intermediary through which sun- spots affected business, in favour of Indian harvests, which, he argued, transmitted prosperity to Europe through the greater margin of purchasing power available to the Indian peasant to buy imported goods.
“Jevons's argument is by no means so clear as is usual with him. He produced considerable evidence for the view that commercial crises had occurred at intervals of about 10½ years. The astronomers told him that the solar period was about 10½ years. This" beautiful coincidence," as he called it, produced in him an unduly strong conviction of causal nexus. "I beg leave to affirm," he wrote in his article for Nature," that I never was more in earnest, and that after some further careful enquiry, I am perfectly convinced that these decennial crises do depend upon meteorological variations of like period." But he devoted far too little attention to the exact dating of deficient harvests in relation to the dating of commercial crises, which was a necessary first step to tracing the intermediate links. In his paper of 1875, when he believed his evidence to depend on European harvests, he discovered the link in the spirit of optimism produced by good crops:
“Mr. John Mills in his very excellent papers upon Credit Cycles in the Transactions of the Manchester Statistical Society (1867-68) has shown that these periodic collapses are really mental in their nature, depending upon variations of despondency, hopefulness, excitement, disappointment and panic. … Assuming that variations of commercial credit and' enterprise are essentially mental in their nature, must there not be external events to excite hopefulness at one time or disappointment and despondency at another? It may be that the commercial classes of the English nation, as at present constituted, form a body suited by mental and other conditions to go through a complete oscillation in a period nearly corresponding to that of the sunspots. In such conditions a comparatively slight variation of the prices of food, repeated in a similar manner, at corresponding points of the oscillation, would suffice to produce violent effects.
“But in 1878 he described this theory as a "rather fanciful hypo thesis," and made everything to depend on the decennial fluctuations in foreign trade consequent on cyclical crop changes in India and elsewhere. Unfortunately this involved a difficulty in dating which he passes over with surprising levity:
“One difficulty which presents itself is that the commercial crises in England occur simultaneously with the high prices in Delhi, or even in anticipation of the latter; now the effect cannot precede its cause, and in commercial matters we should expect an interval of a year or two to elapse before bad seasons in India made their effects felt here. The fact, however, is that the famines in Bengal appear to follow similar events in Madras.
“Thus the details of the inductive argument are decidedly flimsy. If, however, it could be established that, generally speaking and on the average of different crops and countries, years when the world draws for current consumption on the stocks carried forward from one harvest to another alternate, in accordance with the solar period, with years when bountiful harvests serve to increase the stocks carried forward, Jevons could have linked his thesis, on the broadest possible grounds, with his forgotten theory of 1863 that the trade cycle depended on fluctuations of investment. For alternating investment and disinvestment in the aggregate stocks of the produce of the soil held in excess of current consumption might be capable of consequences closely analogous to those he had previously ascribed to fluctuations in the rate of new investment in durable goods.
“…Since his time, unfortunately for his conclusions, the astronomers have reverted to 11.125 as the average of the solar period, whilst the trade cycles have recurred at intervals of 7 or 8, rather than of 10 or 11i years. In 1909 the problem was reconsidered in an ingenious manner by his son Prof. H. S. Jevons, who argued that the harvest statistics could be interpreted in terms of a 32-year cycle, which was combined in twos or threes to produce either 7- or 10½-year periods. This was followed up after the War by Sir William Beveridge's much more elaborate studies of harvest statistics, which led him to the conclusion of a complex 15.2-years period which he further analysed into sub-periods. It is now generally agreed that, even if a harvest period can be found associated with the solar period or with more complex meteorological phenomena, this cannot afford a complete explanation of the trade cycle. The theory was prejudiced by being stated in too precise and categorical a form. Nevertheless, Jevons's notion, that meteorological phenomena play a part in harvest fluctuations and that harvest fluctuations play a part (though more important formerly than to-day) in the trade cycle, is not to be lightly dismissed.”
Keynes, John Maynard, 1936: “William Stanley Jevons 1835-1882: A Centenary Allocution on his Life and Work as Economist and Statistician,” — Journal of the Royal Statistical Society, Vol. 99, No. 3 (1936), pp. 528-531.
Garcia-Mata, Carlos and Felix I. Shaffner, 1934: “Solar and Economic Relationships: A Preliminary Report,” — The Quarterly Journal of Economics, Vol. 49, No. 1, Nov., 1934.
Jevons, William Stanley, 1875: “Influence of the Sun-Spot Period on the Price of Corn,” — A paper read at the meeting of the British Association, Bristol, 1875.
Jevons, William Stanley, 1878: “Commercial crises and sun-spots,” — “Nature,” Volume xix, November 14, 1878, pp. 33-37.
Jevons, William Stanley, 1879: “Sun-Spots and Commercial Crises,” — “Nature,” Volume xix, April 24, 1879, pp. 588-590.
Jevons, William Stanley, 1882: “The Solar-Commercial Cycle,” — “Nature,” Volume xxvi, July 6, 1882, pp. 226-228.