In 1932, J.M. Funk (1892-1941), an American aviation engineer, introduced his concept of a Cycle of Prosperity and Depression, proposing
a 56-year cycle in US economic activity. Although this concept garnered
some attention during his lifetime, it was largely overlooked by
mainstream economists and academia. Funk considered the cycle so
significant that he delivered numerous lectures and published a
pamphlet, The 56-Year Cycle in American Business Activity, to
promote his theory. While the cycle might have faded into obscurity, it
was revived through the writings of financial astrologer LCdr. David
Williams (1947, 1959, 1982), who extensively discussed Funk's work,
helping to bring the theory to a broader audience. Funk was one of the
few individuals to predict both the economic upheavals of the early
1930s and the subsequent recoveries in 1933 and 1935. David Williams recounts:
"During the mid-1930’s, a Middle Western cable manufacturer came into the author’s office in New York and presented him with a pamphlet on Philocracy, written in 1932 by J. M. Funk of Ottowa, Illinois in which the latter propounded a theory of Economic Cycles, which he stated are, “a series of events (produced by ‘cause and effect’) which recur in the same order.” [...] Funk stated: “A knowledge of the present and history is therefore a key to the future. Until Government Standards are based upon the recognition of exterior forces (which govern human conduct) history will repeat itself. THE CHART WILL PREDICT THE FUTURE because the human make-up includes, aspiration, greed, intemperance, fickleness, etc., which traits are governed by endurance; endurance is governed by exterior forces which fluctuate in rhythm and tempo as constantly as the Sun in its journey through the heavens.” The author redrew Funk's chart [...], which was used to illustrate a lecture delivered April 16, 1947 at the Henry George School of Social Science, New York. The results show conclusively that regardless of wars, rebellions, population changes, industrialization, technological, and monetary changes, American business has been dominated by a 56-year rhythm. In each 56-year period three major panic periods occur at 20-20-16 year intervals. While other panic periods intervene, no discernible pattern is evidenced."
Reference:
J.M. Funk (1932) - The 56-Year Cycle in American Business Activity. Privately published. Ottawa. IL.
LCdr. David Williams (1947) - Rhythmic Cycles in American Business.
LCdr. David Williams (1959) - Astro-Economics.
LCdr. David Williams (1982) - Financial Astrology.
» [J.M. Funk] claims that February 6, 1933, will be the date for a definite improvement
in business and general economic conditions in the United States. «
La Salle Post Tribune
Monday, January 9, 1933
Depression Ends February 6 Says Ottawa Man Here
'Philocracy' is the title of an address that will be made before the Illinois Valley Manufacturers' Club and Chamber of Commerce membership Tuesday noon by J.M. Funk of Ottawa, statistician, inventor, and manufacturer, who has reduced the cycles of prosperity and depression to a mathematical basis and claims that February 6, 1933, will be the date for a definite improvement in business and general economic conditions in the United States.
The stock market actually reached what is today considered the low point of the
Great Depression in the Dow Jones Industrial Average on Wednesday, February 8, 1933.
Manufacturers' Club Hears Unusual Economic Analysis Given by J.M. Funk
It is not a mystic or fortune-telling device but a practical aid to business, with a dramatic appeal that carries with it a message of courage and optimism. In adopting the title of 'Philocracy,' the inventor explains that the new thought being advanced by the "technocrats" and "economists" leaves the average citizen and businessman in a state of confusion, while 'Philocracy' is based on facts and strives for sound and reasonable conclusions. The cyclical regularity of prosperity and depression is demonstrated as occurring every fifty-six years, regardless of every obstacle and in spite of them. Reports from Ottawa men who have heard this address explain 'Philocracy' as one of the most interesting and fascinating propositions they have studied. It is said to be entirely different from all other forms of thought on business. Mr. Funk especially invites the interest of men and women who are students of government, business, philosophy, and higher mathematics to check his conclusions against the historical records of this nation over the past one hundred and fifty years. He encourages them to observe the sequence of parallels that apply to business, just as they do to bridge building, steam engines, airplanes, or any other type of engineering.
James Morris Funk, 1933.
The nation's depression will officially end on February 8, with a minor reaction, followed by a major reaction on March 19, J.M. Funk, Ottawa disciple of 'Philocracy,' told members of the Manufacturers' Club and the La Salle Chamber of Commerce at a joint luncheon meeting today. Basing his statement on a formula he had prepared using every possible figure in the economic structure of the nation, Funk declared that periods of depression follow in regular intervals of 56 years. With that information in hand, Funk predicted that 1949 would be a panic year, due to the fact that bonds, debentures, war costs, and other payments were coming due that year.
Proved by Charts, Claims Funk
“The chart,” Funk declared, “proves beyond question that humanity does and will not profit by experience; that everything in economics is governed by cause and effect, action and reaction. The chart further proves that panic and depression are the result of production setting a pace that consumption cannot follow. It will be noted that after 56 years each economic event is repeated. Bound up in this lapse of time are indicated the governing forces of human endurance, both mental and physical, which are then manifested by new living standards, customs, and manners. A study of the year-to-year accumulation of surplus production will demonstrate that these cycles repeat, proving that economic patterns are consistent over time. The economic cycle is a chain of unbroken cause and effect events, which, when transposed into common expressions, occur in the order: Depression produces thrift; thrift produces confidence; confidence produces investment; investment produces activity, and activity is prosperity; continued prosperity produces easy credit, easy credit produces over-production; over-production produces fictitious sales and such fictitious sales produce fictitious collateral; fictitious collateral produces an economic structure of fictitious paper value. When the structure is so recognized, it is abandoned. Panic prevails and depression is produced. The depth of depression depends upon the magnitude to which the fictitious condition expanded. Until a financing basis is inaugurated to govern each endeavor, the scientific diversification is workable. The demand for referendums is heeded and facilitated. So long as the organized minorities control legislation, the political payrolls are in excess of services required or efficiency rendered, labor, organized or otherwise, is unscientifically compensated. So long as there be dabbles in countries of different general standards, so long as bonds and debentures are destined to mature regardless of coincidence with other maturities, so long as the government competes with business, then, just that long will memory repeat itself."
Covered 118 Years
Funk took his figures over a period of 115 years. First, he noted when the first panic was noted. The panics of 1873 and 1920 followed at 56-year intervals. He said that a depression was due in 1913 but was forestalled by the war and the consequent expenditure of moneys by foreign countries for war munitions. "Depressions," Funk said, "are periods of industrial stagnation when surplus productions are used. We may expect the peak of our market prices in October, 1936, the same as the peak was reached in 1897 before the 1903 crash. In 1817, when canal construction was being financed, leaders described the expenditure of money as wild orgies of speculation; again in 1873, when much money was spent in financing the construction of transcontinental railroads, the same expression was used, and in 1929, William Randolph Hearst expressed himself similarly." Funk was accompanied to the meeting by L. C. Carroll, secretary of the Ottawa Chamber of Commerce, who introduced the speaker. His statements produced an unusual effect on the gathering, who came to attend in a doubting frame of mind, but left with entirely different feelings.
