"Is the Depression in Austria after 1873 a "Myth

AVID F. Good suggests in his dissertation,' part of which was published in thisjournal,2 that the idea of a depression in Austria between I873 and I'896 is a myth. Good calculated the growth of assets held by Austrian intermediary institutions and translated them into G.N.P. growth rates by using the ratio of annual rate of change of financial assets to annual rate of change of G.N.P. (hereafter referred to as the ratio), calculated by R. Goldsmith for several countries.3 He concluded that real G.N.P. per capita in Austria grew at approximately the same annual rate between i 873 and i 896 as between i 896 and 19 I 3, thereby ruling out the likelihood of a depression in Austria after I 873. The recalculation of Good's data (with slight variation) yields contrary results. For the sake of brevity I confine my calculations to using the ratios of the six late industrializers (identified by Good), as these countries possibly come closer to approximating the relationship between the Austrian financial superstructure and the real infrastructure than the remainder of the countries. The following adjustments were made. (i) Instead of using three-year averages at the end points in calculating the growth rate of financial assets, the peak-to-peak growth rates were calculated. Averaging the value of assets for I 873/5 biased the growth rate upward in the first period, since I-874 and I 875 were already years of depression. (2) The ratio for Germany computed by Good4 was used instead of the one calculated by Goldsmith as it appears to be nearer to the ratios of the other late industrializers. (3) Goldsmith's figures were recalculated from the raw data provided in appendixes D and E of his study. The following insignificant changes were made in the ratios: i 88o's: Italy 4*22, Japan 3 00; I 900's: Canada I * I 3, Italy i.87. As Table i indicates, Good's data do not by any means refute the idea of a depression in Austria after I 873.5 Real per capita G.N.P. during the two business cycles after i873 appears to have grown at only about two-thirds of the rate achieved during the subsequent cycles.6

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