THE THEORY OF INTEREST

not shown by the r’s for the shorter periods. These highlysignificant correlations seem to establish definitely thatover long periods of time high or low interest rates followhigh or low prices by about one year.

(SEAT BBITAIH

- 1820-1804

- 1865-1897

- 1898-1924

UNITED STATES 1900-1927

Lag in Tears of Interest Rates in Respect to Prices

CHART 53

Correlation Coefficients Between P and i for Various Lags. YearlyData, Great Britain, 1820-1924; United States , 1900-1927.

Comparison of short term interest rates with quarterlyindex numbers gives results of no significance for theperiod 1890-1914. On the contrary, the r’s obtained from

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