From The Stock Market Barometer by William P. Hamilton, published in 1922

Dow and Stock Market Panic Dates

Continued from...Charles H. Dow and his Theory

Where Dow Went Wrong

Remember that Dow wrote this twenty years ago, and that he had not the records for analysis of the stock market movement which are now available. The extent of the primary movement, as given in this quotation, is proved to be far too long by subsequent experience; and a careful examination has shown me that the major swing before Dow wrote was never: "from four to six years," rarely three years and oftener less than two.

But Dow always had a reason for what he said, and his intellectual honesty assures those who knew him that it was at least an arguable reason. It was based upon his profound belief in the recurrence of financial crises, at periodic intervals (as shown by recorded financial history), of a little more than ten years. Dow assumed for that period one primary bull market and one primary bear market, and therefore split the ten-year period in half. It was rather like the little boy who, being asked to name ten arctic animals, submitted "five seals and five polar bears!"

Panic Dates of Jevons

In the opening chapter we spoke of historic panics, of Professor Stanley Jevons, and of his theory connecting such crises with the recurrence of spots on the sun and their assumed influence upon the weather and crops. I said that the reasoning was about as good as associating presidential elections with leap years. But here are the dates of commercial crises in England, as recorded by Jevons, and it is fair to say that they are sufficiently impressive. These years are 1701, 1711, 1712, 1731-32, 1742, 1752, 1763, 1772-3, 1783, 1793, 1804-5, 1815, 1825, 1836, 1847, 1857, 1866, and 1873.

As Dow says in an editorial quoting these dates, published in The Wall Street Journal on July 9, 1902:

"This makes a very good showing for the ten-year theory and is supported, to a considerable extent, by what has occurred in this country during the past century."

Dow's account of the successive crises in this country (he had personal experience of three of them-1873, 1884 and 1893) was so good and interesting that it is well worth quoting here. So far as Jevons's dates are concerned, it is curious to note that he omitted one serious crisis near the beginning of his list. That occurred in 1715, and was precipitated by the Scottish invasion of England in that year to restore the Stuarts to the English throne. It is rather human of Jevons to omit it, if, as I suspect, there were not enough spots on the sun in that year to fit the parallel.

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From The Stock Market Barometer by William P. Hamilton, published in 1922