Quantifying Uncertainty: The Failure of the First World Business Barometer

At the end of World War I, when the idea of a “world economy” took shape, economists on both sides of the Atlantic embraced the dream of establishing an economic world barometer. The seemingly mechanical working of new forecasting instruments seemed to allow for that dream to become reality. This paper investigates the cooperation between the members of the so-called Harvard Committee on Economic Research and European economists and statisticians in the 1920s. In 1919, the members of the Harvard Committee presented an index to the public, which promised to allow for the prediction of business conditions 4-10 months ahead. Fostered by the League of Nations, which actively promoted the expansion of the index in Europe and beyond, economists and statisticians all over Europe attempted to adopt the index in their respective countries, hoping to eventually establish a world barometer. The attempts and various meetings between American and European researchers, however, quickly revealed difficulties in adapting the barometer to other countries. Telling the story of the failure to create the first world barometer, the paper sheds light on the ambiguity between a global economy and various national economies that still lingers today.