Dr. W.C. Mitchell, fornierly Professor of Political Economy at the University of California, gave the first of his two lectures on "Business Cycles" yesterday afternoon. He spoke of the business cycles as the succession of steps between crisis, business depression, a new period of reviving activity and back to crisis again.

Beginning with the revival after the crisis, Dr. Mitchell traced the development half way through the cycle, or to the point where liquidation sets in after the banks have refused to extend loans any further. The re-establishment of business activity comes from an increased volume of trade, which tends to boost prices. Optimism sets in prospect of greater profits tends to confidence and increased investment, and a short period of five or six years of prosperity is well on its way.

Increased Business Causes Reaction.

The reaction from all this starts with the strained efforts to keep up with increased business and the consequent rise of the average cost of production. Interest rates soar and the efficiency of business management falls off on the top of the boom because the offices are too busy to pay attention to details and small wastes. Then there is an increase in long time borrowing, closely followed by a rise of interest and a complaint of tight capital. This in turn leads to a reluctance to make further investments and an increase of demands for short time loans. The last step before the process of liquidation is reached when prospective profits, really the collateral of credit, begin to decrease and there is great danger that the great structure of credit will topple.