A system of six equations is presented to explain quarterly movements in the U.S. trade cycle over a 21 year period in terms of five exogenous variables--hourly rate of money wages, public expenditure, taxation, exports, and bank deposits. All other variables--consumption, various types of investment, inventory changes, imports--are endogenous. The development of the theoretical ideas contained in the system is traced. The model is tested against data for the period involved, and an application is made to post-war data. The data used and its sources are indicated.