768 THE POPULAR SCIENCE MONTHLY. 



THE ECONOMIC DISTURBANCES SINCE 1873. 



Br Hon. DAVID A. WELLS, LL. D., D. C. L. 

 IV. 



DEPRESSION of prices lias, to a large extent, been accepted as a 

 prime cause of the " economic disturbance " which has pre- 

 vailed since 1873. Indeed, Mr. Robert Giff en, the well-known English 

 economist and officer of the British Board of Trade, in an article 

 contributed to the " Contemporary Review," June, 1885, does not 

 hesitate to express the opinion that " it is clearly unnecessary to assign 

 any other cause for the gloom of the last year or two ; " and continu- 

 ing, he further says : 



" The point to which I would draw special attention is, that . . . the most dis- 

 astrous characteristic of the recent fall of prices has been the descent all round 

 to a lower range than that of which there had been any previous experience. 

 It is this peculiarity which more than anything else has aggravated the gloom 

 of merchants and capitalists during the last few years. Fluctuations of prices 

 they are used to. Merchants know that there is one range of prices in a time 

 of buoyancy and inflation, and quite another range of prices in times of discredit. 

 By the customary oscillations, the shrewder business people are enabled to make 

 large profits, but during the last few years the shrewder, as well as the less 

 shrewd, have been tried. Operations they ventured on when prices were falling 

 to the customary low level have failed disastrously, because of a further foil 

 which is altogether without precedent. The change is more like a revolution in 

 prices than anything which usually happens in an ordinary cycle of prosperity 

 and depression in trade." 



Here, then, is a description of the extent of the recent fall in prices, 

 and its influence in producing and aggravating the gloom of mer- 

 chants and capitalists, by one well competent to appreciate and de- 

 scribe what has happened. The point of novelty and greatest signifi- 

 cance, however, in Mr. Giffen's statement is, not that a depression of 

 prices has been productive of gloom and a depression of business for 

 no fact is better recognized by all economists and business men than 

 that on a falling market trade is always stagnant, and that nothing is 

 more productive of gloom to the industrial and mercantile community 

 owning or carrying stocks of merchandise than losses experienced or 

 anticipated through a fall in prices ; but that the recent fall in the 

 prices of the great staple commodities of the world has been in extent 

 and character without precedent in the world's history.* 



A further fact of the highest importance, and one that is not dis- 



* " Many who discuss this question, and whose opinions generally command deference, 

 appear scarcely to realize the enormous extent of the fall, and it is only by means of 

 very extensive statistics and of a comparison of various periods that a clear insight into 

 the details and a broad view of the whole can be gained." Augustus Sauerbeck Jour- 

 nal of the Statistical Society of London, September, 18SG. 



