THE ECONOMIC DISTURBANCES SINCE 1873. 771 



100, and the average decline in the prices of these same articles for 

 the year 1810 was found to be 20 per cent, the index number for 

 the year 1800 would be 100, and for the year 1810, 80.* 



The difficulties in the way of obtaining satisfactory averages from 

 comparisons of prices at different periods by the above or any other 

 methods are, however, almost insuperable ; so that it may well be doubt- 

 ed whether the determination of an average of general prices is ever 

 within the bounds of possibility. Quotations for a given day, or 

 month, do not necessarily show the average for the year ; and, in like 

 manner, the selection of a limited number of articles for comparison 

 can not insure correct conclusions respecting the movement of prices 

 in general. All methods of comparing price variations which content 

 themselves with mere average quotations of different articles, and 

 which do not pay due regard to the relative importance of each arti- 

 cle in the domestic and foreign commerce of a country ; which, for ex- 

 ample, allow a change of 80 per cent in the price of an article like 

 cochineal, of which the value sold in any one year is small, to balance 

 a change of 2 per cent in an article, like sugar, the value of which annu- 

 ally sold is enormous, are also in a great degree deceptive and worth- 

 less ; f and even when in the comparison of prices, the importance of 

 considering relative quantities is fully recognized, the data for ascer- 

 taining these relations are extremely uncertain and questionable. The 

 utmost of service that all such tabular comparisons of prices, even 

 when prepared with all desirable qualifications, are capable of ren- 

 dering, would, therefore, seem to be limited to the affording of impor- 

 tant inferences respecting variations of prices, or to the showing 



* For a full exhibit and discussion of these tables, reference is made to a paper pre- 

 pared and laid before the British Royal Commission (third report, Appendix B, pp. 312- 

 390, 1886), by R. H. Inglis Palgrave, F. R. S. ; and also to an article in the (Harvard) 

 " Quarterly Journal of Economics" (vol. i, No. 8, Boston, 1887), by Professor J. Laurence 

 Laughlin, Professor of Political Economy, Harvard University. 



f One of the best-known tables of this character, embracing twenty-two different 

 articles, has been kept by the London " Economist " for many years as a constituent element 

 of current British commercial history ; and the objections inherent in the system adopted 

 are forcibly illustrated by the followirg recent occurrence, to which attention has been called 

 by the " New York Commercial Bulletin " : Thus, a comparison of index numbers for Janu- 

 uary and July, 1886, and for January, 1887, as deduced from the "Economist's" tables of 

 prices, indicated a small advance for the latter month in the general level of British 

 prices. But the first article on the " Economist's " list of prices is coffee, which advanced 

 from July 1, 1886, to January, 1887, to a degree sufficient to alone add 50 to the index 

 number of January; while the entire increase for the whole twenty-two articles was only 

 36 ; or, in other words, if coffee alone were omitted from the list of articles compared, 

 the net result would show an apparent decline instead of any advance in the general 

 level of prices. " Certainly," as the " Commercial Bulletin " remarks, " it is difficult to at- 

 tach much importance to results having no better basis than this. For coffee is by no 

 means one of the most important articles compared; it is greatly exceeded in impor- 

 tance by at least twelve of them. But the change in that one article happens to have 

 been surprisingly great, and it thus outweighs far more important changes in other arti- 

 cles, such as iron or meats." 



