132 PRESIDENT’S ADDRESS—SECTION F. 
necessitate extra provision against loss or waste of satisfactions 
produced or being produced (such as dangers from loss by storms, 
inundations, fire, waste by war, civil strife, robbery, depredations 
by wild animals, idle and useless dependants, plagues of parasites, 
disease, etc.), curtail of necessity the amount of necessary 
satisfaction which otherwise might be enjoyed by each useful 
human unit. Obstacles, therefore, greatly reduce the amount of 
human satisfactions so far as each individual is cencerned, 
although in the aggregate this is not so easily comprehended. 
Lowness of nominal prices is not a correct index of conditions 
most favourable for the attainment of the greatest amount of 
satisfactions with the smallest expenditure of time and human 
energy : for it often happens that low prices may be caused by 
excessive expenditure of human energy forced upon a struggling 
producer, or by poverty due to forced idleness on the part rot a 
large body of consumers. While it may often happen—as in 
young colonies—that a high price is no index of a lower supply 
of satisfactions, but rather of the smaller amount of obstacles 
intervening between consumer and producer, and gratuitous 
sources of nature, the smaller amount of enforced idleness on 
the part of consumer giving him a greater purchasing power ; 
and the greater advantage of the producer, due to similar 
causes, enabling him to obtain all the most necessary round of 
satisfactions with a smaller expenditure of time and labour. Mere 
cheapness of satisfactions, therefore, is not a reliable index of 
individual welfare. Purchasing power, as indicated by expendi- 
ture of time and labour, is the only true index as between 
countries differently circumstanced, and this purchasing power of 
the consumer—unlike the unreliable nominal cost or wage—is 
always in harmony with the amount of obstacles intervening 
between the actual producers of satisfactions and the actual 
consumers. 
This method of determining the condition of different com- 
munities will be better understood if we carefully investigate the 
effect of obstacles more closely. As the factors are variable and 
numerous, the only way to arrive at true conclusions is to 
approach the question by the mathematical method : thus :— 
Let N=Natural agents and products; or the gratuitous 
forces of nature. 
P = Productive power of human agencies, including skill 
and energy, and skilled appliances. 
O = Obstacles intervening between NP, or producer and 
consumers. 
C=Producers, dependants, distributors, etc., repre- 
senting the living population ; or consumers. 
Then NP—O 
cane 
= Represents the amount of the average satisfactions 
provided for each individual. 
