CONSUMERS' RATIOS 



DURING the past fifty years, a number of people have set 

 themselves to work to measure the shifting economic tides 

 with index numbers. The more complete of these index numbers 

 really undertake to measure the changing value of the dollar. In 

 July of 1914, for instance, Dun's index number was $119.71, which 

 meant that it required $119.71 to buy a certain given amount of 

 wheat, corn, oats, pork, beef, butter, eggs, wool, hides, pig-iron, 

 lumber, petroleum, etc. On September 1, 1919, it required $238.34 

 to buy these same goods. The dollar of July of 1914 had become 

 worth about 50 cents in September of 1919, in its ability to buy 

 wholesale products. The consumer, in his buying, has certain 

 choices. The man who thinks pork is too high in price can shift 

 to beef or mutton ; or he can leave meat altogether out of his ration 

 and secure the needed nutrients in dairy or poultry products. 



The producers' ratios, as described in preceding chapters, have 

 to do fundamentally with supply conditions. They deal with the 

 relation between a raw product and a more finished product. They 

 are concerned, but not immediately, with demand conditions. The 

 attempt in this chapter is to develop a ratio which gives more par- 

 ticular weight to demand conditions. Therefore, ratios are devel- 

 oped between a standard index number on the one hand and a given 

 commodity on the other. However, because index numbers in- 

 clude some of the items of expense entering into the production 

 of any commodity, such a ratio also represents to a considerable 

 extent a producers' ratio. 



To understand the matter more definite!}', we shall look into the 

 ratio actually prevailing between Dun's index number and Chicago 

 hog prices. As an average of the ten-year period, 1907-1916, 

 Dun's index number in January has averaged $120.16, whereas 

 hogs during the same period have averaged $6.99 per hundred- 

 weight. In other words, live hogs have sold per hundredweight 

 for about one-seventeenth of the value of Dun's index number. 

 On this basis, in January of 1907, the index price of hogs was 

 $6.24, whereas the actual price was $6.60, or 36 cents higher. In 

 January of 1908, the index price of hogs was $6.59, whereas the 

 actual price was $4.45, or $2.14 lower. And so it goes. For the 

 period of a year or two, hogs will sell proportionately higher than 

 other commodities, and then for a like length of time they will sell 

 lower. This is graphically illustrated in the accompanying chart. 



