THE PSICE OP WHEAT 169 



the causes which have been responsible for the rising 

 tendency since 1894. 



(iii) Relation of Wheat Prices to General Prices. 

 As pointed out above, the general level of prices rose 

 greatly in the period, mainly as a result of the increase 

 in the circulating media. Wheat prices have risen some 

 8 per cent, less than the rise in general prices. Now the 

 demand for wheat is inelastic, and we should therefore 

 expect its price to rise relatively more than the rise 

 in other commodities in a period of rising prices. 

 Moreover, in a period of rising prices the margin of 

 cultivation is being extended, and this should a priori, 

 accentuate the rise in price; for, as inferior lands are 

 brought under cultivation, the marginal cost of pro- 

 duction rises. These two factors both tend to accentuate, 

 if anything, the tendency of wheat prices to rise. But 

 we notice that the actual state of affairs was that, 

 relative to the prices of other commodities, wheat prices 

 did not rise to the same level. They fell short of the 

 rise in general prices by some 8 per cent. For the 

 explanation of this, attention must be paid to forces 

 operating from the supply side. 



European markets have been deluged with ever- 

 increasing supplies of wheat since the early "nine- 

 ties." In 1890 the world's production of wheat was 

 2,296,000,000 bushels, while in 1912 it had reached 

 4,018,000,000 bushels, an increase of nearly 75 per cent, 

 in 22 years. For the three decades ending 1910 the 

 average annual production was as follows: 



TABLE XXIV. 



AVEEAGE ANNUAL WORLD'S PRODUCTION 

 OF WHEAT. 



Million 



Decade Bushels 



1881-1890 2,269 



1891-1900 2,577 



1901-1910 3,233 



1910-1914 3,944 



