The Mechanism of Cycles 1 03 



The Volume of Crops and the Activity of Industry 



We shall approach the problem of the cause of the 

 changing level of prices by considering two preliminary 

 questions which will enter into the subsequent argu- 

 ment: (1) Is there any relation between the changing 

 volume of the crops and the changing volume of those 

 producers' goods whose fluctuations are generally re- 

 garded as indices of the activity of trade? (2) Is the 

 law of demand for crops the type of law that is repro- 

 duced in the demand for all commodities, or is it not 

 rather the case that the law of demand for pure pro- 

 ducers' goods is of a different type from the law of 

 demand for those commodities of which our four crops 

 are samples? 



The first of these two questions we shall consider in a 

 form modified to bring its significance to bear upon the 

 results that have already been established. The volume 

 of crops varies with the extent of the acreage and with 

 the average yield per acre. The question of interest 

 to us at this point is whether the volume of producers' 

 goods fluctuates with the yield per acre of the crops. 

 We shall investigate this question, and, as a means of 

 carrying forward our inquiry, we first construct an 

 index number of the yield per acre of crops. The nine 

 crops of the United States whose yield per acre through- 

 out a long period is recorded in the Yearbooks of the 

 Department of Agriculture are: corn, wheat, oats, bar- 

 ley, rye, buckwheat, potatoes, hay, cotton. 1 If, in case 



1 The figures for the yield per acre of cotton, 1870-1910, were oh- 



