112 Economic Cycles: Their Law and Cause 



consideration of the cause and law of cycles of general 

 prices. The first of these preliminary problems, namely, 

 the influence of the bounty of nature upon the volume 

 and activity of trade, we have just discussed, and we 

 come now to the second preliminary problem, which 

 we shall put in the form of a question: Are all demand 

 curves in a dynamic society of the same type as the 

 demand curves for the representative crops: corn, hay, 

 oats, and potatoes? 



This question must be answered as a preliminary to 

 the more fundamental inquiry as to the cause of cycles 

 of general prices, because if we assume that all demand 

 curves are of the same negative type, we are confronted 

 with an impossibility at the very beginning of our in- 

 vestigation. Upon the assumption that all demand 

 curves are of the negative type, it would be impossible 

 for general prices to fall while the yield per acre of 

 crops is decreasing. In consequence of the decrease 

 in the yield per acre, the price of crops would ascend, 

 the volume of commodities represented by pig-iron 

 would decrease, and upon the hypothesis of the uni- 

 versality of the descending type of demand curves, the 

 prices of commodities like pig-iron would rise. In a 

 period of declining yield of crops, therefore, there would 

 be a rise of prices, and in a period of increasing yield of 

 crops there would be a fall of prices. But the facts are 

 exactly the contrary. During the long period of falling 

 prices from 1870 to 1890, there was a decrease in the 

 yield per acre of the crops, and during the long period 

 of rising prices from 1890 to 1911, there was an increas- 



