LIMITATIONS OF THE MATHEMATICAL 

 METHOD 



SUCH a mathematical formula as : Hog prices equal ,56 bank 

 clearings — .56 hog receipts must always be applied with 

 common sense. In November of 1914, for instance, hog receipts 

 at Chicago were abnormally small on account of foot-and-mouth 

 disease, and in December of tlic same year they were abnormally 

 large for the same reason. Judging from receipts, we might have 

 expected heavy hogs to sell for $8.83 in November and .$6.'i4- in 

 December. As a matter of fact, the actual price was $T.50 in 

 November and $7.10 in December. It was commonly recognized 

 by the trade that hog receipts at Chicago in November and Decem- 

 ber of 1911 were abnorm.al, and not representative of the poten- 

 tial supply in the country at large. 



Occasionally, as in NoA'ember of 190T, falling prices act to 

 curtail receipts. The small receipts in November, 1907, would 

 have indicated a price of $6.75, whereas the actual price was $4'. 90. 

 As a matter of fact, there was a large number of hogs that year, 

 and tlie actual price reflected the potential supply rather than the 

 temporary supph'. 



It is possible to refine the method considerabl}'. For instance, 

 it may be worth while to proceed on the assumption that the rela- 

 tion between hog prices and hog receipts is best expressed by an 

 equation representative of a hyperbola or skew curve instead of a 

 straight line. The straight line equation, based on the years 1903 

 to 1915, inclusive, is: 



Hog prices equal —.8 —.56 hog receipts. 



The hyperbola equation for these years is: 



Hog prices equal —1.24 — .55 hog receipts 



-I-.0046 hog receipts squared. 



The skew or cubic curve equation is : 



Hog prices equal — I.IS —.24 hog receipts 



-f .0027 hog receipts squared 

 — .00079 hog receipts cubed. 



Using these more complex mathematical methods, it is often 

 possible to o\])ress the relationships more exactly. But no method, 

 however far refined, will take the place of common sense market 

 judgmelit. Nevertheless, it may be decidedly helpful to a better 



