ON THE USE OF INDEX NUMBERS. 871 
the goods given were at least 40 per cent. more. It is often claimed 
that this is but a temporary alteration, accompanied by conditions which 
neutralise the injury. No doubt in many cases there has been a contrac- 
tion in the cost of the materials employed which, if imported from abroad, 
especially from foreign countries rather than our colonies, is a clear saving 
to the nation. Yet even this is not so when home capital is employed in 
their production abroad. But when, as with coals and iron, the whole 
proceeds of the sale are distributed at home, the diminution of these 
proceeds is a home loss. Improved mechanism or increased industry 
may have lessened the expenditure on production by diminishing or 
restraining from proportionate increase the numbers to be sustained out 
of these proceeds ; and to this may be attributed the number of workers © 
who are out of employ, or what is still more largely the case at present, 
the short time in which they are working. But it surely cannot be 
-gravely maintained that there is here no depreciation in our most impor- 
tant means of obtaining wealth. Neither does an attentive consideration 
of these figures afford any assuring indication that the evil is in process 
of passing away. Again, we find that the decay in prices of imports is 
greatly below that of exports. Even Mr. Giffen’s figures show that the 
index number by which the bulk of the trade is estimated—for the 
exports of 1865 has to be altered from 65°8 by the addition of 23°46, 
and for 1883 by the deduction of 5°95, a correction of 45 per cent., 
whilst that of imports has to be changed from 81:16 by an addition of 
13°59 and deduction of 9°43, a correction of but 28 per cent.—the 
corresponding alteration in total value having been 4/ and 36 respec- 
tively ; that is, we have lost nearly twice as much by the reduced prices 
of our sales as we have gained by those of our purchases. It seems 
mockery to talk of enlarged trade as a proof of national prosperity when 
these are the terms on which it is conducted. Butin truth the whole of 
this part of the question depends upon whether the prevailing lowness of 
prices is due to causes which are removable or temporary, or to such as 
are in process of increase and so likely to be enduring. 
It is by no means to be presumed from what has been said that the 
consideration of these figures or the grave teachings they afford are in any 
way calculated to support a return to protection, or whatever is meant 
by ‘fair ’ as opposed to free trade. The declension in prices and the con- 
sequent destruction of profits arise from the fierce competition to which 
our manufactures are exposed in the markets of the world, and especially 
in those countries which wield protection against us. These evils would be 
multiplied tenfold by any steps which would increase the cost of our home 
products for foreign sale. It is to the extension of the ground our markets 
cover, and to increased economy of production, that both manufacturer 
and artisan should look for the desired recovery from the prevailing 
depreciation of their products. 
I fear that details and figures such as these have been difficult to 
follow without diagrams large enough to be seen, but trust that those 
who are accustomed to follow calculations of this sort will not think I 
me altogether failed in the attempt to put them upon a truly scientific 
asis, 
The following table shows the method of arriving at the index numbers 
’ and of comparing one year with another. The index number for the 
