1168 REPORT—1885. 
MONDAY, SEPTEMBER. 14. 
The following Papers were read :— 
1. On the Use of Index Numbers in the Investigation of Trade Statistics. 
Dy SterHen Bourne, L.8.S.—See Reports, p. 859. 
2. On Depression of Prices and Results of Economy of Production, and on 
the Prospect of Recovery. By Hype Crarge, FS.S. 
The author said that the expectations in 1884 of the sale of the corn crops in 
the United States and Canada had not been realised, nor were hopes of recovery 
to be built on the crops of 1885. The sale in the European market of American 
and other imported corn is limited by the fact that the consumption by human 
beings (and by animals) is itself limited by what the individual can consume, which 
is a natural maximum not dependent on price. The amount to be supplied is the 
deficiency each year on the local crops, which in most European countries meet 
their own wants, and in the eastern districts allow of export. Corn, too, cannot, 
like fibres or metals, be stocked for a long time. 
Corn, sugar, and coffee are now produced in large quantities, because all the 
best producing countries are laid open by cheap railways, and the freight to the 
ocean markets is also reduced. 
The effective cause of the great reduction in production and transport is due to 
the reduction in the cost of steel and iron, consequent on the inyentions of Bessemer, 
Siemens, Thomas, Gilchrist, and others. Whatever the quantity of gold may be, 
the former price of steel in relation to other commodities will not be regained. As 
steel or steel iron rails can be made for one-tenth of the cost of thirty years ago, 
this is an economical fact to be dealt with. Cheap railways and cheap ocean 
steamers are now making their influence felt. 
With regard to gold coinage, the effect of any supposed short supply cannot be 
measured from one year’s supply, or five, or ten years’, as the effect has to be 
calculated on the whole mass of gold coinage existing in the world, whatever that 
may be. Gold is a metal coined over and over again, sometimes for centuries, and 
the coinage of a year is in reality in a great degree recoinage. The wear and tear 
on coinage is much less in the whole world than is usually estimated, as much coin 
is hoarded, or is subject to sluggish circulation. Manufacturers of gold take new 
coins and make them into rings, chains, jewellery, and give back supplies of 
bullion to the mimt. The wear and tear of manufactured gold is also limited. 
Manufactured gold and coinage act and react on each other, but a positive pressure 
on coinage is supplied from manufactured gold. 
It is not possible to ascertain the real and effective total of gold coin in circu- 
lation in the world at any moment, and if we could ascertain that, we do not 
thereby learn the ratio of its efficiency. This is not immediately relevant to its 
quantity, but to the greater or less rapidity in its circulation or turn-over, dependent 
on sluggishness or energy of trade, panic, war, famine, hoarding, and many other 
causes. At present no practical evidence has been adduced that a diminished 
supply of gold is the cause of lower prices. 
With regard to the question of recovery, it will ultimately depend on the 
readjustment of the new economical conditions. Temporary fluctuations of price 
may be caused, as was seen this year, by war and rumours of war; also by short 
crops, or by the discovery of some new mineral commodity. The course of 
economical events is, however, in the direction of discoveries still further diminish- 
ing the amount of labour required for production. The low prices may, however, 
assist in their own readjustment. At the present moment half the population of 
the world—in India, China, and Japan, five hundred millions in number—are under 
the influence of old traditional prices, which in some cases give daily wages of 2d. 
