252 EEPORT— 1887. 



Another remedy analogous in principle, but perhaps more efiBcacious,' 

 as hitherto carried out in practice, is to estimate Ihe average price as is 

 now done in the case of Imports and Exports by dividing the aggregate 

 of declared values by the total quantity. 



When, indeed, a considerable interval occurs between the compared 

 epochs, then, with the progress of the arts, in pai-ticular the facilities of 

 transport, the quantities of fruit available out of season, of fish supplies 

 to the inland consumer, are likely to be markedly increased. In this case 

 the modifications just suggested ai-e less helpful. We may have to 

 resort to the more drastic treatment pointed to by Professor Marshall. 

 Or perhaps our best course (however bad the best) might be to follow 

 the general rule given by Professor Marshall for the comparison of 

 epochs separated by a wide interval. It being impossible to bring the 

 last year of the series into direct relation with the first, we ought to 

 compare the last year (in respect of the purchasing power of money) 

 with the penultimate year, the penultimate with the antepenultimate, 

 and so on. In this case the remedies above suggested would be effica- 

 cious. To consider the treatment appropriate to each species of goods 

 will be no small part of our next year's task. 



Of auxiliary standards the number is unlimited. We distinguish 

 six which appear to be particularly important ; "without attempting to 

 arrange them in an order of merit. (1) One is based upon the larger 

 wholesale commodities, whether imported or manufactured at home. 

 The type of this species is the index number calculated by Mr. Palgrave 

 in the memorandum contributed by him to the ' Third Report on Indus- 

 trial Depression.' The method adopted by him of iveir/hting, or assign- 

 ing importance to, the given pi'ice-variations, seems sufficiently accurate 

 for the purpose in hand ; and, being less laborious, may be preferred to 

 the slightly more correct procedure which we have proposed for the 

 principal standard. 



Agreeable also to the character of an auxiliary standard is his summary 

 decision of the knotty question, what goods ought to be excluded in 

 order that the same materials should not be counted twice (e.g., indigo, 

 as imported raw, and as worked up with cotton). 



, This index number is useful as enabling us, given the increase of 

 value, to estimate the increase in quantity of the class of commodities 

 under consideration. Again, such index-numbers, especially when dis- 

 posed in a chronological series, assist us in conjecturing the future 

 course of general wholesale prices. 



(2) Similar remarks apply to Mr. Giffen's calculation of Index- 

 numbers for Imports and Exports respectively. These measurements, 

 owing to the number of items on which they are built, have a greater 

 precision than that which is founded on only twenty-two articles. We 

 may say, perhaps, that, as indices of the course of prices in general, the 

 standard constituted by Imports and Exports is rather more important 

 to the world than that which is based upon general wholesale commodities 

 to England. 



(3) A third very important Index is that which has recently been 



' The computed prices were based only on samples (as described in the Memoran- 

 dum above referred to). But this disadvantage, as contrasted with the method of 

 total values, ma}' be partly compensated by the inaccuracy which attaches to declara- 

 tions of value (see Giffen, Essays in Finance, series 2, essay ti ; and Bourne, Trade, 

 Food, and Pnjmlation, first paper. 



