Influence of Credit on Prices 41 



the following ranking is obtained : In England vegetable food 

 and sugar, tea and coffee come first with the same rank, min- 

 erals and textiles come next with equal ranks, then sundries, and 

 lastly animal food. In the United States the order is fuel and 

 lighting, house furnishings, food, miscellaneous articles, cloth- 

 ing, metals, drugs, and building materials. Germany observes 

 the order, divers, next metals and agricultural products with 

 equal rank, then textiles, tropical products, British exports, East 

 India goods, and animal products. 



In the spread of prices, the three great groups, food, minerals, 

 and textiles come uniformly to the front. These are clearly the 

 commodities which, under this test,- are affected most by crises. 

 It is easy to understand why this should be the case. Minerals 

 and metals are basic products. There are few or no enterprises 

 which do not make some demands upon them. "Iron being 

 wanted for almost every industry is the one of them upon which 

 the misfortunes of all other industries ultimately fall. If the 

 cotton trade is bad, the cotton spinners require less machinery. 

 If the mineral trade is bad, the railroads require a smaller amount 

 of accommodation ; fewer rails are required and less rolling stock. 

 And the same observation applies with regard to ships. "^ 



The tendency for the prices of textiles to spread greatly shows 

 the extent of speculation in that line. It is possible also that 

 overproduction takes place in the textile industries more readily 

 than in others. In other words, when a financial pressure is be- 

 ing experienced the most drastic economies take place in expen- 

 ditures for clothing. These industries would also be apt to suf- 

 fer from wrong estimates of consumption because they come into 

 intimate contact with all the caprices of fads and fashions. In 

 addition, the raw materials used in manufacturing textiles are, 

 like food products, dependent very directly upon the seasons. 

 This would increase the tendency to price fluctuations. 



The spread in the prices of food products, as stated above, 

 must be regarded as an occasion of crises. Food products do not 

 enter into schemes of promotion, but they are objects of increas- 



^ Testimony of Sir Lowthian Bell, in Second. Report of Royal Commis- 

 sion on Depression of Trade, Q. 1924. 



