TRANSACTIONS OF SECTION F. 773 



Economics may thus furnish a rational account of the modus operandi, and statis- 

 tics supply corroborative evidence. This evidence, indeed, may be said to amount 

 to ocular demonstration, for no one who has studied with moderate attention the 

 course of a curve of general prices over a period of time, drawn io accordance with 

 the graphic method of statistics, can have failed to distinguish the different 

 character of the fluctuations thereby shown — to have separated the more obvious 

 and pronounced fluctuations of credit, marking the flow and ebb of confidence, 

 from the minor passing changes due to some temporary accident of demand and 

 supply on the one hand, and, on the other, from the general trend of the curve 

 indicating a growing abundance or scarcity in the available supplies of the standard 

 metal. This is a broad influence, the operation of which is only discernible on a 

 comprehensive view ; but the graphic method of statistics brings it within the 

 range of ordinary vision, and the reasoning of economics di.scloses the connection 

 of the phenomena. The influence of credit is apparent on the surface, but the 

 deeper influence can be detected beneath ; and, if the general level of one credit 

 cycle be higher or lower than another, the change points to the presence and action 

 of .some less obvious cause. In a modern commercial society, with its development 

 of banking and credit, we are able to ob.serve and to measure cause and efl'ect. At 

 the one end of the ])rocess we possess statistics of the production of gold, and can 

 frame estiuiates of the amount and character of extraordinary demands.^ At the 

 other end we can employ, in the form of index-numbers, as they are called,- a 

 means of measuring changes in general prices, which is certainly adequate to show 

 the direction of the change, if it is not competent to indicate its precise amount. 

 For the connection between cause and efl'ect we look to economic reasoning, wliich 

 here, as elsewhere, enables us to discern the unseen. 



A simihir test may be applied to the adequacy of some other causes. It is 

 sometimes said that a complete explanation of changes in general prices can be 

 discovered in the particular circumstances ot individual commodities, witliout any 

 reference to a common cause. The answer is evident on the principles we have been 

 endeavouring to establish. Those particular circumstances lie on the surface, and 

 the common cause is only apparent if we penetrate beneath. Here, again, econo- 

 mics is aided by statistics. Economics can recognise and explain the operation of 

 a common cause in enhancing or diminishing the efl'ect of particular circumstances, 

 and statistics can oft'er corroborative evidence of the presence of such a cause. 

 For the very meaning and intention of a statistical average is to eliminate the 

 influence of particular causes, and therefore the testimony of those index-numbers, 

 in which an attempt is made to exhibit the average change in prices, is adequate to 

 establish the influence of some common cause, if the basis on which thev^ are con- 

 structed be sufficiently comprehensive and typical. It can scarcely be doubted tbat 

 this criterion is satisfied in the case of some of tlie best-known varieties. The 

 presence of that common cause, it must be reuiembered, does not imply the absence 

 of other contributory or counteracting causes ; and the inquirer in the region of the 

 moral and political sciences is always beset by difliculties arising from the plurality 

 of causes. But, if he can establi-sh the presence of a common cause competent to 

 produce the efl'ect, and can point to the efl'ect which has been produced, the argu- 

 ment for the connection between the two attains that higli degree of probability 

 which is all that we can expect to reach. In the instance before us statistics may 

 show the presence of this common cause and the occurrence of the efl'ect, and 

 economics may indicate the competence of the cause to produce the efl'ect. We 

 know that until recently the production of gold had declined from the level reached 

 in the middle of the century, and we are aware that a series of extraordinary 

 demaiids ^ had coincided, while various index-numbers are in general agreement in 



' To some extent also this is true of the changes in the ordinary demands, but 

 the stress of the argument may be laid on the extraordinary demands. 



- Cf. those compiled by the Economht, Mr. Palgi'ave, Mr. Sauerbeck, Dr. Soetbeer, 

 and Sir Robert Giffen. 



^ E.g.. on the part of Germany, the United States, the Austro-Hungarian Empire, 

 and Russia. 



