578 TRANSACTIONS OF SECTION F. 
been left to compete on equal terms, the canals have been definitely beaten; 
that in America the bulk of the canals have been abandoned, and even the Erie 
Canal, though maintained as a free highway at public expense, has lost all its 
old importance; that in France, not only are the canals free highways main- 
tained at public expense, but the railways are forbidden to reduce their rates 
to the canal level, and still the average total ton mile cost is higher on the 
canals than on the railways. 
From Germany figures of the important Dortmund-Ems Canal were given to 
show that its construction has resulted in an economic loss to the State, and 
only a small gain to the individual trader. 
It was pointed out that canals are necessarily inferior to railways as a 
means of transport, because (a) their capital cost is higher, (b) their carrying 
capacity is smaller, (c) they only cater for low-class goods, in bulk, and (d) 
they can only reach the ultimate point of production or consumption by the 
supplementary use of waggons or railway trucks. 
It was also pointed out that the traders and localities for whom canals are 
potentially available naturally have an interest in promoting their construction 
at the public expense, as thereby they, paying only a proportion of the total 
cost of carriage, throw the remainder of that cost on the public at large, 
and so not only reduce their expenses, but obtain a differential advantage over 
competitors to whom the railway only is accessible. 
The writer concluded that the adoption of a forward policy cannot be 
justified as in the interest of the community at large, and that therefore it 
lies upon those who urge the adoption of such a policy in any individual case 
to prove their right to secure for themselves a differential advantage at the cost 
of the whole community. 
MONDAY, SEPTEMBER 15. 
Discussion on Prices and the Cost of Living. 
(i) The Relation between the Changes of Wholesale and Retail Prices 
of Food. By Dr. A. L. Bow .ey. 
Between wholesale and retail prices come the expenses and profits of 
merchants and brokers, of transport, of manufacture, of taxes, of interest and 
of retail dealing. It.is not known in general whether these expenses tend to 
vary with the movement of wholesale prices or remain stationary. If the 
former, retail prices would vary proportionately with wholesale; if the latter, 
retail prices would move less per cent. than wholesale. The question is 
examined by comparing the prices of grain, flour, and bread month by month 
during 1906-1913. Two measurements are proper to make: (1) The coefficient 
ot correlation, which shows how closely the two prices are casually connected ; 
(2) the standard deviations, which show how far the prices diverge from their 
average. If the cost of distribution and manufacture remained unchanged, 
the ratio of the standard deviations of wholesale and retail prices would equal 
the ratio of the retail price to the wholesale price of the same unit. This is 
found to be the case with bread and flour, so that hs Jolla 
4 Bat ae Price of flour per cwt.—lls. _ 
The price of a quartern loaf = 2:27d. + 3°33d. + Number of loaves made from owt. 
where 3°33d. is the cost of the flour, and 2-27d. the cost and profit of baking. 
The same process is applied to the wholesale prices in 1896-1910 of bread, 
flour, beef, mutton, bacon, butter, potatoes, sugar, tea, eggs, and cheese,, as 
compared with the London retail prices stated in the publications of the Board 
of Trade. The commodities are weighted in the proportion in which they 
occur in a town workman’s expenditure, and together they account for over 
two-thirds of the expenditure on food. No uniform relation is found, but 
when all are grouped together the following equation is satisfied :— 
Cost of budget = Wholesale price of goods (10s.) + Cost of distribution (5s.) 
+ 1:11 of excess of wholesale price over 10s. 
