476 TRANSACTIONS OF SECTION F. 
measures the importance of industry to the employé, but not to the proprietor 
or proprietors. The proper reduction of this covers interest charges and general 
risks of industry, and is often misunderstood. This is scarcely less important 
in co-operative industries in a country in touch with the world. This fact is 
probably not adequately appreciated. 
The value of wages, paid in money, depends upon the purchasing power of 
wages, 7.e., upon ‘effective’ wages; i.e., their value reduced to some common 
datum, which is best measured by the cost of a ‘composite unit.’ In Australia 
wages in some industries have been determined on the principle that they 
should be equated to the changing prices of commodities, or ‘cost of living.’ 
In principle, to be equitable, this must be general. But the direct effect will 
be to increase the price of commodities, and thus to force them continually 
upwards, and thus to defeat itself. The tendency may be exhibited by com- 
puting the consequence on the assumption of an automatic and instantaneous 
adjustment. The effect is startling, and though perhaps of less consequence in 
a self-contained country, is of a far-reaching significance to a country in 
competition with the rest of the world. The complete solution of the problem 
is very difficult even for a self-contained country. 
Economic investigations to be of high value must be quantitative, and only 
in this way can either their scientific dr sociological value be advanced. 
2. Hstimate of the Privale Wealth of a Community and the Measure of 
its Uncertainty. By G. H. Kniss, C.M.G., F.S.S. 
It is very doubtful whether the private wealth of a community can be 
ascertained with any degree of accuracy even by means of an elaborate census 
of wealth, and even then comparisons at different dates would require to be 
used with caution. A rough estimate, made from a limited parcel, by means 
of which the average per individual is ascertained, to be applied to the entire 
population, would be subject to still larger uncertainty. 
Probably, for large averages, and in any one community, income and accumu- 
lated wealth are fairly closely related, and deductions may also be made on 
that basis. Such methods are subject, however, to obvious and grave limitations. 
Since death incidentally involves estimates of value of a deceased’s estate for 
the purposes of probate duty, such estimates, which also are subject to grave 
defects, have been applied to determine the private wealth of the living, on the 
assumption that, with suitable precautions, the deceased group may be taken to 
represent the entire community. This is essentially a ‘parcel’ method. 
The reliability of an estimate necessarily depends on the factor applied to the 
value of the estates of deceased persons to get the value of all estates. This, 
however, is subject to large accidental variations, and, moreover, is not constant, 
since it depends on the death-rate, itself a changing quantity. 
The solution reaches its highest value when age-groups are independently 
treated and its inherent limitations are also best disclosed thereby. There are 
characteristic differences between the wealth of the sexes and its variation with 
age, and these affect all deductions. 
Deductions from income returns may be related by a suitable investigation 
with those from probate returns. In this connection it is important not to rely 
on Pareto’s so-called law. The apparent rough validity of this law merely 
depends on the fact that a considerable stretch of either branch of any unimodal 
frequency-curve can be represented by a general parabola or hyperbola 
y=Aatn where n may have other than integral values. Jt also masks its defects 
by dealing with aggregates, since the integral of the above expression is also a 
general parabola whose index is n+1, and as a matter of fact is disposed of by 
a study of Prussian income returns. 
Probate returns can hardly be regarded as normal estimates of value, and 
expert estimates vary enormously according as to whether they tend to repre- 
sent cost-price, fair market value, or value at forced sale. Individual estimates 
made at leisure differ enormously, and may be either sanguine or conservative 
estimates, while the differences between esteem, utility, and market values are 
very great. 
The problem cannot be made absolutely definite, even by a Census of Wealth, 
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