8!) 



For further evidence against the two theories under trial, 

 let us study the movements of an important manufacturing 

 industry in another country (United States) in its development 

 between the years 1850 and 1880, or an interval of 30 years, 

 as in the following table, prepared from certain statistics 

 relating to the Cotton industry of the United States, quoted 

 by Guuton (p 263, Principles of Social Economics) : — 



(Table A.) 

 In the accompanying table we have the true cause of the 

 recent fall of prices of commodities most clearly and unmistak- 

 ably demonstrated. In 50 years the causes at work produced: — ■ 



(1.) A fall in the price of cotton cloth of 58'8 per cent. 



(2 ) A rise in the nominal wages of the operatives of 

 112 per cent. 



(3.) An increase of the real wages or purchasing 

 power of the operatives over the product of their 

 own industry of as much as 414 per cent. 

 Among the more important causes which effected these 

 splendid economic advantages are : — 



(1.) The reduction in cost of management by the con- 

 centration of the work in fewer but larger and 

 better equipped establishments. 



(2.) Improvements in machinery and other auxiliary 

 aids to human labour enabling one hand to con- 

 trol 62 spindles, whereas formerly one hand could 

 control only 22 spindles. 



(3.) The effective producing power of each worker by 

 such means was increased 3 7 fold, or nearly 

 four-fold. That means that the labour of pro- 

 ducing lib. of cloth per hand was reduced 73 per 

 cent. 



(4.) The price of cloth was, however, reduced only 58'8 

 per cent., but the difference of 14-2 per cent, is 

 accounted for by being absorbed by the increase 

 of 112 per cent, in the nominal wages of the 

 operatives. 



The " scarcity of gold " theory of the decline of prices 

 cannot be reconciled with these plain facts, for the decline 

 of 58'8 per cent, in cotton cloth is conjoined with an increase 

 of 112 per cent, in the wages of the operatives. The fall of 

 58'8 per cent, in prices is likewise irreconcilable with the 

 Ratio of Demand and Supply theory, for this remarkable fall 



Ga 



