2 Flux, Fall in Prices during the past Twenty Years. 



in the date selected as the basis of comparisons of average 

 prices. For the purpose of comparisons over so short a 

 period as twenty years there are obvious advantages in 

 selecting the middle of the period as a basis from which to 

 measure movements earlier and later. 



To take the Economist Index number first. This 

 number, as is well known, is the aggregate obtained by 

 expressing the price of each of 22 selected commodities as 

 a percentage of the corresponding price, averaged over the 

 six years 1845-50, and summing these percentages. If we 

 divide the result by 22, we obtain a figure showing the 

 average percentage rise or fall of price of these 22 com- 

 modities. For purposes of comparison we may express 

 the figure for each year as a percentage of the figure for 

 1886. For more thorough comparison, each of the 22 

 prices may be expressed as a percentage of the corre- 

 sponding price of 1886. The change of basis might be 

 expected to produce considerable change in the result, 

 since the proportions between the prices obtaining in 1886 

 were by no means those obtaining in 1845-50. The 

 modification produces much less difference than might be 

 expected, the chief differences being that the fall to 1886 

 is somewhat greater than in the original number, and the 

 movement from 1886 to 1890 less irregular. 



The fifty-years-old set of standard prices are less out 

 of touch with the circumstances of to-day than might 

 have been anticipated. The figures for January 1st of 

 each year, referred to January 1st, 1886, start, in the 

 original number, from a level of 34 % above 1886, in the 

 modified number from 42 % above. The two approach, 

 and finally coincide in 1885 as well as in 1886. In the 

 subsequent movement, both rise ; but the original rises 

 to in in 1890 and 1891 the modified reaches this level 

 in 1889 and in 1891, meanwhile rising to 113. The 

 subsequent fall carries the original to 95, the modified 



