162 WHEAT PRODUCTION IN NEW ZEALAND 
(b) The Period 1876-1895. Falling Prices—During 
the following two decades the price of English wheat 
continued to fall rapidly with only two important 
exceptions. The quinquennial average for the period 
1871-5 was 6s. 10d., and in successive quinquennial 
periods it showed a considerable falling tendency until, 
in the period 1891-5, the average was as low as 3s. 6d. 
Thus during the period prices had fallen by one-half, the 
average price for the first quinquennial period in the 
two decades being almost 100 per cent. higher than that 
for the last. 
This falling tendency was constant throughout with 
the exception of the year 1877, when the index number 
of wheat rose from 159 to 198 in 1876, and in 1891, 
when a rise in the index number from 112 to 129 was 
registered. The Russo-Turkish War of 1877 was no 
doubt responsible to a large extent for the sudden rise 
in that year, while a very deficient harvest had been 
experienced in the United States. 
(i) Relation of Wheat Prices to the General Level.— 
The fall in the price of wheat is again synchronous with 
a movement in the general level of prices. The period 
1873-1896 was essentially a period of falling prices. 
The fall was presumably due to a slackening in the 
production of gold, and to the increased demand for 
gold due to its adoption by several nations with 
currencies previously organised on a silver standard 
basis. A further reason, and more important for 
our purposes, is the increase in production generally. 
The fall in the price of wheat was due to a combination 
of these causes—the diminution in the rate of gold 
production, and the general increase in production. 
According to The Economist (London) Index Number, 
the general level of prices fell from 134 in 1873 to 91 
in 1896, whereas the index number of the price of wheat 
fell from 205 in 1873 to 92 in 1896. This points to the 
fact that the fall in the price of wheat was due more to 
increased supply than to a relative decrease in the money 
material. 
