SI CE.-SUPPLEMENT. 



FRIDAY, OCTOBER 23, 1885. 



PRICES FROM 1873 TO 1884. 



In the annual report issued by the mint depart- 

 ment on the production of precious metals in 1884, 

 there are given statistics of prices during the years 

 1883 and 1884. These statistics are in continua- 

 tion of others of the same kind in previous reports. 

 The ligures for the years from 1825 to 1880 may 

 be found in the quarterly report of the Bureau of 

 statistics, No. 3, 1883-84 ; those for the years 1881 

 and 1882 in the report of the director of the mint 

 for 1883 ; those for 1883 and 1884 in the present 

 report. All of them, we are uiformed, were col- 

 lected and arranged under the superintendence of 

 ]\Ir. Bui'chard, the former director of the mint, to 

 whom belongs the credit for the work. The in- 

 vestigation is one which does not he very obviously 

 vrithin the scope of the mint department, and rec- 

 ognition is due to the intelligence and activity 

 wliich caused it to be undertaken. 



The different reports, taken together, purj)ort to 

 give a continuous account of the fluctuations of 

 general prices from 1825 to the present time. Such 

 an account, if accurate and trustworthy, would be 

 of gi-eat interest and value. Unfortunately the 

 statistics have not been got together in a very care- 

 ful way ; and the general results which are de- 

 duced from them can be accepted only with 

 hberal allowance for possible errors. 



To the method adopted there can be little objec- 

 tion. It was to take the wholesale prices of a 

 number of articles in New York, to reduce them 

 to a common denominator, and then to calculate 

 the arithmetical mean of the prices as reduced. 



It can be easily illustrated by an example. Sup- 

 pose that for three years the prices of cotton, 

 wheat, and pig-u'on, were as foUows : 





1880. 



1881. 



1882. 



Cotton 



.10 



1.00 

 20.00 



.12 



.80 

 30.00 



.08 



1.50 



40.00 



Wheat 



Iron 



Indicate the price of each article for the first 

 year by 100, express the prices for the following 

 years in percentages on that basis, and calculate 

 the averages. The result is : 





1880. 



1881. 



1882. 





J 00 

 100 

 100 



120 

 80 

 1.50 



80 

 150 



Wheat 









Average. 



100 



116% 



150 



The average, or aritlimetical mean, of the per- 

 centages here indicates a rise in prices over the 

 average of 1880, of 16|- per cent m 1881, and of 50 

 per cent in 1882. 



If the prices of a sufficiently large number of 

 articles be taken, the averaged percentages indicate 

 with sufficient accuracy the general rise or fall 

 of prices. This is the method adopted in the mint 

 reports ; and it is also adopted in the London 

 economisfs annual table of prices. If applied 

 with care, it is probably the safest way of calcu- 

 lating the rise and fall of general prices. Objec- 

 tions to it have been much urged, and other meth- 

 ods of calculation have been suggested and tried ; 

 but the various experiments seem to show pretty 

 clearly that the simple arithmetical mean of the 

 prices of a large number of articles gives as good 

 an indication of the general fluctuations as we can 

 hope to get. 



Unfortunately the method has been aj)phed with 

 too little care and discrimination in the tables be- 

 fore us. In the first place, one cannot be sure that 

 the prices quoted are the real market prices. For 

 the years previous to 1873, they are taken bodily 

 from two Treasury reports, those for 1863 and for 

 1873, in which tables of prices for a long series 

 of years were brought together. There has always 

 been a suspicion that these prices were largely 

 made up by the clerks in the Treasury office, and 

 that they were not worth much as a. record of the 

 real fluctuations. For the years after 1873, the 

 figures were gathered specially for these mint re- 

 ports, and may be more trustworthy. But even 

 here there are obvious mistakes and mconsistencies. 

 For instance, instead of taking the same articles 

 consistently year by year, and deducing the aver- 

 age prices of these, the list changes almost every 

 year. Thus for 1881 and 1882, the prices of 88 

 articles are given ; ui this year's report, however, 

 for 1883 and 1884, those of 94 articles are taken. 

 In other words, it is as if the prices of one set of 

 articles for this year were compared with the 

 prices of another set of articles for next year ; a 

 method which obviously, so far as the two sets 

 vary, vitiates any comparison between them. It 

 is part of the same error in these tables, that an 

 article, after having been quoted and reckoned for 

 a few years, suddenly disappears entu'ely, while 

 another one perhaps takes its place, and is reck- 

 oned in the general average. One is therefore 

 not surprised to find the results to be on then- face 

 inconsistent with each other. Thus the average 



