FACTORS AFFECTING THE PRICE OF HOGS 39 
INDEX OF FOREIGN DEMAND 
For exact statement, demand must be defined with regard to "the 
quantity taken at a certain price. ' ? Hence the foreign demand, for 
any product can not be measured merely by taking the quantity 
exported, for the quantity exported is largely determined by the 
price — large exports at low prices do not necessarily indicate any 
stronger export demand than do small quantities exported at high 
prices. In computing the index of export demand the object, there- 
fore, was to obtain a measure of how large the exports were relative 
to what ordinarily they would have been for the prevailing price at 
that time. 
The first step in the process was the computation of an index of 
the physical volume of exports. This was done by weighting the 
quantities of each product exported each month by the average 
export price for the period June 30, 1910, to June 30, 1914, with 
pork itself as unity. This gave weights of 1.00 for canned, fresh, or 
pickled pork, 1.19 for bacon, 1.22 for hams and shoulders, and 1.03 
for lard. The resulting index of the physical volume of exports is 
given in Table 2. 
The index of volume of exports was then correlated with the de- 
flated price of hogs (X i2 ) and time, for the period 1907 to 1915, 
giving a multiple correlation of K = 0,695. The regression on time 
was practically zero, showing that there was no significant trend in 
exports over the period. A curve was then constructed by the method 
of curvilinear correlation, to show the net effect of prices upon ex- 
ports, and the exports for each month expressed as a percentage of 
what they would have been had they had the normal relation to 
price at that time, as shown by the trend and the curve. These per- 
centages were found to have some seasonal movement, so they were 
averaged by months for the period 1907-1913, giving the following 
statement of the regular seasonal variation in export demand: 
Average seasonal variation in export demand — Exports, percentage of normal 
amount for the prevailing price 
Per cent Per cent 
January . 96.0 July 103.0 
February 98. 7 August 100. 4 
March 101.9 September 102.0 
April 102.0 October 101.2 
Mav 100.7 November _- 96.7 
June 101.8 ] December 95.8 
The final index of export demand was then computed by dividing 
the previous percentages by the average seasonal variation, elimi- 
nating the regular seasonal variation from the index. As thus com- 
puted, the index represents the relation between the exports of any 
given month and the quantity that ordinarily would be exported 
that month, taking account of the prevailing price, the time of year, 
and the long-time trend in export demand. 
The trend in export demand was very slightly downward for the 
pre-war period. The relation of price to exports is shown in Figure 
27. It is evident that this export demand curve is very different 
from the total demand curve shown previously. The total curve 
measured the effect of supplies upon price; this curve measures the 
effect of prices upon exports. It is probable that a more detailed 
