Popular Science Monthly/Volume 31/October 1887/The Economic Disturbances Since 1873 IV

by David Ames Wells

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THE ECONOMIC DISTURBANCES SINCE 1873.

By Hon. DAVID A. WELLS, LL. D., D. C. L.

IV.

DEPRESSION of prices has, to a large extent, been accepted as a prime cause of the "economic disturbance" which has prevailed since 1873. Indeed, Mr. Robert Giffen, the well-known English economist and officer of the British Board of Trade, in an article contributed to the "Contemporary Review," June, 1885, does not hesitate to express the opinion that "it is clearly unnecessary to assign any other cause for the gloom of the last year or two;" and continuing, he further says:

"The point to which I would draw special attention is, that . . . the most disastrous characteristic of the recent fall of prices has been the descent all round to a lower range than that of which there had been any previous experience. It is this peculiarity which—more than anything else—has aggravated the gloom of merchants and capitalists during the last few years. Fluctuations of prices they are used to. Merchants know that there is one range of prices in a time of buoyancy and inflation, and quite another range of prices in times of discredit. By the customary oscillations, the shrewder business people are enabled to make large profits, but during the last few years the shrewder, as well as the less shrewd, have been tried. Operations they ventured on when prices were falling to the customary low level have failed disastrously, because of a further foil which is altogether without precedent. The change is more like a revolution in prices than anything which usually happens in an ordinary cycle of prosperity and depression in trade."

Here, then, is a description of the extent of the recent fall in prices, and its influence in producing and aggravating the gloom of merchants and capitalists, by one well competent to appreciate and describe what has happened. The point of novelty and greatest significance, however, in Mr. Giffen's statement is, not that a depression of prices has been productive of gloom and a depression of business—for no fact is better recognized by all economists and business men than that on a falling market trade is always stagnant, and that nothing is more productive of gloom to the industrial and mercantile community owning or carrying stocks of merchandise than losses experienced or anticipated through a fall in prices; but that the recent fall in the prices of the great staple commodities of the world has been in extent and character without precedent in the world's history.^[1]

A further fact of the highest importance, and one that is not disputed, is, that no peculiarity of currency, banking, or standard of value, or form of government, or incidence and degree of taxation, or military system, or condition of land tenure, or legislation respecting trade, tariffs and bounties, or differences in the relations between capital and labor in different countries, has been sufficient to guard and save any nation from the economic disturbances or trade depression which has been incident to such changes in prices.

An analysis of British exports and imports for 1886, with comparisons of similar data for the previous year, 1885 (presented by the "London Economist" in its issues for January 22 and 29, 1887), furnishes, moreover, some information, almost, if not fully, in the nature of a demonstration of the continued tendency of prices to decline during the latest period for which accurate data are (at present) accessible, and also of the continued universality of such tendency. Thus, looking first at exports, it appears that there was an increase during the year 1886 in the quantities of British and colonial commodities exported of 6·02 per cent, as compared with similar aggregates for 1885; or Great Britain sent out 106,020 pounds, tons, or other quantities in 1886, in place of 100,000 in 1885. Comparing, however, the sum which the quantities actually exported in 1886 would have cost at the prices of 1885, a decline in price is indicated of 6·34 per cent; or while sending away 106,020 pounds, tons, or other quantities in 1886, as compared with 100,000 in 1885, Great Britain received back in money value only $893,660 for the same quantities which in the previous year brought $100,000.

"A similar examination of British imports for 1886 also brings out the further interesting fact that the average decline in the prices of the goods imported was almost precisely the same as in prices of goods exported. The increase in quantities of imports was less than one per cent; or the country brought in 100,796 pounds, tons, or other quantities, in place of 100,000 in 1885. But the decline in prices was 6·373 per cent; so that the country paid only $93,627 for the same quantities for which it paid $100,000 in the previous year. The decline in the general range of prices for the year 1886, as measured by the actual exports and imports of the greatest exporting and importing nation of the world, would therefore appear to have been in excess of six per cent; and this decline would seem to have occurred during the same period in all those countries in which Great Britain deals as a seller equally with those in which she deals as a buyer; or, in other words, this decline was practically universal."^[2]

The question which here naturally suggests itself, as to what in general has been the extent of the recent fall in prices, is perhaps best answered from the basis of English figures, by Mr. Augustus Sauerbeck, who, as the result of an exhaustive inquiry into the price movements of thirty-eight leading articles of raw produce since 1818-'27 (communicated to the Statistical Society of London and published in the journal of their "Proceedings" for September, 1886, and March, 1887), has arrived at the following conclusions: There was a persistent decline in the average prices of general commodities in England from the beginning to the middle of the present century; or, more exactly, to 1849. From thence there was an advance, which culminated in 1873. But leaving out of consideration a remarkable speculative period from 1870 to 1874, coincident with the Franco-German War and the payment of the war indemnity by France, during which period prices rose with great rapidity from 1870 to 1873, and fell in the succeeding year (1874) below their average starting-point in 1870, the decline of prices may be regarded as having been continuous from 1864 to 1886. Compared with the average prices of general commodities from 1867-'77, the period from 1878-'85 shows a depreciation of 18 per cent. But if the average prices of 1885 alone be taken, the decline from the average for 1867-'77 is 28 per cent; or continuing the comparison through 1886 and embracing a somewhat larger number of articles, the average depreciation, in the opinion of Mr. Sauerbeck, has amounted to 31 per cent. Furthermore, the average level of prices for 1886, according to the tables of Mr. Sauerbeck, was considerably below the average for the year 1848, which in turn appears to have been the lowest previous point for the century subsequent to 1820.

Many similar inquiries, embracing in some instances a much larger number of articles than were selected by Mr. Sauerbeck, have been instituted in recent years by other investigators in England, France, Germany, and the United States; but the conclusions arrived at are respectively so divergent that no figure representing the average decline during the period under investigation would probably be universally accepted as in every way satisfactory and conclusive.^[3]

The usual method employed by European economists in order to form a correct idea of the changes of prices in one period as compared with another, is to take the prices of certain selected commodities in a given year, or the average prices of a series of years, as the standard; represent this by the figure 100 or 1,000, and then note the increase or decrease in price in the case of each article in each subsequent year in proportion to this standard. Combining the percentage of price alterations among all the articles, a total of the variations experienced becomes known, and the number thus obtained is termed an index number for the year, or other period under consideration; or a number expressive of the ratio of price at a given date to the average of some former period. Thus, for example, if the average prices of forty articles in the year 1880 were to be taken at 100, and the average decline in the prices of these same articles for the year 1810 was found to be 20 per cent, the index number for the year 1800 would be 100, and for the year 1810, 80.^[4]

The difficulties in the way of obtaining satisfactory averages from comparisons of prices at different periods by the above or any other methods are, however, almost insuperable; so that it may well be doubted whether the determination of an average of general prices is ever within the bounds of possibility. Quotations for a given day, or month, do not necessarily show the average for the year; and, in like manner, the selection of a limited number of articles for comparison can not insure correct conclusions respecting the movement of prices in general. All methods of comparing price variations which content themselves with mere average quotations of different articles, and which do not pay due regard to the relative importance of each article in the domestic and foreign commerce of a country; which, for example, allow a change of 80 per cent in the price of an article like cochineal, of which the value sold in any one year is small, to balance a change of 2 per cent in an article, like sugar, the value of which annually sold is enormous, are also in a great degree deceptive and worthless;^[5] and even when in the comparison of prices, the importance of considering relative quantities is fully recognized, the data for ascertaining these relations are extremely uncertain and questionable. The utmost of service that all such tabular comparisons of prices, even when prepared with all desirable qualifications, are capable of rendering, would, therefore, seem to be limited to the affording of important inferences respecting variations of prices, or to the showing whether a pound sterling or a dollar would have bought more or less of a given number of bushels, yards, or pounds at one time than another. In all other respects they are little other than curiosities; inasmuch as if some articles in a given period have risen and others have fallen in price, and if the fall of some and the rise of others can be undoubtedly traced to the action of entirely different causes, the grouping of these facts into the form of tables, and the endeavor to reduce the sum of the respective changes to a common average, can prove nothing whatever as to the cause or causes which have been operative in producing the changes. And between such discordant results effected by entirely diverse influences, there would, furthermore, seem to be no possibility of establishing an average; for the price of some articles, whose use has been superseded or impaired by change of fashion or new inventions, may fall nearly or quite to zero, while the price of others, by reason of increased demand or interrupted supply, may rise almost to infinity by comparison; and between such extremes there may be any number of gradations.

All, therefore, that can be confidently affirmed in respect to the extent of the recent depression of prices is, that comparing the data for 1885-86 with those of 1866-'76, the decline has been extraordinary and has affected most articles and most countries; and that the estimate of Mr. Sauerbeck (before referred to), of 30 per cent as the average measure or extent of the decline, is not excessive.

It seems almost unnecessary to remark, that a fall of prices, although commonly so considered, can not, in any comprehensive discussion, be regarded as in any sense a primary cause of economic disturbances; but that here again something antecedent in the nature of a cause or causes, more or less general, must be sought for in explanation. And of such causes, two only that are worthy of attention have been suggested: First, a great multiplication and cheapening of commodities through new conditions of production and distribution, which in turn have been mainly due to the progress of invention and discovery; and, second, that the precious metal used for standard money, viz., gold, has, through relative scarcity, owing to diminished production and increased demand, greatly appreciated in value; in consequence of which a given amount of gold buys more than formerly; or, what is the same thing, the price or purchasing power of commodities, in comparison with gold, has fallen.

As to which of these two causes has been most influential in occasioning the recent great decline in prices, the best authorities who have investigated the subject, as is well known, widely differ. It is also well recognized that the determination of this question is almost fundamental in the so-called bimetallic controversy; the plea for an increased use of silver as money being wholly predicated on an alleged insufficiency in the supply of gold for effecting the world's exchanges, while ample evidence of the scarcity of gold is claimed to be found in the remarkable fall of prices which has been recently experienced. It is, however, a universally accepted canon, alike in logic and common sense, that extraordinary and complex agencies should never be invoked for the explanation of phenomena, so long as ordinary and simple ones are equally available and satisfactory for the same purpose. And with this premise, it is a matter of the highest interest and importance to observe how, with very few exceptions, the phenomenal decline in recent years of the prices of the world's great staple commodities admits not only of a ready and complete explanation in accordance with the first cause, but is, in fact, in the nature of an inevitable sequence from it; and, in support of this proposition, attention is asked to the nature of the agencies which have been so identical, absolute, and exclusive in determining the recent decline of prices in the case of such a number of what must be regarded as typically staple commodities, that their conjoined experiences would seem so fully to establish a rule, as almost to compel all antagonizing results, especially in the case of products of minor importance, to be regarded in the light of unimportant exceptions.

What these agencies have been, how they have acted, and what disturbing influences they have exerted on the world's prices, on the world's industries, commerce, and consumption, and on pre-existing relations of labor and capital, will, when fully told, constitute one of the most important and interesting chapters of political economy and commercial history. Such a complete statement it is not at present proposed to attempt; but the following exhibit of results, derived from a study of what may be termed the recent production and price experiences of a considerable number of important commodities, will, it is thought, better contribute to an understanding of the situation, and to a solution of the difficult economic problems involved in it, than any other method hitherto adopted.^[6]

The commodity of prime importance in the commerce and consumption of the world, which appears to have experienced the greatest recent decline in price, is sugar, which has fallen to a lower rate than has ever been known in the history of modern commerce; the wholesale price of fair refining sugars having been more than 114 per cent higher in 1880 than in the first half of the year 1887.^[7]

Now, while improved methods of manufacture and greater and cheaper facilities for transportation have undoubtedly contributed to such a result, it has been mainly due to an apparent desire, as M. Leroy-Beaulieu has expressed it, on the part of the Governments of France, Germany, Austria, Belgium, Holland, Italy, and Russia, "to make their national sugar industry the greatest in the world" by stimulating the domestic production of this commodity by the payment of extraordinary bounties on its exportation to other countries; or, in other words, by competing with one another in paying large sums for the purpose of speedily getting rid, at little or no profit, of one of the most valuable and highly-desired products of human industry.

On the other hand, in order to neutralize to some extent the exceptional advantages enjoyed through such an economic policy by the producers of beet-sugar in Europe, some of the cane-growing countries have felt obliged to encourage, by subsidies or tax-exemptions, their own sugar-production. In both Brazil and the Argentine Republic the manufacturers of cane-sugar have obtained a guarantee from the state of a five to six per cent return on their capital invested; while all the machinery needed in this industry may be imported free of duty. In the Spanish West Indies the home government has finally (1887) felt compelled to relinquish the export duties on sugars—the produce of Cuba and Porto Rico—which have long been regarded as almost indispensable on account of revenue necessities; while in South Africa and Australia the production of sugar has also been encouraged to such an extent that both of these countries will hereafter be undoubtedly included among the number of important sugar-exporting regions. In Central America, the British and Dutch West India Islands, Guiana, and India (which last produces more sugar than any other country) production has not as yet been artificially encouraged, and, with the exception of the levying of export taxes in certain localities, neither have any impediments been placed in the way of the natural growth of production. But at the same time it can not be doubted that the recent increased facilities for transportation and communication have, as before pointed out, been in the nature of a stimulus to the production of sugar, in common with all other commodities, and have opened up large and fertile sections of the earth, which a quarter of a century ago were practically inaccessible.

Under such conditions the increase in the production of sugar entering into the world's commerce, and available for general consumption, has been extraordinary. Mr. Sauerbeck estimates the increase from 1872-'73 to 1885-'86 to have been 68 per cent. Other authorities estimate the increase from 1853 to 1884, exclusive of the product of India and China, to have been at the rate of 30 per cent for each decade—or about 100 per cent compounded. In the Hawaiian Islands, where a remission of duties on sugars exported to the United States is equivalent to an export bounty of about 100 per cent, the domestic production of sugar has increased from about 12,000 tons in 1875 (the year before the duties were remitted) to 110,000 tons in 1886, an increase in eleven years of 750 per cent. The part that beetroot sugar has played in this increase is shown by the circumstance that while in 1860 the proportion of this variety to the whole sugar product of the world (commercially reported) was less than 20 per cent, the product for 1886-'87 is estimated as in excess of 55 per cent; Germany alone having increased her product from about 200,000 tons in 1876 to 594,000 tons in 1880-'81, and to 1,155,000 tons in 1884-'85; while the increase of the beet-sugar product in the other bounty-paying states of Europe was not disproportionate.

Of this extraordinary increase of product, as large a proportion as foreign markets would take was, as a matter of course, exported in order to obtain the benefit of the government bounties on exports; the sugar-export of Germany alone increasing from about 500,000 cwt. in 1876 to over 6,000,000 cwt. in 1885, and, with every increase of exportation, the government disbursements on account of export bounties increased proportionally. The export bounty paid by Russia is estimated to have been as high at one time as $31.25 (£6 8s.) per ton; and that of France at between $35 and $40 (£7 and £8), entailing a present direct and indirect tax (French colonial sugars being admitted to the home market at reduced import rates), according to estimates recently presented by M. Dauphin, in the French Chamber of Deputies, of £3,280,000 ($16,400,000) per annum. In Germany the amount paid in the way of subsidies on sugar was estimated by Deputy Gehlert, in a speech in the German Reichstag in 1886, as having up to that time approximated $40,000,000; while for the year 1885, $10,000,000, it was claimed would be necessary, or an amount equal to the total wages paid to all workmen in all the German sugar-refineries. As might also have been expected, the profits of producers, and more especially of the sugar-refiners, working under the bounty (export) system, were at the same time enormously increased. In Germany the largest and best-managed beet-sugar manufactories divided for a series of years dividends to the extent of 60, 70, 90, and in one instance 125 per cent per annum on the capital invested;^[8] and corresponding results were also reported in Austria, Russia, France, and Belgium. How rapidly and extensively sugar has declined in price, consequent upon such an extraordinary and unnatural increase in production, has already been pointed out. How much of disaster this decline has brought to great business interests and to the material prosperity, and even the civilization, of large areas of the earth's surface, will be made a subject of future notice.

Wheat.—The next important commodity to the recent production and price experiences of which attention will be asked, is wheat. The average price of British wheat for the last week in July, 1882, was 50s. per imperial quarter. For the corresponding dates for 1885 it was 32s. 11d., and for 1886, 31s. 3d. per quarter;^[9] which last quotation was the lowest since average market prices have been officially recorded.^[10]

The average price of wheat in the English markets for the decade from 1870 to 1880 was 43 per cent higher than the average of 1886; and the average prices from 1859 to 1872 were 68 per cent higher than the average of 1886.

An analysis of the comparative prices of wheat in the United States furnishes corresponding results; the average price of No. 2 spring wheat having declined in the Chicago market from $1.10 (gold) in 1872 to 76 12 cents in 1886; and 67 cents in July, 1887; a price equivalent to 29s. per quarter in the harbor at Liverpool, or 86 cents per bushel, cost, freight, insurance included. This is about the lowest price ever reported. The average annual export price of wheat for the whole country declined from $1.24 per bushel, in 1880, to 86·2 in 1885, and 87 in 1886. The average price of wheat in Chicago from 1872-'78 was $1.04 gold; and the decline to the average price of 1886 was about 28 cents, representing a loss to the American producers of wheat on an average crop of at least $150,000,000 per annum. For such results an all-sufficient explanation would seem to be found in the circumstance, that all investigation shows that the comparatively recent increase in the world's supply of food has been greatly in excess of the concurrent increase of the world's population; that there has been in the last decade a large increase in the area of land devoted to the cultivation of cereals; an increase (due to better methods of tillage) in the average product per acre; and an immense increase in the facilities for transportation, coupled with a greatly reduced cost, which has made product more accessible and accordingly more available for distribution. The most salient points of the evidence tending to these conclusions are as follows: The cereal production of the United States increased from 932,752,000 bushels in 1862 to 2,992,881,000 in 1884; and in acreage from 34,594,381 to 136,292,766; or in the respective ratios of 452 and 338 per cent, respectively. The average wheat production of the United States for the five years from 1881 to 1885, inclusive, was 436,000,000 bushels; while for the ten years preceding—some of which supplied the heaviest demands for exportation ever experienced—the average was only 366,000,000 bushels. According to Mr. Neumann Spallart, a German statistician of repute, the production of cereals in Europe doubled from 1869 to 1879; and in the case of Russia, her exports of wheat increased from 36,565,000 bushels in 1880 to 67,717,000 in 1884. According to figures of the United States Bureau of Agriculture, the average production of wheat in Europe, for the five years from 1875 to 1881, inclusive, "increased some 50,000,000 bushels over the average of the ten years preceding, which included several seasons of unusually low yield in Western Europe." In 1862 the United States exported breadstuffs to the value of $24,000,000; in 1872 the corresponding value was $87,000,000; and in 1880, $288,000,000; and if since this latter year there has been a decline in the value of American cereal exports, it can not be attributed to any impairment of ability to produce and export, if sufficient inducements existed. Of the respective wheat-crops of the United States for the years 1884-'86, 30 per cent—in the form of wheat and flour—have been exported, the largest proportion ever recorded, except during the era of crop failures in Western Europe—i.e., 1878-1883. While, therefore, it is clear that the comparative product of the heretofore great wheat-producing countries has not diminished, recent experiences are also making it evident that the world is hereafter to derive important supplies of wheat from sources which a few years ago did not exist, or were regarded as of little importance. For example, British India, which in 1880 exported only 13,896,000 bushels, in 1885 exported 39,312,000 bushels, and whose increase of wheat exports appears to be coincident with the increase of the railway mileage of the country. During the same period Australia and New Zealand, where a rapid growth of population inevitably tends to divert agricultural industry from wool-producing to wheat-growing, increased their exports from 13,999,000 bushels in 1880 to 19,466,000 in 1885; and the Argentine Republic, from 5,772 bushels in 1881 to 3,986,000 in 1884. All the indications are, furthermore, that the increase of wheat supplies from new sources is likely to be continuous and of great magnitude: from India, whose internal and foreign commerce is yet only in its infancy, but is developing with extraordinary rapidity under the influence of railroad construction;^[11] from the great wheat region of Manitoba, to open which the Canadian Pacific railroad was mainly constructed; from Algeria and Northern Africa, which, once the granaries of the Roman world, are now, for the first time for centuries, contributing something to the world's surplus of cereals; and from the South American states of the Argentine Republic and Chili, where extraordinary railroad construction is rapidly drawing an extraordinary European immigration to the finest of wheat-lands, which so recently as 1880 were practically inaccessible. Great, also, as is the present wheat product of the United States, Mr. Atkinson has shown that all the land at present in actual use in that whole country for growing maize or Indian corn, wheat, hay, oats, and cotton is only 272,000 square miles, out of 1,500,000 miles of arable land embraced in its present national domain; and, also, that the present entire wheat-crop of the United States could be grown on wheat-land of the best quality selected from that part of the area of the State of Texas by which that single State exceeds the present area of the German Empire.

In short, it would seem as if the world in general, for the first time in its history, had now good and sufficient reasons for feeling free from all apprehensions of a scarcity or dearness of bread. But while this is certainly a matter for congratulation, are there not, on the other hand, reasons for apprehension of serious disturbances to the material interests of that large part of the world's population engaged in agriculture, from the continued abundant production and decline in the price of their products?

The effect of the extensive fall in prices of agricultural products during the last decade has, as already pointed out, been most disastrous to the agricultural interests and population of Europe. It has reduced farming in England and Germany to the lowest stage of vitality, and has had less but similar effects in France, Italy, and Belgium. It has almost bankrupted the sugar-producing interests in the West Indies and the Dutch East Indies, and threatens the continuance of productive industries, and even of civilization, in these countries.^[12] In 1880, 44

per cent of the entire population of the United States was engaged in agriculture, and less than 7 per cent in manufactures; and since the year 1820, or for a period of sixty-six years, the proportion between the agricultural and non-agricultural exports of this country has been remarkably steady, the average for the former for the whole of this period having been about 78 per cent. Up to the present time there has been little tendency to change in these proportions; but, if the continued fall of prices of agricultural products in the United States and other countries should compel their farming populations to seek other employments, what other employments are open to them? That the world will ultimately adjust itself to all new conditions may not be doubted; but what of the period pending adjustment?^[13]

Meats.—The price of meats, according to the statistics of English markets, exhibits no material decline, comparing the average prices of 1867-'77 and of 1878-'85. But during the years 1885 and 1886 the decline was very considerable, and extended also to most other animal products. The percentage of fall in the carcass prices of different kinds and quantities of meat in London, as given by the London "Economist" of November 27, 1885, was, in comparison with the prices for 1879, as follows: For inferior beef, 43 per cent; prime beef, 18 per cent; prime mutton, 13 per cent; large pork, 22 per cent; middling mutton, 27 per cent.

The immediate cause of this decline was undoubtedly the new sources of supply of live animals and fresh meats that have been opened up to Europe, and especially to Great Britain, from other than European countries: the value of the imports into Great Britain from North America of live animals having increased from $1,085,000 in 1876 to $22,980,000 in 1885; of fresh meat from 81,950,000 to $11,820,000; and of fresh meat from Australia and the River Plate (transported through refrigeration) from $890,000 in 1882 to $5,850,000 in 1885; a total increase of from $3,025,000 in 1870 to $40,650,000 in 1885. The ability of the three countries named to increase their exports of meat during such a brief period to such an enormous extent, constitutes of itself a demonstration of increased product and of the diminished price that is the invariable accompaniment of a surplus seeking a market. The decline in the average export price of salt beef in the United States was from 8·2 cents per pound in 1884 to 6 cents in 1886 (26 per cent); of salt pork from 8·2 cents to 5·9 cents

(27 per cent); of bacon and hams from 9·6 cents to 7·5 cents; and of lard from 9·4 cents to 6·9 cents. In the case of lard-oil an exceptionally great decline in price in recent years—i.e., from an average of 94 cents per gallon (Cincinnati market) in 1881-'82 to a minimum of 48·8 cents in 1886, is claimed to be due mainly to the large production and more general use of vegetable oils—cotton-seed oil in the United States, and palm and cocoanut oils in Europe. The effect of the increased quantity and cheapness of these vegetable oils has been especially marked in England, France, Italy, and Germany; and has also undoubtedly influenced the price of tallow, the decline in which in English markets, comparing the average prices of 1867-'77 with those of 1886, having been 31 per cent, while in the United States the price for 1884-'85 was the lowest on record.

Cheese.—American cheese experienced an extraordinary decline in price from 12 and 13 cents in 1880 to 8 38 and 10 18 cents in 1885; and as the American contribution of this article of food to the world's consumption has constituted in recent years a large factor, the world's prices generally corresponded with those of the American market. This decline in the United States was due mainly to increased product; the relative prices of butter and cheese during the years 1880-'81 being so much to the advantage of the latter, that large quantities of milk which had previously gone to the creameries to be made into butter, found their way into factories to be made into cheese; and for the years 1883, 1884, and 1885 the annual receipts at New York city averaged 25 per cent in excess of the receipts for 1880. Demand for export at the same time largely fell off, and so assisted in the decline of prices; the same influences existing in the United States having also apparently prevailed to a degree in other cheese-producing countries, the amount recognized by the trade as supplied to the great cheese-consuming countries, Great Britain, the Continent of Europe, and South America, having increased from 1880 to 1884 to the extent of 14 per cent.

Fish.—The year 1884 in the United States was notable for a plethora of all kinds of dry and pickled fish on the one hand, and of extreme low prices of such commodities on the other; mackerel having touched a lower price in the Boston market than for any year since 1849, while for codfish the price was less than at any time since the year 1838.

Coffee and Tea.—The decline in recent years in the prices of each of these great staple commodities has been almost as remarkable as has been the case with sugar, coffee having touched the lowest prices ever known in commerce in the early months of 1886, the price of "ordinary," or "exchange standard No. 5," having been 7 12 cents per pound in January of that year in the New York market; while, according to Mr. Giffen, of the British Board of Trade, the decline in the price of tea, comparing 1882 with 1861, has been greater than that of sugar, or, indeed, of almost any other article. In both cases the decline would seem to find a sufficient explanation in a common expression of the trade circulars, "Our supplies have far outrun our consumptive requirements." In the case of coffee, the total imports into Europe and the United States, comparing the receipts of the year 1885 with 1873, showed an increase of 57 per cent; while the increase in the crops of Brazil, Ceylon, and Java during the same period has been estimated at 52 per cent. Subsequent to January, 1886, the price of coffee, owing to a partial failure of the Brazil crop, rapidly advanced more than 150 per cent, "ordinary" or "exchange" standards having sold in New York in June, 1886, at 22 cents per pound, the highest point in the history of American trade, unless possibly during the war, when entirely abnormal circumstances controlled prices. From these high prices there was a subsequent disastrous reaction and extensive failures. In the matter of the supply of tea, the total exports from China and India increased from 234,000,000 pounds in 1873 to 337,000,000 pounds in 1885, or 44 per cent; the exports from India having increased from 35,000,000 pounds in 1879 to 68,000,000 pounds in 1885.^[14]

Hops.—The report of the German Hop-Growers' Association for 1886 estimates the quantity grown throughout the world in that year at 93,340 tons, and the annual consumption at only 83,200 tons, so that there was an excess of production over consumption in 1886 of nearly 10,000 tons. As might have been expected, there was a notable decline in the world's prices for hops.

Such having been the production and price experience in recent years of the world's great food commodities, attention is next invited to a similar record of experience in respect to the metals.

Iron.—Sir Lowthian Bell, recognized as one of the best authorities on the production of iron and steel, in his testimony before the Royal British Commission in 1885, fixed the world's production of pig-iron in 1870 at 11,565,000 tons, which increased to 14,345,000 tons in 1872. From that date production continued almost stationary until 1879, when it was 14,048,000 tons. "After 1879 an extraordinary change became apparent in the volume of the make, for during the ensuing five years the average make was 18,000,000 tons, and in 1883 it rose to 21,063,000, or nearly 50 per cent more than it was in 1879." The witness further estimated that while the product of iron increased in the United Kingdom at the rate of 131 per cent from 1870 to 1884, the increase in the production of the rest of the world during the same period had been 237 per cent.

The tables of the American Iron and Steel Association, prepared by Mr. James M. Swank, indicate an increase in the pig-iron product of the world, from 1870 to 1886 inclusive, of about 100 per cent. All authorities are therefore substantially agreed that the increase in the production of this commodity in recent years has been not only far in excess of the increase of the world's population in general, but also of the increase of the population of the principal iron-producing countries. Thus, for example, in the United States, the production increased from 4,044,526 gross tons in 1885 to 5,683,329 in 1886, an increase of 1,638,803 tons, or 40 per cent.

Under such circumstances, the price of pig-iron throughout the world has rapidly declined, and in the case of some varieties touched in 1885-'86 the lowest points in the history of the trade. American pig, which sold in February, 1880, for $45 per ton, declined almost continuously until September, 1885, when the low point of $16 58 was reached; while in Great Britain, Cleveland pig, which sold for £4 17s. 1d. in 1872, and £2 5s. in 1880, declined to £1 10s. 9d. in 1886. The decline in Bessemer steel rails in the English market was from £12 1s. 1d. in 1874 to less than £4 in 1887. In the United States, Bessemer steel rails, which commanded $58 per ton at the mills in 1880, fell to $28.25 at the close of the year 1884, reacting to $3912 in March, 1887.

Reviewing, specifically, the causes which have contributed to the above-noted extraordinary decline in the prices of iron, the following points are worthy of notice:

First. The testimony of Sir Lowthian Bell shows that foreign countries have within recent years, and contrary to former experience, increased their production of iron in a far greater ratio than Great Britain, which was formerly the chief factor in the world's supply; and, in consequence, have become formidable competitors with Great Britain, not only in their own territories, but also in neutral markets. New fields of iron-ore have been discovered in Germany, France, and Belgium, very analogous in point of character to those which by discovery and development, about the year 1850, in the north of England, led to the subsequent great and rapid increase of British iron production.

Second. The power of producing iron with a given amount of labor and capital has, in recent years, greatly increased. For example, the average product per man of the furnaces of Great Britain, which for 1870 was estimated at 173 tons, is reported to have been 194 tons in 1880, and 261 tons in 1884.

Third. The substitution of steel for iron has resulted in a notable diminution of the consumption of iron for the attainment of a given result, or, in other words, more work is attainable from a less weight of material. Sir Lowthian Bell, in his testimony before the Royal British Commission, stated that a ship of 1,700 tons requires 17 per cent less in weight of pig-iron, in being built of steel rather than of iron, and is capable of doing 7 per cent more work.

Again, the quantity of pig-iron requisite for keeping a railroad in repair will depend greatly upon the state in which iron enters into construction; rails of steel, for example, having a far greater durability than rails of iron.^[15]

A further example of recent economic disturbance consequent upon changes in the manufacture of iron—characterized by the Secretary of the British Iron Trade Association, in his report for 1886, as "one of the most remarkable of modern times"—is to be found in the rapid disuse of the system invented about one hundred years ago by Henry Cort for converting pig-iron into malleable iron by the so-called process of "puddling." Twenty years ago the use of this process was almost universal, to-day it is almost a thing that has past; and the loss of British capital invested in puddling-furnaces which have been abandoned in the ten years from 1875 to 1885, is estimated to have approximated £4,667,000, or $23,333,000, involving in Great Britain alone a displacement, or transfer of workmen to other branches of industry during the same period of about 39,000.

Copper.—This metal touched the lowest price on record in 1886, Lake Superior copper in New York falling from 25 cents per pound in 1880 to 912 cents in August, 1886; and in the case of no other single commodity is the connection between the decline in price and the increase of production so well established and so significant. The increase in the copper product of the world is estimated by Mr. Sauerbeck to have been 97 per cent in the thirteen years from 1873 to 1885, inclusive; while according to the report of the United States Geological Survey, 1886, the increase from 1879 to 1885 was nearly 47 per cent (46·8). The countries which have most notably contributed to this increased product have been the United States, Spain, and Portugal; the increase in the case of the former having been from 23,000 tons in 1879 to 74,053 tons in 1885; and in that of the latter, from 32,677 tons to 45,749 in the same period. As in all other like cases, the disturbing effect on the industries involved—mining and smelting—contingent on this rapid and remarkable fall of prices, was very great, and in all quarters of the world. In Montana, the Montana Copper Company, with an annual product of 8,000,000 pounds of pure copper, entirely suspended operations; and the Anaconda Company, with an annual product of 36,000,000 pounds, shut down 20 out of 28 furnaces, and discharged most of its hands at the mine. In Chili, production during the year 1885 was diminished to the extent of about 10 per cent. In Germany the great Mansfield mine, which reported gross profits in 1884 of 5,675,000 marks, sustained a loss in the operation of 1885 of 653,338 marks; and its managers have since sought relief by petitioning the Imperial Government for the imposition of a higher tariff on the imports of copper into the empire. For the years 1881-'83 the great San Domingo mine in Portugal paid annual dividends of 1212 per cent; in 1885 the annual rate was reduced to 334 per cent. It is important also to note, as throwing light upon the problem of the recent reduction of prices, that while in the case of copper the increase of product has been confessedly immense, three other agencies—one permanent, and the other two of a temporary character—have contributed to its recent decline in price. The first is, that there has been a reduction in the cost of mining, smelting, and marketing copper at the principal mines of the world, owing to improved processes, and reduced rates of transportation contingent on railroad construction. In the case of the Lake Superior mines, this reduction is very striking; in the "Quincy" mine, for example, the cost of production in cents per pound having been reduced from 10·03 in 1881, to 7·50 in 1885; and in the "Atlantic" from 13·80 to 9·37 in the corresponding period. Second. The recent discovery and rapid development of new and rich mines in Montana, Arizona, the Dominion of Canada, and elsewhere, have left a feeling of apprehension in the world's market as to the conditions of the supply of this metal in the future. Third. The consumption of copper in Europe, for the year 1886, fell off 14,000 tons below the average for the two preceding years—a result attributed mainly to the dullness of ship-building, and the various metal industries.

Lead experienced a decline, comparing the highest market prices in New York, in January, 1880 and 1885, respectively, of about 39 per cent; or, comparing the average of prices for New York and London for the same years, about 30 per cent. The world's production of lead between the years 1880 and 1883 appears to have increased in nearly the same ratio, or far in excess of the increase of the world's population within the same period. With an approaching exhaustion of a number of the heaviest lead-producing mines in the Rocky Mountains, United States,^[16] and a notable decline in the lead product of British ores (50,328 tons in 1882 as compared with 37,687 tons in 1885), the price of lead tends to increase. The decline in the price of lead, above noted, occasioned the suspension or bankruptcy of many English lead-mining companies, and during the year 1885 much distress from this cause was reported as existing among English lead-miners. The following is an example of another economic disturbance contingent on changes in the production and price of lead: Formerly the domestic supply in the United States of white-lead and of all paints, the basis of which is oxide of lead, was derived almost exclusively from manufactories situated upon the Atlantic seaboard; but with the discovery and working of the so-called silver-lead mines of the States and Territories west of the Mississippi, and the production of large quantities of lead as a product residual, or secondary to silver, the inducements offered for the manufacture of white-lead and lead-paints, through local reductions in the price of the raw material and the saving of freights, have been almost sufficient to destroy the former extensive white-lead and paint business in the eastern sections of the United States, and transfer it to the western.

Nickel, not many years ago, was a scarce metal of limited uses, and commanded comparatively high prices. Latterly the discovery of new and cheaper sources of supply has tended to throw upon the market an amount in excess of the world's present average yearly consumption—estimated at between 800 and 900 tons—and, as a consequence, there has been "over-production, and unsatisfactory prices to dealers." There is, moreover, little prospect that prices in respect to this metal will ever revive—one mine in New Caledonia alone being estimated as capable of producing two or three thousand tons annually, if required; while the discovery of richer and more abundant ore deposits than have ever before been known is reported as having resulted from the construction of the Canadian Pacific Railroad.

Tin.—The production and price experiences of this metal during the last quarter of a century have been very curious. The world's consumption of tin from 1860-'64 constantly tended to be in excess of production, and prices rose from £87 (the lowest figure) in 1864 to £159 (the highest) in 1872. In this latter year the mines of Australia began to produce very largely, and in a short time afforded a supply equal to one third of the world's current consumption. Under such circumstances the price of tin rapidly declined, and in October, 1878, touched £52 10s., the lowest price ever known in history; a decline of 66 per cent. For some years past, however, the product of tin in Australia has been declining, that of the "Straits" increasing, and that of England and other countries remaining nearly stationary. But the consumption of tin throughout the world has gone on continually increasing, until now the surplus stock is being so rapidly reduced, that unless new sources of supply are developed, famine rates may again occur; prices having advanced continuously from £52 10s. in 1879 to £107 in June, 1887.

Tin Plates.—Owing to a well-recognized tendency of consumption to exceed production, tin plates in common with tin ruled at what were termed "famine" prices in 1872, and for some years previous; the average price for "coke" plates being from 26s. to 27s. per ton. Since 1872 the decline has been in excess of 50 per cent—the quotations for the first half of the year 1887 having been from 12s. 6d. to 13s. per box. This remarkable and steady decline in the prices of this commodity during the last fifteen years, is as clearly and certainly understood as in the case of tin, above noticed; and is referable to three causes: First, the reduction in the cost of the metal tin. Second, to the revolution in the manufacture of iron, and the extensive substitution of steel (plates) in place of charcoal and puddled iron plates. Third, to new processes of manufacture and tinning; a modern tin-plate mill turning out every twenty-four hours more than double the product of old-fashioned mills, without any increase in expenditure for motive power or labor. Supply and consumption alike under such circumstances have increased to an enormous extent, and the tin-plate trade, instead of being a minor industry of the world, as was formerly and not remotely the case, has become one of great magnitude. The decline in prices has, however, brought nothing of prosperity to the British tin-plate manufacturing industry; as out of an average of eighty-two works in existence during recent years in South Wales, there have been no less than forty failures.^[17]

Quicksilver.—Excepting petroleum and quinine, the decline in price of this metal seems to have been greater in recent years than that of any other leading commodity—i. e., from £26 per flask (the highest) on the London market, in 1874, to £5 2s. 6d. (lowest) in 1884; and from $118 (highest) to $26 (lowest) on the San Francisco market during the same period—a decline of 77·1 per cent. The explanation of this movement of price is to be found mainly in the circumstance that California, which furnishes nearly one half of the world's supply of this metal, increased her production from 30,077 flasks in 1870 to 79,684 in 1877; and although, as the result of low prices, only ten of thirty working mines of California were in operation in 1885 (none of which paid a dividend in that year), the generally increased supply of quicksilver, coupled with its diminished use in the reduction of silver-ores—consequent on the introduction and use of cheaper processes—has thus far prevented any material augmentation in its price, the London quotation for June, 1887, having been £6 15s. per flask.

Silver.—The annual supply of silver from the mines of the world has largely increased since 1872-'73, the period covered by the marked decline in the market price of silver, or from $65,000,000 in 1872 to $102,168,000 in 1881; $115,000,000 in 1883, and $124,000,000 in 1885—an increase in supply in fourteen years of 90·7 per cent.^[18]

Coal.—The decline in the export prices of British coal, comparing the average for 1867-'77 with 1886, was about 33 per cent. The decline in the average annual price of anthracite coal (by the cargo at Philadelphia), comparing 1870 with 1880, was 38 percent; but, as between 1870 and 1886, it was only 6·6 per cent. The total production of all kinds of coal in the United States in 1886, according to the returns of the United States Geological Survey, shows a net gain of 1,785,000 short tons, as compared with 1885, but a loss in value at the point of production of $4,419,420.

The increase in the product of the five chief coal-producing countries of the world, Great Britain, the United States, Germany, France, and Belgium, from 1870 to 1886 inclusive, has been in excess of 80 per cent—Great Britain increasing her product from 109,000,000 tons in 1870 to 159,351,000 in 1885; and the United States from 38,468,000 in 1870 to 112,743,000 short tons in 1886. On the other hand, the amount of coal displaced from use in the United States in 1886 by the introduction and use of natural gas is estimated by the United States Geological Survey at 6,353,000 tons, valued at $9,847,000. In Germany, the increase reported was from 36,041,000 tons in 1873 to 55,000,000 tons in 1883. In 1870 the average output of coal per miner in the British coal-mines—counting in all the men employed—was 250 tons, an amount never before reached. In 1879 this average had increased to 280 tons per man, and in 1884 the average for the five preceding years was reported at 322 tons, an increase of 42 gross tons of 21 cwt. per man per annum. For Germany, the increase was from 261 tons in 1881 to 269 tons in 1883; and in Belgium, for corresponding years, from 165 tons to 178 tons per miner.

Recent inventions have also done much to reduce the amount of coal formerly used to effect industrial results, particularly in the case of blast-furnaces and coke-ovens. For example, at blast-furnaces, coal was formerly used for heating the boilers that furnished steam for blowing, hoisting, etc., and for heating the air which was blown into the stacks. Now, a well-ordered set of blast-furnaces does not use a single ounce of coal except what goes in to melt the ore. The whole of the heat used to produce the steam required in connection with the furnace, and for heating the stoves for making the hot blast, is obtained from the gases which rise to the top of the stacks in the process of smelting the iron, and which formerly was all thrown away.^[19]

Petroleum.—Crude petroleum declined in the American market from an average of $3.86 (gold) per barrel in 1870 to 8712 cents per barrel in 1885, and 7112 cents in 1886, a total decline of over 80 per cent.

The American annual production (including Canada) increased during the same period from 5,510,745 barrels in 1870 to 30,626,100 in 1882, declining to 25,798,000 in 1886.

That the production and price experiences of the great staple fibers of commerce and consumption in recent years have not been dissimilar to those of the foods and metals, will also appear from the following:

Cotton.—Comparing 1860 with 1885, the decline in the price of American cotton (middling uplands) in the New York market has not been material. The year 1886, however, witnessed a decline to a lower point (81316) than has been reached, with one exception, since the year 1855; the exception occurring just after the failure of the Glasgow Bank in Scotland in 1878, the lowest quotations in both years being exactly the same. On the other hand, the increase in the world's supply of cotton in recent years has been very considerable, the American crop increasing from 3,930,000 bales in 1872-'73 to 6,575,000 in 1885-'86, or 67 per cent; while the supply of the world for the corresponding period is estimated to have increased from 6,524,000 bales to 8,678,000 bales, or at the rate of about 32 per cent. Such an increase in production would undoubtedly have occasioned a more marked decline in price, had it not been for a great and coincident increase in the world's consumption of cotton fabrics; which, in turn, was undoubtedly in consequence of a material decline in the cost of the same, as the result of improvements in machinery and methods of production; the equivalent of the labor of an operative in the factories of New England having increased from 12,164 yards in 1850 to 19,293 in 1870, and 28,032 in 1884, while the reduction in the price of standard sheetings from 1850 to 1885 has been about 10 per cent, and of standard prints and printing-cloths, during the same period, approximately 40 per cent.

Wool.—According to the statistics of Mr. Sauerbeck ("Journal of Statistical Society," March, 1887), the price of merino wool (Port Philip, Australia, average fleece), comparing the average of the series of years 1867-'77 and 1878-'85, declined 10·7 per cent; or, comparing the average price of 1867-'77 with that of the single year 1886, when wool "was cheaper than at any time within the memory of the present generation," 27 per cent. Certain fibers classed with wool, and known as "alpaca" and "mohair," and the grade of long-combing English wools known as "Lincoln," experienced a much greater decline after 1874-'75, owing to the curious circumstance that a change in fashion in those years almost entirely and suddenly destroyed any demand for the before popular, stiff, lustrous fabrics manufactured from such wools for female wear, and substituted in their place the soft and pliable cloths that are made from the merino wools.

The increase in the production and world's supply of raw wools, from the years 1860 to 1885 inclusive, was about 100 per cent. According to Mr. Sauerbeck's tables, the increase from 1873 to 1885 inclusive, was 20 per cent; according to Messrs. Helmuth, Schwartze & Co., of London, the increase from 1871-'75 to 1881-'85 was 23 per cent; and from 1871-'75 to 1886, 35 per cent. The wool-clip of the United States increased from 264,000,000 pounds in 1880 to 329,000,000 in 1885, or 24·6 per cent in six years. Such an increase in the world's supply of wool would undoubtedly have resulted in a greater decline in prices, had not the increase been accompanied, as was the case with cotton, with a very marked increase during the last quarter of a century in the world's consumption—i.e., from 2·03 pounds of clean wool per head in 1860 to 2·66 pounds in 1886.^[20]

Silk.—The decline in the price of silk (Tsatlee), according to Mr. Sauerbeck, from the average price of 1867-'77 to the average of 1886, was about 40 per cent; and the average increase in supply of all varieties of silk-fiber, comparing 1873 with 1885, was reported by the same authority as about 12 per cent. No relation between the price movements of this commodity and supply and demand or any other agencies can, however, be established, which fails to take into account the great increase in the use of the ramie and other fibers and materials within recent years as substitutes for or adulterations of silk in the manufacture of fabrics, and which must obviously have an effect on the price of raw silk equivalent to an increase in its supply.

Jute.—Good medium jute declined on the London market from £17 per ton in 1874 to an average of £11 10s. in 1886, or more than 32 per cent. The increase in exports from British India was from 5,206,570 cwt. in 1876 to 10,348,909 cwt. in 1883, or 98 per cent.

Nitrate of Soda.—The recent price experiences of nitrate of soda (Chilian saltpeter) have been very curious. The supply of this article, which corresponds to the more valuable nitrate of potash (true saltpeter), is practically limited to one locality on the earth's surface—a rainless, desert tract—in the province of Tarapaca, which formerly belonged to Peru, but has recently been annexed to Chili. It is cheaply and plentifully obtained, at points from fifty to ninety miles from the coast, by dissolving out the nitrate salt from the desert earth, which it impregnates, with water, and concentrating the solution by boiling to the point where the nitrate separates by crystallization. Up to the year 1845 it was an article so little known to commerce, that only 6,000 tons were annually exported; but as its value as a fertilizing agent in agriculture, and as a cheap source of nitrogen in the manufacture of nitric acid, became recognized, the demand for it rapidly increased until the amount exported in 1883 was estimated at 570,000 tons, or more than a thousand million pounds. To meet this demand and obtain the profit resulting from substituting skillful for primitive methods of extracting and marketing the nitrate, foreign capital, mainly English, extensively engaged in the business. A large amount of English-made machinery, and many English engineers and mechanics, were sent out and planted in the desert; additional supplies of water were secured, and a railroad fifty-nine miles in length constructed to the port of Iquique on the sea-coast, for the transportation of coal, provisions, and other material up, and the nitrate as a return freight down. So energetically, moreover, was the work pressed, that at the last and most complete establishment constructed under English auspices, the business, employing when in full operation six hundred men, was prosecuted unremittingly by night (by the agency of the electric light) as well as by day. The result was exactly what might have been anticipated. The export of nitrate, which was 319,000 tons in 1881, rose to 570,000 tons in 1883; and prices at the close of 1883 declined with great rapidity to the extent of more than 50 per cent, or to a point claimed to be below the cost of production. Such a result, threatening the whole business with disaster, led to an agreement on the part of all the interests concerned, to limit from June, 1884, to January, 1887, the product of every establishment to 25 per cent of its capacity. But notwithstanding these well-devised measures, prices have not been restored to their former figures, the average price per cwt. in London having been 10s. in 1886, as compared with an average of 14s. for 1867-77. For May, 1887, the quotations had advanced to 11s. and 11s. 5d. This case is especially worthy of notice, because it constitutes another example of a great and rapid decline in the price of a standard and valuable commodity in the world's commerce, and for which—all the facts being clearly understood—it is not possible to assign any other cause than that of production in excess of any current demand for consumption, and which in turn has been solely contingent on the employment, under novel conditions, of improved methods for overcoming territorial and climatic difficulties.

Concurrently with the fall in the price of nitrate of soda, saltpeter, or nitrate of potash, also notably declined from 28s. 3d. in 1880 to 21s. in 1887 (for English refined), a fact which seems to find a sufficient explanation in the circumstance that nitrate of soda can be used to a certain extent as a substitute for nitrate of potash, and that the export of the latter from India, the country of chief supply, increased from 352,995 cwt. in 1881 to 451,917 cwt. in 1885, or 36 per cent.

Paper.—A quarter of a century ago, or less, paper was made almost exclusively from the fibers of cotton and linen rags; and with an enormous and continually increasing demand, paper and rags not only rapidly increased in price, but continually tended to increase, and thus greatly stimulated effort for the discovery and utilization of new fibrous materials for the manufacture of paper. These efforts have been so eminently successful that immense quantities of pulp suitable for the manufacture of paper are now made from the fibers of wood, straw, and various grasses, and so cheaply that the prices of fair qualities of book-paper have declined since the year 1872 to the extent of fully 50 per cent, while in the case of ordinary "news" the decline has been even greater. Rags, although still extensively used, have, by the competitive supply of substitute materials, and a consequent comparative lack of demand, been also greatly cheapened.

Quinine.—But in no one article has the decline in recent years been more extraordinary and thoroughly capable of explanation than in the case of sulphate of quinine, a standard chemical preparation used extensively all over the world for medicinal purposes. In 1865 the highest price of sulphate of quinine in the English market was 4s. 4d. ($1.07) per ounce, which gradually advanced to 9s. 6d. in 1873, reacting to 6s. 9d. in 1876. In the subsequent year, owing to an interruption in the exportation of cinchona-bark from South America by civil war in New Granada, and by low water in the Magdalena River, the price advanced to the unprecedently high figure of 16s. 6d. ($4.70) per ounce, receding to 13s. in 1879, and 12s. in 1880. In 1883 identically the same article sold in Europe for 3s. 6d. per ounce, and in 1885 for 2s. 6d., a result entirely attributable to the successful and extensive introduction and growth of the cinchona-tree in the British and Dutch East Indies, and to the further very curious circumstance that, while the cinchona-barks from South America—the product of trees—yield on an average not over 2 per cent of quinine, the bark of the cultivated tree in Java is reported to yield from 8 to 12 per cent.

The decline in the prices of many chemicals, due to improvements in methods and to excess of production, has also been very great the decline in soda-ash from 1872 having been 54 per cent, while bleaching-powders (chloride of lime) declined from £10 in 1873 to £6.15 in 1878, reacting to £9 in 1887.

Many other commodities, of greater or less importance, might be included in this investigation, with a deduction of like results; but a further exhibit is not necessary. For it is difficult to see how any one can rise from an examination of the record of the production and price experiences of the commodities which have been specified, which, it must be remembered, represent—considered either from the stand-point of qualities or values—the great bulk of the trade, commerce, and consumption of the world, without being abundantly and conclusively satisfied that the decline in their prices, which has occurred during the last ten or fifteen years, or from 1873, has been so largely due to conditions affecting their supply and demand, that if any or all other causes whatever have contributed to such a result, the influence exerted has not been appreciable; and further, that if the prices of all other commodities, not included in the above record, had confessedly been influenced by a scarcity of gold, the claims preferred by the advocates of the latter theory could not be fairly entitled to any more favorable verdict than that of "not proven."

But have all other commodities, for which conclusive evidence of a recent greatly-augmented production can not be adduced, exhibited in their recent price movements any evidence of having been subjected to any influences attributable to the scarcity of gold? For the consideration of this question, reference is made to the next paper of this series.

 

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Professor N. S. Shaler advocates, in the "Popular Science News," a system of international co-operation in meteorological observation. We need it in order to obtain a wider field whence to draw data for forecasts, so that we may make them for longer periods; for the proper study of the "meteorological unit," which the whole North Atlantic basin constitutes; for the proper determination of the work and influence of the Gulf Stream and of the Pacific Current; for the investigation of variations of the sun's heat, the field of observation for which should cover nearly the whole earth; and for the study of extra-meteorological phenomena like earthquakes and earth-tremors. We can hardly determine what is of importance to the climates of Europe and America without a pretty thorough study of all the great climatal units of the earth. The seven nations, Great Britain, the United States, France, Germany, Russia, Spain, and Holland, with their colonies, are so situated that, with their co-operative action, no great area of the earth, except the polar regions and the central oceanic areas, need be without regular frequent observations in aid of these studies.

1. "Many who discuss this question, and whose opinions generally command deference, appear scarcely to realize the enormous extent of the fall, and it is only by means of very extensive statistics and of a comparison of various periods that a clear insight into the details and a broad view of the whole can be gained."—Augustus Sauerbeck Journal of the Statistical Society of London, September, 1886.
2. New York Commercial Bulletin.
3. The so-called "Hamburg" tables published by the well-known German statistician, Dr. Soetbeer, in 1886, make the average of prices in 1885 10 percent higher than they were in 1847-'50.
4. For a full exhibit and discussion of these tables, reference is made to a paper prepared and laid before the British Royal Commission (third report, Appendix B, pp. 312-390, 1886), by R. H. Inglis Palgrave, F. R. S.; and also to an article in the (Harvard) "Quarterly Journal of Economics" (vol. i, No. 3, Boston, 1887), by Professor J. Laurence Laughlin, Professor of Political Economy, Harvard University.
5. One of the best-known tables of this character, embracing twenty-two different articles, has been kept by the London "Economist" for many years as a constituent element of current British commercial history; and the objections inherent in the system adopted are forcibly illustrated by the following recent occurrence, to which attention has been called by the "New York Commercial Bulletin": Thus, a comparison of index numbers for Januuary and July, 1886, and for January, 1887, as deduced from the "Economist's" tables of prices, indicated a small advance for the latter month in the general level of British prices. But the first article on the "Economist's" list of prices is coffee, which advanced from July 1, 1886, to January, 1887, to a degree sufficient to alone add 50 to the index number of January; while the entire increase for the whole twenty-two articles was only 36; or, in other words, if coffee alone were omitted from the list of articles compared, the net result would show an apparent decline instead of any advance in the general level of prices. "Certainly," as the "Commercial Bulletin" remarks, "it is difficult to attach much importance to results having no better basis than this. For coffee is by no means one of the most important articles compared; it is greatly exceeded in importance by at least twelve of them. But the change in that one article happens to have been surprisingly great, and it thus outweighs far more important changes in other articles, such as iron or meats."
6. "A general movement in prices is the resultant of a number of particular movements, and in these particular movements, again, we find the proximate causes of the distribution of the industrial forces of the world and of the wealth which these forces create."—Professor Nicholson, University of Edinburgh, etc.
7. How continuous and regular has been the decline in the price of sugars in recent years is shown by the following table, which exhibits the average price of fair refining sugars in bond (or free of duty) in New York from 1880 to July, 1887, inclusive:

   1880, 5·08 cents.⁠1885, 3·06 cents.
   1882, 4·53 cents.⁠1886, 2·92 cents.
   1884, 3·31 cents.⁠1887 (lowest to July), 2·3712.

8. "By a law passed in 1809 it was assumed that it took 12 12 centners of beet-roots to give one centner of crude sugar, and a tax was levied on this basis, and a corresponding drawback allowed on exported sugar. Since then great improvements have been made in the process of manufacturing, so that but 10 12 centners of roots are necessary to produce one centner of sugar instead of 1212 as formerly; but the Government continued to grant a drawback on the basis of 1212. The export drawback thus became an enormous premium to the producers, and the German manufacturers have been enabled to supply all Europe with cheap sugar; till, to protect themselves, the other states have had to increase their duties on the imports of foreign sugar."—Report to United States Department of State by Commercial Agent Smith, Mayence, January, 1887.
9. London "Economist."
10. The Eton record gave only 26s. 9 34d. per quarter as the price for the year 1761, when reduced to Winchester bushels; but there is no certainty that the average for the entire year was even in that one market as low as that, and still less that the price was as low in more than one hundred and fifty English market towns as it was in 1886.
11. "There is nothing more remarkable in the history of railway enterprise than the development of the traffic that has occurred on Indian railways within the last ten years, to go no farther back. In 1876 the total quantity of goods-traffic carried on all the railways of India was 5,750,000 tons. In 1886 the quantity was about 19,000,000 tons. In the year 1876 the mileage open was 6,833 miles, so that the volume of goods-traffic carried per mile was about 800 tons. In 1886 the mileage open was 12,376, so that the average volume of traffic carried per mile was over 1,500 tons. The aggregate volume of traffic in the interval had fully trebled, and the average traffic carried per mile open had almost doubled. Notwithstanding these remarkable results, the traffic which has been developed on the railways of India is less, in proportion to the population, than that of any country in the world. This is especially the case in reference to goods-traffic, which only represents some 0·05 of a ton per head of the population, as compared with three tons per head in Canada, and over seven tons per capita in the United Kingdom. But the goods-traffic of India is likely to develop very rapidly in the future, and especially in agricultural produce, of which only about 4,000,000 tons are now annually transported, as compared with 76,000,000 tons in the United States for less than a fourth of the population."—Bradstreet's (N. Y.) Journal.
12. "In consequence of the low prices of sugar in Europe and America, owners of plantations and their lessees have speculated to such an extent that they have placed themselves on the brink of an abyss, and it is feared that this will totally stop the production of sugar in Java. This event would be in every way a great catastrophe. It would at once throw half a million of Javanese laborers out of employment, who would increase the already enormous number of Malay pirates."—Journal des Fabricants de Sucre, October, 1886.
13. A recent writer in the (British) "Quarterly Review" broadly antagonizes the views above expressed respecting the prospective increasing production and continued low prices for wheat, and endeavors to prove that "it has been too hastily assumed that, in the struggle for existence among wheat-growers, the British, the best farmers in the world, will not be among the fittest who will survive." In support of this conclusion the writer starts with the proposition that the returns of the cost of growing wheat in Great Britain, collected in 1885, make the average about £8 ($40) per acre, and venturing the opinion that, with the general reduction of the rents of British farming-lands that have already taken place, and the practice of increased economies on the part of British farmers, they can grow wheat with a profit at 40s. and 45s. a quarter (although the average price of British wheat has not for some years reached that level), next assumes, that growers "in all parts of the world—with the doubtful exception of India—can not possibly keep up the present acreage of wheat at the recent or any lower range of prices." The writer further concludes, from an examination of American statistics, which he abundantly offers, that the area of wheat acreage in the United States is diminishing, and that the average farm-value of wheat in that country, for the years 1884-'86, was about 33s., "which can not," he says, "yield a satisfactory profit under the most favorable circumstances."
    The following reply to the conclusions of this writer in the "Quarterly," so far as they relate to the United States, which appeared in the columns of the "New York Commercial Bulletin" (May, 1887), strikingly illustrates how different the situation appears to a writer equally competent to discuss the question, when viewed from a trans-Atlantic standpoint:
    "These guesses about the cost of wheat-producing in this country arc highly interesting. Probably they will interest no one else so much as the American farmers, who know that they do not know, and have a strong impression that other people can not tell them, the exact cost of raising wheat per acre. Very few of them produce any one crop under such circumstances that they can accurately compute, in dollars or days' labor, what that separate crop costs them; and fewer still know what they add to the value of their land by improvements, or take from it by exhaustion yearly. But one thing a great many of them do know, that they are going to raise more wheat next year than they did last, as they raised more last year than the year before; and they have been selling wheat for several years at about 45 cents per bushel, in great regions like Kansas, Minnesota, and Dakota, and yet the business is found so far profitable that the acreage in these very States enormously increases. It is supposed that Dakota, which produced 22,800,000 in 1880, and 22,000,000 bushels three years ago, will produce 30,000,000 in 1887."
    (In 1880 the crop area of the State of Kansas was about 8,000,000 acres; for the present year (1887) the area planted is believed to be in excess of 16,000,000 acres.)
    "The farmer in this country is, at the same time, a land-improver and a land-speculator, in most of the great wheat-growing States. He takes possession of a farm under the homestead law, by pre-emption, or by purchase from corporations, the land costing him so little that a single good crop or two pays for it outright. Then he puts into it labor of his own, and of men hired, which he could not otherwise utilize at all, and the cost of which he can not compute, and thus adds year after year to its value. The farmer who runs into debt can tell what his land costs him yearly, but they are not the majority. Host farmers get a living out of the land for themselves and families, to begin with, and make some improvements besides, and meanwhile are gaining more without any effort, than by all their labor. For, while the farmer is raising four or five crops, a settled State or county grows up about him. Towns and cities start from the ground. Railroads and manufacturing establishments come to enhance the value of his land. In a few years, the ground that he bought for $1.25 to $5 per acre comes to be worth in market price $10, $20, or $30 per acre. Land settled by men who are yet in their prime averages in value over $20 per acre for the entire State of Iowa, or $13 for the entire State of Minnesota, or $10 for the entire States of Kansas and Nebraska. That means for the owners of only a small farm a yearly saving which not many wage-earners are able to accomplish, and in all the more successful selections of land the increase in value and the consequent return for labor are far greater.
    "Just as long as this occupation of new land and development of new territory are possible in this country, the most scientific calculation of the cost of growing wheat will have as much to do with its continued production or with its average price as it has to do with the height of mountains in the moon. Wheat-growing will continue, and the yield in this country will greatly exceed the demand, and an enormous surplus will be annually offered for sale, at prices with which British farmers can not easily compete, where the cost of growing wheat averages 'about $40 per acre.'"
14. The British Chancellor of the Exchequer, Mr. Goschen, in his budget speech for 1887, calls attention to the following curious incident of financial disturbance growing out of a change in the quality of a staple commodity—tea—which, in turn, has been contingent on a change in the locality or country of its production: "Whereas, ten years ago," he said, "we (Great Britain) received 156,000,000 pounds of tea from China and 28,000,000 pounds from India, or 184,000,000 pounds altogether, in 1886 we received 145,000,000 pounds from China and 81,000,000 pounds from India. In the transfer of consumption of tea from the tea of China to that of India, we have to put up with a loss of revenue owing to the curious fact that the teas of India are stronger than the teas of China, and therefore go further, so that a smaller quantity of tea is required to make the same number of cups of tea." Mr. Goschen further called attention to the fact that "the fall in the price of tea and sugar (in Great Britain) has been so great, that whereas in 1866 a pound of tea and a pound of sugar would have cost 2s. 6d. and in 1876 2s. 1 14d., in 1886 they would have cost only 1s. 7 14d., or 3d. less than they would have cost in 1866 with all the duties taken off."
15. Opinions, as yet, vary greatly as to the comparative durability of iron and steel rails. In the testimony given before the British Royal Commission, Mr. I. T. Smith, manager of the Barrow Steel Company, gave it as his opinion that the life of a steel rail is three times that of an iron rail, adding, "My reason for saying so is, that I know that upon the London and Northwestern Railroad, where steel rails have been now in use more than twenty years, they consider it so."
    Sir Lowthian Bell also, in testifying before the commission, on the effect on the iron-trade of Great Britain from the expected longer duration of steel rails, says: "Assuming iron rails to last twelve, and steel rails twenty-four years, instead of the railways now in existence in the United Kingdom requiring 465,648 tons annually for repairs, 232,824 tons will suffice for the purpose. Although this only involves the saving of a comparatively small weight of pig-iron, it means less work for remelting and for our rolling-mills, say to the extent of 4,000 to 5,000 tons per week." The difference in duration of iron and steel rails is not, however, in itself a complete measure of the amount of pig-iron required for renewals. This arises from the fact that an iron rail splits up and becomes useless long before the actual wear, as measured by the diminution of weight, renders it unsafe, which often happens when the loss of weight does not exceed 4 per cent of the original weight. Steel rails, on the other hand, go on losing weight until they are from 10 to 20 per cent lighter than when they were laid down, before becoming unsafe.
16. Report of the United States Geological Survey, 1886.
17. An attempt on the part of Germany to break in upon the almost complete monopoly of the manufacture of tin plates enjoyed by Great Britain, by imposing a heavy duty on their importation, has been singularly unsuccessful; domestic (German) production and exports having diminished, and exports increased, as will appear from the following table: YEAR. Production, tons. Imports, tons. Exports, tons. 1885. 4,892 5,798 186 1878. 8,582 5,307 1,696
18. The estimates of the annual silver production of the world, submitted to the Royal (British) Commission on Gold and Silver by Mr. Hector Hay, are somewhat smaller, namely, £12.8 in 1873; £18.8 in 1881; £20.6 in 1883; and £21.3 in 1885.
19. Testimony of J. D. Ellis, chairman of John Brown & Co., Sheffield, British Commission, 1886.
20. The details of this increase are thus stated by Messrs. Helmuth, Schwartze & Co., of London, in their annual review of the production and consumption of wool for 1887: "Making allowance," they say, "for the increase of population, we find that the principal development in the supply of wool took place from 1860 to 1868, in which period the consumption rose from 2·03 pounds of clean wool per head to 2·47 pounds, or about 22 per cent. From 1868 to 1879 the consumption remained practically unchanged, amounting on the average to 2·41 pounds clean wool per head. It rose to 2·49 pounds for the average of the next four years, and was 2·58 in 1884 and 2·66 pounds in 1886."