New-York tribune., 1879-02-01
EEiITITE FRlCfS or COuHODITIES.


The very old question whether prices OF
commodities are controlled by the supply OF
the precious metals is about to be discussed
with new zeal and new light. The importance
of this question, ~ the practical solution ot
all financial aad commercial problems, has
been widely recognized. Nearly all evidence
aS to the success or failure OF economic
or industrial measures depends Tor It's
value uD0n the assumption that the pur-
chasing power Of the precious metals has
been regulated by their supply, or the con-
tr,ry assumption ,hat their purchasing power
has varied irrespective Of the supply. In
rr,pcct to the demonstration OF SILVER, espe-
cialy nearly al argument turns upon the
question whether dininution IN the quantity
of the precious metals used a money VIII
produce an advance III the purchasing
power Of money fall IN prices In Its
last issue ror 1873, TIE LoRdoR kcoHomi@ has
a remarkable editorial on tnS subject which
viii at once be- sciIrl Uron, by AL opponents OF
moronrtahsm, a. u v.,,ul admission of their
claims by journal recognized aS of the
highest authority on financial questions.
Thcrcm automatically injustice Will be
done TO Lic EcJqo~jy' which closes
ha, vet TO consider t!ic effect upon prices of
the inclca~ci employment ot substitutes Tor
specie ii that journal shows hereafter as We
may presume ihat II viii, that the Increased
use of cIrdi. currency III various forms has
lendcd 10 diminish the demand for gold, I. e.,
To advance prices, nearly OF quite as much as
the shrinkagc in the volume OF metal en-
ploycd Is money ha- tended to increase the
demand for gold, I. C., to reduce prices the
positlon of Ihc LcoaOmiSf a. an advocate OF
monometaism viii be defended.
MEANWHILE itS reasoning "a to the fall OF
prices hitherto invites SERIOUS criticism. 1t
prrsents statement of the average prices
each year since 1880 compiled by Mr. New
march, and based upon the method OF com
p1rlson employed by him and Professor
Jevons, which Is in substance fins: The aver
age price of each article for Is lj-'JO Is taken
~ the normal basis, or 100; an advance III
price of 20 per cent upon shat basis IN any
wear is then represented by 12O. and de-
cline of 10 per cent in any year Is repre-
,ented 10y 30. rnt ratio of price of
each article to the basis of 1Ni5-'5O
bping thus coIrulltrd for each year, these ra-
tios each year for twenty-five representative
article, are ,hcu added together, and the re-
sult i taken a, the index number 0r rep
rcscntativc Of syCra.e prices for That year.
II viii at once be observed that an advance
of 20 per cent in indigo counts for more upon
this basis than decline of 10 per cent III
cotton TIE EconOWi>t itself, though II employs
these ratios AZ thr best attalnlbie evidence of
the variation al prices, has pointed out
that they were defective in the important re-
spcrt here suggested. viz: that the relative
importance Of different quotations to the gen
cral aggregate has Bo, been considered. More
than two wears ago different plan was pro-
posed and employed by Mr.. GroSyenOr, III au
article which ihe Economist afterward copied
(Scptembcr, 23. 1876, saying:
We admit the general ,onnlnes> Of this reasoning
To "moyc" or haudle article like cotton obviously
implies more dealings, more circulating medium. and
more floating capit represented by money lodged in
ia "a aud operated upon Dy checks. than the moving
handling Of less imuort mt articles such
ray: and Is fair application ~ statistics to cndeaYor
to arrive at Hsre which. ior gwen day
or period, Will represent the media Of purchase
required to move OF handle in proportion 10 tacir Quan
thy or uk the majority Of leading commodities IN
country We mast regard this American table
of pTic.s rs real and valuable contribution 10 economic
science, and i'll tha department "f IL IN whieA l. most
difficult obtain the kind of honest and well directed
evidence such these tables finnish.
# seems strange that Tie IcoRomjei. hay
ns ut command the necessary data for eNii-
MATING the relative importance OF the twenty
two articles quoted, has not corrected lt> Ia
blcs of average pTIccs upon the principle thus
fully recognized as sound. Thc practical i'm
portancc of this criticism appears in the fact
that prices in England seem to have varied.
according to the tables now given by Hc'
Ecoaomist, quite differently from American
prices as shown in tables prepared and now
commonly quoted here.
But second and, wo think still more i'm
portant criticism. is that The Economist does
not seem to taEe into account the great fall
in prices which, other things being equal,
would have reNIltcd from the multiplication
of abor-Saylng machinery. We do not know
that any attempt has been made 10 estimate
thc effect upon prices Of this change in the
amount of human labor required to produce
the chief articles of commerce. The cotton
Gin il a familiar illustration, but there are
many others The Use Of agricultural ma
chlnery has certainly greatly increased, perhaps
il has more than doubled, the quantity of
wheat which the labor of one man can pro.
dnce on land OF given fertility. The cost of
cloths and clothing has i'll like manner been
vastly reduced by improvements in manuIac-
ture and by sewing machines the cost of iron
for railroads and many other purposes by the
Bcssemer process, aud the cost of lights by
the discovery of petroleum. If ma
chinery aud invention have been more
effective in reducing the labor required
Tor the production Of other commodities than
4 n
fall in prices. Therefore, if prices have really
fallen On an average from 1Gi IN lS6l-'65 to