St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1893-07-20
ECONOMIC FALLACIES.
FAULTY STATISTICAL METHODS AND
BAD LEGISLATION.
as TO SILVER AND PRICES.
How Silver Men Reach Conclu-
siOns-Periods of Time Which
They Take for Comparison =
The Factor OF Labor-Argu-
ment From Concrete Gases.

ment From Concrete Cases.
The following letter was contributed
to the Boston Herald: Seldom has
vicious legislation brought OH so quickly
such calamitous visitation as the one
we are suffering under now.
The silver legislation of the United
States, the Bland act and the Sherman
act, are concessions to the wild cry for
more money; to the selfish demands of
the silver mine owners Tor market of
their products; to the agricultural
classes, laboring under the idea that the
fall in prices of commodities is the di-
rect result of the fall in the price of
silver.
But much of the evil teaching has
been supported by what goes for facts
on the exchanges of trade and of
thought. What is commonly accepted
as the most substantial support of eco
nOmic deductions, the worlds trade
statistics. is by use made of them placed
on such footing that il rather misleads
than guides.
Figures representing ever so many
different species of merchandise are
brought together in long columns footed
up, and the results are made the basis
Of comparisons. They are treated in
solid masses. They are not analyZed so
that the parts may be given their proper
represe ntation in the totals. Nothing
less than a reform of statistical meth
DDS is required to give solid footing in
our endeaVor to get out OF the quick
sand into which our neglect of the true
principles of economics has brought us.
The Importance of this is obvious.
nd clof
the offspring of prOtecCionism. Imitation
Of statistics created the soil for the
growth of these parasitic developments,
aud when statistics were not warped to
suit a purpose, faulty methods and
wrong interpretations gave seemingly
sufficient support for the fallacies set in
vogue. The cOeXiStence, or rather the
consecutlon of facts, proves that one is
cause and the other effect. 1t is neceS-
sary to be clear on this point, and to at
tain clearneSS, it is necessary to show
the falsity of the methods by which it
was possible to give so much plausible
support to prevailing doctrines.
The decline i'll prices has lent weight
to the argument of the silver men. But
even in this their position is not correct.
Here the Jimes chosen for comparison
are all-important. To prove their case
the decade from 1866 to 1875 for the
period of parity of silver and the high
prices, and the year 1885 for silver de-
cline and low prices, stand we'll to-
gether. And here it is where SO much
error proceeds from otherwise correct
data. The times for comparison con-
vaniently chosen, almost anything can
be proven from Index numb ers,"
which in themselves
Are Full of Error
by the very nature of the thing dealt
with. Here chance has done the work
for silver which no amount of fore
thought could have improved on. In
economic deduction, however. every
thing depends on the sitting of data and
taking like and like tor comparison.
The Importance is far-reaching. Prop
erty, wages and the well being of all
classes depend on the Legislation on
finance and taxation. The legislator
depends solely on what he understands
to be facts. If these facts are spurius,
what else can be expected but ilI-ad-
viSed and dangerous legislation?
Now let us see what these COM
PARSONS of prices on which this silver
agitation rests actually show. The
prices which | introduce are, of course,
English prices; American prices are I'M
suitable. For 1S66-75 they have the
double initiation of the gold premium
and the war tariff. But even in Eng
land the two price periods are by no
means equivalents. a fact constantly
ignored by bimetallistS. The imitation
of all prices during the decade of 1S66-
IS by eXtraneous causes was greater
than even during the preceding ten
years, which had the Initiating influ-
ence of the Crimean war and the
American war to carry. The decade
from which blmetallists draw their con-
illusions bore the effects, not only of in
ffation and speculation left over from
the American war, but also from the
Franco German war of 1870. with the
intense commercial and industrial
activity following the destruction OF
property in France and the gift of the
Pandora box of five milllardS to Ger
many.
Now suppose you have noted down in
the period: Cotton AS sh., tobacco 104.
pig iron 125, bar iron 235, coal 81, to
name few articles chiefly affected by
the two causes of war and speculation.
and put opposite for 1885: Cotton IS
sh., tobacco "a. pig iron ~ US Sh. for
Cleveland from. bar iron 80, coal 9, and
you can well imagine how easy it is to
prove the case.
The prices of other commodities were
likewise affected, though in more
moderate degree. We can See how apt
we are to draw
Wrong Conclusions
when we do not apply to otherwise cor
rect data the scrutiny which no business
man would fail to employ in his own
transactions, but which he may be sure
to leave safely locked ur in his office
desk When he is perchance called upon
to apply them to national or inter-
national affairs. 1t is in print, it has
the signature of the official in charge.
chief Of the bureau of statistics, COM
missioner of labor and what not, and
naturally carries with it sufficient
weight to make 1t seem SuperfiuouS to
go behind the returns.
The comparing of a highly inflated
price year with depressed year would
give, if we take the two examples cited
above, 632 for the five articles named
for the former period and 262 for the
latter. The addition of great number
OF articles of smaller fluctuations. of
course, reduces the final proportions in
the aggregate of figures usually taken
by the different authorities for what
they call the Index numbers" and
from which they prove the increase or
decrease of prices. Now, If we take
the prices of the same five articles for
the year 1854. we have cotton "a, tobacco
81, pig iron 70, bal iron POO. coal %. in
all 407. The same articles show for
1860: Cotton 50. tobacco So, pig iron 53,
bar iron $50, coal 9, in all 30. The
methods of production were not very diff
ferent in 1854 and 1860. But the price
aggregate is much higher In 1854 than