Page images
PDF
EPUB
[graphic][merged small]

OCT 26 1857
LIBRARY

THE

POPULAR SCIENCE

MONTHLY.

NOVEMBER, 1887.

THE ECONOMIC DISTURBANCES SINCE 1873.

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

V. N the preceding paper of this series (No. IV), evidence was sub

mitted to the effect that the remarkable decline in prices which has occurred during the last ten or fifteen years-or since 1873–in the case of the various commodities which constitute the great bulk of the trade, commerce, and consumption of the world, 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 such analysis, 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 commodities, other than those whose production and price-experience have been submitted-more especially such commodities as have not in recent years experienced any marked change in their conditions of supply and demand-exhibited in their recent price-movements any evidence of having been subjected to any influences attributable to the scarcity of gold? The answer is, that not only can no results capable of any such generalization be affirmed, but no one commodity can even be named, in respect to which there is conclusive evidence that its price has been affected in recent years by influences directly or mainly attributable to any scarcity of gold for the purpose of effecting exchanges.

In the first place, all that large class of products or services, which are exclusively or largely the result of handicrafts; which are not capable of rapid multiplication, or of increased economy in production, and which can not be made the subject of international competition,

VOL. XXXII.-1

have exhibited no tendency to decline in price, but rather the reverse. A given amount of gold does not now buy more, but less, of domestic service and of manual and professional labor generally than formerly ; does not buy more of amusements ; not more of hand-woven lace, of cigars, and of flax, which are mainly the products of hand-labor; of cut-glass, of gloves, of pictures, or of precious stones. It buys notably less of hides and leather, which are the sequences of cattle-growing, which in turn involves time, and for which, in point of economy, large sections of the earth are not adapted ; of horses, and most other animals ; of pepper; of cocoa, the cheap production of which is limited to a few countries, and requires an interval of five years between the inception and maturing of a crop ; of malt liquors, eggs, currants, and potatoes ; and also of house-rents, which depend largely upon the price of land, and which in turn is influenced by fashion, population, trade, facilities for access, and the like.

How little of change in price has come to the commodities of countries of low or stagnant civilization, that have remained outside of the current of recent progress, is strikingly illustrated in the case of a not unimportant article of commerce, namely, the root sarsaparilla ; which, with a gradually-increasing demand, continues to be produced (collected and prepared) in Central America, by the most primitive methods, and, without any change in the conditions of supply, save, possibly, some greater facilities for transportation from the localities of production to the ports of exportation. Thus, in the case of Honduras sarsaparilla, at New York, which is the principal distributing market of the world, the average price for the best grade is reported as identical for the years 1881 and 1886; while for the “Mexican,” the average reported for 1881 was eight cents per pound, and for 1886, with much larger sales, from seven to eight and a quarter cents.

All the evidence, furthermore, tends to show that there has been very little decline in recent years in the prices of such of the commodities of India as constitute her staple exports, which can not, as will be hereafter shown, be clearly referred to agencies entirely disconnected with any influence assumed to have been occasioned by any increase in the purchasing power of gold due to its absolute or relative scarcity.*

Now, all of the commodities referred to, including labor and personal service, and many others which might be specified, whose condition in recent years has not been materially influenced by changes

* According to Mr. Robert Giffin, in his testimony before the British Commission, “On the Changes in the Relative Values of the Precious Metals,” 1886, the general result of a comparison of India prices submitted to the Commission “On Trade Depression,” shows a fall of only two per cent in 1880-'84, as compared with 1870–74, or with the period immediately before the fall in silver:

“The general conclusion appears to me to be that the effect of the present relations between gold and silver have not told appreciably on prices in India, or on the relative progress of her import and export trade.”— Testimony of Sir Louis Mallet, late Under. Secretary of State for India, Trade Depression Commission, 1886.

affecting their supply and demand, ought to have exhibited evidence, in a decline of prices, of the influence of the scarcity of gold, if any such had been exerted; but they not only do not, but the drift of the evidence deducible from their price-experiences is rather in favor of the position recently taken by some economists, that gold in recent years, in place of becoming scarce for purposes of exchange, has really been more abundant.

The record of extreme changes in prices by reason of circumstances that are acknowledged to have been purely exceptional, is also most instructive, and removes not a few commodities from the domain of any controverted economic theory respecting monetary influences. Thus, from 1862 to 1870, cotton, owing to war influences, ruled so high-from 70 to 800 per cent in excess of normal prices—that its inclusion in computations, with a view of determining any average of prices, or generalization of causes affecting prices during the years mentioned, would, without proper allowance, completely vitiate any conclusions.

War and interruption of traffic on the Upper Nile have increased the prices of “gum-Arabic," and of the drug "senna” in recent years more than 100 per cent. The prices for French and other competing light wines and brandies are much bigher than the average for 1866–67, because the phylloxera has so impaired the production of French vineyards that France now imports more wines than she exports. “Cochineal” and “madder” bave greatly declined in price since 1873, because their use as dye-stuffs has been to a great extent superseded by equivalent and cheaper coloring-materials derived from coal-tar; and within a very recent period the discovery of a method of cheaply preparing a chemical preparation from cloves, having all the flavoring qualities of the vanilla-bean, has already diminished the demand, and bids fair to greatly impair the price of this heretofore scarce and costly tropical product. Certain anímal products, notably entering into commerce, have rapidly advanced in price in recent years by reason of a rapid diminution in the number of the animals affording them, as buffalo-horns, ivory, and whalebone, which latter prodact bas increased in price from 324 cents per pound in 1850 to 85 cents in 1870, and $3.50 in 1886.

An agency which has been most influential in recent years, in occasioning a decline in the price of commodities, which has acted universally, which is entirely the outcome of new processes, construction, and machinery, and has no connection whatever with matters pertaining to currency or standards of value, has been the reduction in the cost of transportation or distribution. Its influence has also necessarily manifested itself very unequally, occasioning the greatest pricereductions in the case of articles like cereals, meats, fibers, ores, and all coarser materials—in respect to which transportation constitutes the largest element of cost at the place of consumption ; and least in the have exhibited no tendency to decline in price, but rather the reverse. A given amount of gold does not now buy more, but less, of domestic service and of manual and professional labor generally than formerly ; does not buy more of amusements ; not more of hand-woven lace, of cigars, and of flax, which are mainly the products of hand-labor; of cut-glass, of gloves, of pictures, or of precious stones. It buys notably less of hides and leather, which are the sequences of cattle-growing, which in turn involves time, and for which, in point of economy, large sections of the earth are not adapted ; of horses, and most other animals; of pepper; of cocoa, the cheap production of which is limited to a few countries, and requires an interval of five years between the inception and maturing of a crop ; of malt liquors, eggs, currants, and potatoes ; and also of house-rents, which depend largely upon the price of land, and which in turn is influenced by fashion, population, trade, facilities for access, and the like.

How little of change in price has come to the commodities of countries of low or stagnant civilization, that have remained outside of the current of recent progress, is strikingly illustrated in the case of a not unimportant article of commerce, namely, the root sarsaparilla ; which, with a gradually-increasing demand, continues to be produced (collected and prepared) in Central America, by the most primitive methods, and, without any change in the conditions of supply, save, possibly, some greater facilities for transportation from the localities of production to the ports of exportation. Thus, in the case of Honduras sarsaparilla, at New York, which is the principal distributing market of the world, the average price for the best grade is reported as identical for the years 1881 and 1886; while for the “Mexican,” the average reported for 1881 was eight cents per pound, and for 1886, with much larger sales, from seven to eight and a quarter cents.

All the evidence, furthermore, tends to show that there has been very little decline in recent years in the prices of such of the commodities of India as constitute her staple exports, which can not, as will be hereafter shown, be clearly referred to agencies entirely disconnected with any influence assumed to have been occasioned by any increase in the purchasing power of gold due to its absolute or relative scarcity.*

Now, all of the commodities referred to, including labor and personal service, and many others which might be specified, whose condition in recent years bas not been materially influenced by changes

According to Mr. Robert Giffin, in his testimony before the British Commission, “On the Changes in the Relative Values of the Precious Metals,” 1886, the general result of a comparison of India prices submitted to the Commission “On Trade Depression," shows a fall of only two per cent in 1880–84, as compared with 1870–74, or with the period immediately before the fall in silver:

“The general conclusion appears to me to be that the effect of the present relations between gold and silver have not told appreciably on prices in India, or on the relative progress of her import and export trade.”—Testimony of Sir Louis MALLET, late Under. Secretary of State for India, Trade Depression Commission, 1886.

« PreviousContinue »