(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.[1]
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
- ↑ 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.
