STABILIZING THE DOLLAR
CHAPTER I
THE FACTS
1. Index Numbers
This book aims to show how prices in general can be controlled.
A great teacher once said to his students: "Divide the study of any social situation into four questions: What is it? Why is it? What of it? What are you going to do about it?" Accordingly I shall take up, in successive chapters, (1) the actual facts to be explained; (2) the chief causes which explain them; (3) the resultant evils which make a remedy desirable; and (4) the remedy.
The present chapter is devoted to the first of these four topics—the facts, as shown by the recorded price movements of history.[1]
The prices of various articles do not usually move together but scatter or disperse like the fragments of a bursting shell. Yet there is always a definite average movement just as there is a definite path of the center of gravity of the shell-fragments.
In order to depict the average movement of prices we must first have some way to measure it. A very simple measure has been devised, called the "Index Number."
- ↑ The reader who wishes fuller details is referred to the bibliographies given in Appendix VI.
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