the sum of the average prices of the 10 years by 10. This average price for 10 years has been adopted as the base for all relative prices. For the ten articles which do not show prices for the entire period of 10 years, 1890 to 1899, the base in each case is the average of the years prior to and including 1899. In explanation of the term base or standard as used in connection with relative prices or index numbers, it may be stated that in reducing a series of actual prices to relative prices a base must first be chosen, and this may be either a single quotation, the average price for 1 year, or the average for 2 or more years. If the price for a single year is chosen, it is essential that that year be a normal one, for if prices are high in the year chosen for the base any subsequent fall will be unduly emphasized, while, on the other hand, if prices are low any subsequent rise will be emphasized. Upon examination of the prices since 1890 it was found that all the commodities did not present a normal condition as regards prices in any one year. For this reason it was decided that an average price for a number of years would better reflect average or approximately normal. conditions and form a more satisfactory base than would the price for any single year. The period chosen as this base was that from 1890 to 1899-a period of ten years. The average price for the base period was found, as previously stated, by adding together the average prices for all of the 10 years and dividing by 10.

The relative prices as shown in this and succeeding tables have been calculated in the usual manner and represent simply the percentage which each monthly or yearly price is of the base price. The average price for the first 10 years of the period, or the base, always represents 100, and the percentages for each month or year enable the reader to measure readily the rise and fall from month to month or from year to year of the prices of each single commodity, of any group of commodities, or of all the 259 commodities involved. These commodities are arranged in alphabetical order under each of the nine general groups, as in Table I.

In order that the method pursued may be more readily understood, the reader is referred to the table itself, as given on pages 488 to 506. Taking up the first commodity shown, barley, we find that the average price per bushel for the base period, 1890 to 1899, inclusive, was 45.34 cents; the average price for January, 1904, was 56.90 cents; that for February was 56.75 cents; that for March 55.38 cents, etc. The relative price for the base period, as heretofore explained, is always placed at 100 and is so given in the table. The relative price for January, 1904, is shown to be 125.5, or 25.5 per cent higher than the base or average for the 10 years. In February the relative price was 125.2, or 25.2 per cent above the base; in March the relative price was 122.1, or 22.1 per cent above the base; in April it was 122.4, or 22.4 per cent above the base; in May it rose to 124.1, or 24.1 per cent above the

base; in June it was 124.9, or 24.9 per cent above the base; in July it dropped to 112.0, or 12.0 per cent above the base, and again in August to 111.7, or 11.7 per cent above the base; in September it was 113.6, or 13.6 per cent above the base; it declined in October, advanced again in November, and declined in December to 105.0, the lowest price for any month of the year. The relative price for the year 1904 was 116.9, or 16.9 per cent above the base. The figures in each case were secured according to the method already explained, that for January, 1904, being expressed as follows:

Average price for base period
Average price for January, 1904.
Relative price for base period.

Relative price for January, 1904.......

$0.4534

.5690

100.0

125.5

The remainder of the table may be analyzed in a similar manner. The value of prices given in this relative form, it will readily be seen, consists in the means afforded for tracing and measuring the changes from month to month, from year to year, or from period to period, and in the combination of prices of a sufficient number of commodities to show the general price level. It must not be assumed that a system of relative prices of representative commodities will enable one to trace the causes of changes in the general price level or to determine the effect of such changes on any class of consumers or on all consumers. The use of such a system is to show the general course of prices from time to time of one commodity, of a group of commodities, or of all commodities.

No attempt has been made in any way to go into the causes of the rise and fall of prices. The aim has been to give the prices as they actually prevailed in the market. The relative prices or index numbers must be accepted merely as showing the course of prices both of the individual articles and the market in general. The causes are too complex, the relative influence of each too uncertain, in some cases involving too many economic questions, to permit their discussion in connection with the present article. It will be sufficient to enumerate some of the influences that cause changes in prices. Such influences include variations in harvest, which not only restrict or increase the supply and consequently tend to increase or decrease the price of a commodity, but also restrict or increase, to a greater or less degree, the purchasing power of such communities as are dependent in whole or in part upon such commodity; changes in demand due to changes in fashions, seasons, etc.; legislation altering internal-revenue taxes, import duties, or bounties; use of substitutes-as, for instance, an advance in the price of beef will cause an increased consumption of pork and mutton and, it may be added, a probable increase in the price of both pork and mutton; improvements in methods of production which will tend either to give a better article for the same price

The course of prices of raw and manufactured commodities during 1904 is shown in the graphic table which follows:

RELATIVE PRICES OF RAW AND MANUFACTURED COMMODITIES IN 1904. [Average price for 1890 to 1899=100.]

RELATIVE JAN. FEB. MAR. APR. MAY. JUN. JUL. AUG. SEP. OCT. NOV. DEC.

PRICES.

Table IV.—Base prices (average for 1890–1899), and average yearly actual and relative prices of commodities, 1890 to 1904, pages 519 to 537.— This table shows for each commodity the base price (average price for the 10-year period 1890-1899), the average price for each of the 15 years from 1890 to 1904, and the relative price for each year. The average price for each year was obtained, as has been explained, by dividing the sum of the quotations for each year as shown in Table I by the number of quotations for each year. The average price for the 10-year period 1890 to 1899 was obtained by dividing the sum of the average prices of the 10 years by 10. The relative prices for each year were computed in the same way as for each month, as explained in the discussion of Table II.

Table V.--Relative prices of commodities, 1890 to 1904, pages 537 to 549.-This table is taken from Table IV and shows the relative prices

of each of the commodities included there. In this table similar commodities have been grouped and the average of the relative prices shown for the commodities in each subgroup and in each of the nine. general groups. The averages in all cases were found by dividing the sum of the relative prices by the number of commodities in the group under consideration, as explained in the discussion of Table III.

The average relative price of each of the nine general groups was found by dividing the sum of the relative prices of the different descriptions of commodities for each year by the number of these commodities or series of quotations considered in that year. The sum of the relative prices in 1890 of the commodities shown under the general group, "food, etc.," for example, is 5,958.2, which amount, divided by 53, the number of different descriptions of commodities or series of quotations considered that year, gives 112.4, the average for the group "food, etc.," for 1890.. For 1893 to 1903, 54 commodities are quoted in this group, and that number is accordingly the divisor for each of those years. For 1904, 53 commodities are included in this

group.

The average relative price of each of the nine general groups for each year of the period, and the average relative price of all commodities for each year, are shown in the summary following:

SUMMARY OF RELATIVE PRICES OF COMMODITIES, 1890 TO 1904, BY GROUPS.
[Average price for 1890-1899-100.]

In this table the average relative prices of farm products are based on 16 articles; of food, etc., on 53 articles from 1890 to 1892 and 1904, and 54 from 1893 to 1903; of cloths and clothing, on 70 articles in 1890 and 1891, 72 in 1892, 73 in 1893 and 1894, 75 in 1895 and 1896, and 76 from 1897 to 1904; of fuel and lighting, on 13 articles; of metals and implements, on 37 articles from 1890 to 1893, 38 in 1894 and 1895 and from 1899 to 1904, and 39 from 1896 to 1898; of lumber and building materials, on 26 articles from 1890 to 1894, and 27 from 1895 to 1904; of drugs and chemicals, on 9 articles; of house furnishing goods, on 14 articles; and of miscellaneous, on 13 articles. The average relative prices of all commodities are based on 251 articles in 1890 and 1891,

on 253 in 1892, on 255 in 1893, on 256 in 1894, on 259 in 1895 and 1904, on 260 in 1896 and from 1899 to 1903, and on 261 in 1897 and 1898.

A study of the table shows that the group of farm products reached the lowest average in 1896 and the highest in 1902; that of food, etc., the lowest in 1896 and the highest in 1891; that of cloths and clothing, the lowest in 1897 and the highest in 1890; that of fuel and lighting, the lowest in 1894 and the highest in 1903; that of metals and implements, the lowest in 1898 and the highest in 1900; that of lumber and building materials, the lowest in 1897 and the highest in 1904; that of drugs and chemicals, the lowest in 1895 and the highest in 1900; that of house furnishing goods, the lowest in 1897 and the highest in 1903, while in the miscellaneous group the lowest average was reached in 1896 and the highest in 1902. The average for all commodities combined was the lowest in 1897 and the highest in 1903. Of the nine groups it is seen that one reached its lowest point in 1894, one in 1895, three in 1896, three in 1897, and one in 1898. The highest point was reached by one group in 1890, by one in 1891, by two in 1900, by two in 1902, by two in 1903, and by one in 1904.

The average relative prices of the 249 commodities for which quotations were secured for the entire period involved do not differ materially from the average relative prices of all commodities shown in the above table. Eliminating the commodities for which quotations could be secured for only a portion of the period, we find that the average relative prices of the 249 commodities remaining was 112.9 in 1890, 111.7 in 1891, 106.0 in 1892, 105.4 in 1893, 95.9 in 1894, 93.5 in 1895, 90.3 in 1896, 89.5 in 1897, 93.2 in 1898, 101.5 in 1899, 110.2 in 1900, 108.3 in 1901, 112.8 in 1902, 113.7 in 1903, and 113.2 in 1904.

In the table which follows, all commodities under consideration have. been divided into two classes or groups. The 50 articles which are included in the group of raw commodities are shown on page 413. All the other articles are classed as manufactured commodities.

RELATIVE PRICES OF RAW COMMODITIES, MANUFACTURED COMMODITIES, AND ALL COMMODITIES, 1890 TO 1904. [Average price for 1890-1899-100.]