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INFORMATION IN REGARD TO PRICES, FURNISHED BY WILLIAM M. GROSVENOR, EDITOR OF "THE PUBLIC," NEW YORK CITY.
PRICES IN 1878, 1877, AND 1860.
We confess some surprise at finding, after a careful comparison, that the average decline in prices from January 1, 1877, to January 1, 1878, was as much as 10 per cent. It has generally been supposed somewhat less, and it is possible that tables more complete than have ever been given, which we hope soon to print, may slightly modify the conclusion warranted by comparison of New York wholesale prices. But we judge that the change, if any, will be too small for practical importance. In the tables already prepared are included the sixty articles of which the usual record of the Journal of Commerce gives data, and in addition to bacco, coal, fresh beef, fresh pork, and other items of large commercial importance. For all articles except meat we have taken the New York wholesale prices as usual, but as a better test of the average price of fresh meats than any other, have taken the prices of beef-cattle and hogs at Chicago. The methode pursued in the calculations is the same that was adopted and fully explained in our article on this subject a year ago; instead of making an average of prices as if each pound of hops were of as much importance as each pound of sugar, cotton, or beef, the quantities of each article entering into consumption or commerce have been carefully estimated. It is then supposed that the quantity of each article thus estimated was actually bought at the recorded prices of January 1, 1877, and of January 1, 1878. The resulting aggregates, it is believed, show more correctly than any other method yet devised the aggregate effect of the various changes in price between the two dates.
The detailed tables of prices are deferred in order to make them more coinplete. But it is believed that the prices of wool, cotton, and leather quite closely represent by their variations the changes in price of clothing generally; that other manufactured articles are approximately represented by changes in iron, coal, lead, salt, turpentine, and linseed oil; and that the general range of farm products at the North is fairly represented by the breadstuffs, hay, cattle, and their products, butter and cheese, and hops, and at the South by cotton, tobacco, rice, hemp, sugar, and molasses. The fisheries are also represented, naval stores, whisky, and beside other imported articles already named, coffee and fruits. The quautities supposed to be purchased of each article are as given in The Public of January 18, 1877 ; the entire number of cattle believed to be slaughtered each year, less the number killed for packing, is supposed to be sold at the Chicago wholesale prices for the lowest shipping grade.
Further, in order to determine whether prices have yet reached or passed the specie basis, we have made a similar calculation upon the New York wholesale prices of January 1, 1860, adding Chicago cattle and hoy prices of that date. In this instance, also, the amounts supposed to be purchased are the same as in 1877 or 1878. But the grade or class of articles quoted in 1860 and at this time is in some instances so different that modifications, presently to be noted, are necessary. In the following is given a summary of calculations based upon the prices of over sixty articles, but for brevity arranged in classes :
Totals 1877 and 1878 ...
| 3, 211, 195, 000
2,877, 530, 000
1,895, 462, 000
Comparing first the prices of 1878 with those of 1877, it appears that the same articles and quantities which would have cost $3,211,195,000 on the 1st of January, 1877, would have cost only $2,877,530,000 on the 1st of January, 1878. The decline during the year 1677 was therefore about 10.4 per cent. Only three articles in the entire list advanced in price during that time. Rice advanced from 6 to 64 cents. There was also a small avance in packed beef, western and mess, but a decline in beef-haus. Four other articles, new Southern corn, coal, mackerel and lime, were unchanged in quotation, In every other case there was a decline recorded, and in some cases, as the aggregates show, a very large decline. So general and considerable a fall in prices is rarely seen, and it is the more remarkable because there occurred during the year quite a flurry of speculative advance in breadstuffs and some other articles. It naturally suggests the ingury whether we have not already reached or even passed the speeie basis. In order to answer this question correctly, important differences in the three tables must be noticed.
Petroleum was not a considerable product in 1860, and the quotation of any other form of oil then used would be misleading. For example, if there had been bought before the war as large a quantity of any illuminating oil then used as now enters into commerce it would have cost $171,000,000, against less than $25,000,000 paid for the product of the oil wells. This item must be omitted from the statement of 1878 in comparison with 1860. Again, the class of butter quoted in 1860 is not that which is now of chief importance in commerce, and a correction on that account adds nearly $35,000,000 to the aggregate for 1878. A much more important source of error is the fact that the quotations of shipping hay and Western corn at New York do not at all represent actual values of those crops at the point of consumption. In comparing 1877 and 1878, little difference is made by including the whole of those crops, and there were not, during that year, such changes in mode and cost of transportation, and in localities of chief production, as to render the comparison a faulty representation of the actual value of the two crops where consumed. But between 1860 and 1878 there were such changes, and it seems to be necessary to include as to corn only that part of the crop which is transported to the East or Sonth-perhaps 200,000,000 bushels at most-and to omit the crop of hay altogether. Making these changes, it appears that the same quantities and qualities of all the articles remaining, which would have cost $1,854,665,000 on the first of January, 1878, would have cost $1,895,462,000 on the first of January, 1860. In that case, the average of prices has now passed below that of 1860, which may be fairly assumed as the specie level for a year of good business, and is still tending downward toward the lower level of extreme depression which was realized in 1843.
We shall readily admit that a comparison which reqnires so much of judgment as to what ought to be included or excluded will have little weight with any who do not agree with us as to these essential preliminaries. It is very desirable, also, in comparing prices at periods so distant, to include a wider range of articles, trusting less to the representative character of those chosen. This we aim to do hereafter, and it may be that different conclusions will then seem warranted. But these calculations are submitted as approaching more nearly to a correct comparison of prices before the war aud now than any other yet made, or for which we yet have sufficient data.
PRICES FOR FIFTY-THREE YEARS.
The same quantity of the most important articles of commerce, which could bare been purchased at New York wholesale prices May 1, 1860, for $2,069, and May 1 of last year for $2,464, could be purchased May 1, 1878, for $1,937. In other words, prices have already fallen 6.4 per cent, below the level of 1860, though they are still much above the extraordinary point reached in 1843—the low-water mark of the century. This conclusion will greatly surprise many who give attention to financial questions, and we therefore give with much detail on page 406 the quotations of prices May 1, in 1825, 1837, 1843, 1860, and in recent years, thus presenting a history of the important changes in values for fifty-three years. To these quotations we apply the principles explained in The Public of two years ago, and of February 14. Certain quantities of each article are taken, which approximate to the actnal product or importation of that article. The assumed quantity of each is supposed to be purchased on the 1st of May, in each of the years named, and the total cost of articles of each class, and of all articles included in the estimate, is here shown for the earliest year to which our records extend, for the year of greatest inflation of prices before the war; for the year of greatest depression of prices, and slow beginning of recuperation after the panic of 1837; and for the latest year of general prosperity before the de parture from a specie basis. The same quantities are also supposed to have been purchased last year, and this year, and it will be noticed that some important articles, of which we have no quotations prior to 1850, are included in the comparative aggregates for the three latest dates. The estimate for meats is based upon the Chicago quotations, but all others upon New York prices. For reisons explained in February,
he quantity of corn assumed represents not the entire crop, but only the portion supposed to be marketed, and hay is wholly excluded. The iron quoted, be it observed, s Scotch pig; the change in price of American iron has been still greater.
According to these figures, $1,975 would purchase as much in 1878 as $2,515 would have purchased in 1877, May 1. The date is somewhat unfortunate, because the outbreak of war in Europe caused a feverish and unnatural advance of prices for a time, and then this movement was followed by a sharp reaction. As we pointed out in February, the decline from January, 1877, to January. 1878, was about 10.4 per cent., but the decline from May 1 to May 1 was 21.5 per cent. It will be found important to bear this fact in mind when comparing transactions of banks, or exports and imports, with those of the inflated period last year.
Omitting petroleum, which was not quoted in 1860, it is found that the prices of like quantities of other articles in 1860, 1877, and 1878 stand related to each other as $2,069 and $2,464 and $1,937. The unnatural advance last year was not confined to breadstuffs. It will be seen that sugar, butter, cheese, leather, coffee, linseed oil, hops, beef, pork, and lead shared in an advance which did not endure, and which bronght disaster to many. A vast amount of imaginary wealth was thus “produced," and was as easily "lestroyed" when the speculative spirit collapsed. The wrecks reinain, and the fictitions prices caused by vagne dreams as to the effect of the European war serve to remind is that, instead of a great blessing to industry and commerce in this country, the war proved a curse.
The quotations for meats, whisky, potash, hemp, lime, and lead, for the yoars preceding 1860, are not at hand. Omitting these articles, we are still enabled to compare twenty classes which include over fifty articles regularly quoted in wholesale tables. The remarkable expansion of other prices from 1825 to 1837, however, is nearly hidden by the great shrinkage in the price of cotton. From 1837 to 1843 a loss of nearly 37 per cent. occurred; indeed, it would appear a little greater if the changes in quotations of packed meat be accepted as indicating the changes in cost of fresh meat also. Upon that basis, the totals for comparison would be $2,161.40 in 1825, against $2,190.90 in 1837, and $1,364.80 in 1843. From this point prices gradually advanced until a new era of inflation followed the discovery of gold mines. The country experienced another reaction in 1857, but had so far recovered that business was generally considered prosperous in 1860. The figures show that as to breadstuffs, cotton, molasses, coal, leather, wool, tobacco, linseed oil, codfish, salt, hops, turpentine, hog products, potash, and lead, prices have fallen to or below the level of 1850, and iron is in reality much lower than it was before the war. A foreign demand has made butter and cheese and beef and its products higher than before the rebellion, and the disorder in Cuba acconuts for an advance in the price of sugar. Prices of some other articles, it will be
readily seen, have been lifted by our present system of taxation. But, these special exceptions aside, the average of prices has now fallen so far below the specie level that there is good reason to hope that bottom has been touched, and that a gradual improvement may hereafter be expected.
The prices of imported articles as shown in the official returns of imports are less reliable than city quotations as a basis for comparison, because the qualities of articles imported under the same designation are often materially changed. However, much useful information is thus obtained as to the changes of price abroad, and we give (page 406) the average prices of about fifty articles imported during the months of April, 1878, and April, 1877. The general result of the comparison may be more readily attained by contrasting aggregates of quantities and values actually importerl. But, owing to the peculiar disturbance of prices in some foreign countries, as well as here, during the month of April, 1877, we prefer to compare aggregate importations during ten months ending April 30, 1877 and 1878, as follows:
The only considerable decline in average price, it will be seen, is in the free goods and in textile fabrics; the decrease in dutiable goods reported by weight is small, and in liquids and glass some increase in average price appears. This may be traced, as well as the smallness of the increase in apparent price of other articles, in part to purchases from abroad of better qualities of goods, but the comparison, as far as it has value, indicates a much smaller decline in foreign prices of goods imported than has been found in prices of domestic products. A similar comparison of quantities and values of the chief articles exported during ten months, ending April 30, shows very different results :
This table embraces about 80 per cent, in value of all merchandise exports, and shows an increase in quantity of about 26 per cent., while the increase in value is only about 11 per cent. As to these articles, therefore, the average price during ten months ending April 10, 1878, seems to be about 13 per cent. lower than the average price during ten months ending April 30, 1877. In other words, holders have been compelled to abate during the last ten months about one-eighth of the price obtained during the corresponding months of the year preceding. We therefore estimate that the domes. tie transactions of the last year have been conducted on a scale of prices lower by about 13 per cent. than that of the year preceding, but that the decline from May 1, 1877, to May 1, 1878, on account of the sudden rise of prices last year, was about 21 per cent.