The most familiar price tables are those of Jevons, Palgrave, Sauerbeck, and the London Economist in England; Soetbeer and Conrad in Germany; and Falkner-Bureau of Labor, Dun's Review and Bradstreet's in the United States.1 One of the oldest and best known tables of index numbers is that published by the London Economist. Starting with the base period, 1845-1850, this price table has been published annually (except for 1852 and 1854-1856) down to the present. It includes only twenty-two articles and is based on the unweighted arithmetical principle. Adopting 100 as the average price of each of the twenty-two articles, the basic index number for 1845-1850 is 2,200 and the index number for succeeding years must be compared with that number rather than with 100, as in most other price tables. The Economist table is criticized on the grounds that, since it is based on a small number of articles, a large increase in the price of any one article causes an excessive change in the index number; and that the commodities are badly chosen, there being, out of the twenty-two, four in which cotton is the principal element.

1 For a full statement of price tables, with diagrams and bibliography, see Laughlin: principles of Money, Ch. VI; see also, Falk-ner's Aldrich Report on Wholesale Prices, Wages and Transportation, Senate Document, 52d Cong., 2d Sess., No. 1394.

Professor Jevons published his notable study of prices in 1863. He based his calculations upon the prices of thirty-nine articles during the period 1845-1850, and worked out index numbers on the geometric average for the period 1844-1862 to show the effect on prices of the new gold from California and Australia. Another well-known table of English prices is that of Mr. Augustus Sauerbeck, published annually in the Journal of the Royal Statistical Society since 1886. He uses as the base line the average prices of the years 1867-1877 and computes his index numbers by a simple unweighted arithmetical average. The Sauerbeck index number is criticized because it includes only thirty-seven articles,1 and these are all staple raw products, such as wheat, coal and iron. The Soetbeer index number was made from the commodities entering the port of Hamburg and covered the period from 1847 to 1891. Soetbeer took the total quantity and price of each article and computed the average price on a simple arithmetical basis.

The most important table of American prices is that prepared by Dr. Roland P. Falkner for the Senate Committee on Finance in 1893.1 In compiling this table ninety commodities were used for the period 1840-1891 and between 1860 and 1891 two hundred and twenty-three commodities were included. Prices for the year 1860 were selected as the base and by using the method of the arithmetical mean, tables were made both from weighted and unweighted prices. The principal groups included in the two hundred and twenty-three articles were: food, cloths and clothing, fuel and lighting, metals and implements, lumber and building materials, drugs and chemicals, house furnishing goods, and miscellaneous articles such as powder, rubber, soap and starch. To show the effect of price changes upon the working classes Dr. Falkner compiled price tables in which various articles were weighted according to their importance in the average family budget. It will be remembered that from 1862 to 1879 the standard money of this country was not gold, but the depreciated greenback. In order to show what the index number would have been if gold had been the actual standard, Falkner in his table reduced the greenback prices for the years 1862-1879 to the gold standard, using the premium on gold as the measure of the depreciation of paper money.2 This method, though the only one available, was not exact, since "paper prices evidently rose at times to compensate for the uncertainty of the standard."3 The list of prices in the Aldrich Report extended only to 1891, but Dr. Falkner subsequently prepared for the Department of Labor a series of wholesale prices from 1890 to 1899, which continued as far as practicable the method of the earlier report, though because of various changes only ninety articles are common to the two sets of tables. With some modifications the Falkner price tables have been continued by the Bureau of Labor; they are based upon the average prices for the period 1890-1899 and include over 250 commodities.1

1 The Sauerbeck index number as continued in the London Statist is based on 45 commodities.

1 Aldrich Report on Wholesale Prices, Wages and Transportation.

2 Compare the second and third columns of the table on next page. 3 Laughlin: Principles of Money, p. 216.

Standard Index Numbersa

Falkner

(Base 1860) Gold

Paper

(1862

1878)

U. S. Department of Labor

(Base

1890-1899)

Sauerbeck

(Base

1867-

1877)

Economist

(Base

1845-1850)

Soetbeer (Base 1847-1850)

1860

100.0

. . . . . . .

. . . . . . .

99

122

121.0

1861

100.6

. . . . . . .

. . . . . . .

98

124

118.1

1862

114.9

117.8

. . . . . . .

101

131

122.6

1863

102.4

148 6

. . . . . . .

103

159

125 5

1S64

122.5

190.6

. . . . . . .

105

172

129.3

1865

100.3

216.9

. . . . . . .

101

162

122.6

1866

136.3

191.0

. . . . . . .

102

162

125.8

1867

127.9

172.2

. . . . . . .

100

137

124.4

1868

115.9

160.5

. . . . . . .

99

122

122.0

1869

113.2

153.5

. . . . . . .

98

121

123.4

1870

117.3

142.3

. . . . . . .

96

122

122.9

1871

122.9

136.0

. . . . . . .

100

118

127.0

1872

127.2

138. 8

. . . . . . .

109

129

135.6

1873

122.0

137.5

. . . . . . .

111

134

138.3

1874

119.4

133.0

. . . . . . .

102

131

136.2

1875

113.4

127.6

. . . . . . .

96

126

129.8

1876

104.8

118.2

. . . . . . .

95

123

128.3

1877

104.4

110.9

. . . . . . .

94

123

127.7

1878

99.9

101.3

. . . . . . .

87

116

120.6

1879

96.6

96.6

. . . . . . .

83

100

117.1

1880

106.9

. . . . . . .

. . . . . . .

88

115

121.9

1881

105.7

. . . . . . .

. . . . . . .

85

108

121.0

1882

108.5

. . . . . . .

. . . . . . .

84

111

122.1

1883

100.0

. . . . . . .

. . . . . . .

82

106

122 2

1884

99.4

. . . . . . .

. . . . . . .

76

101

114.2

1885

93.0

. . . . . . .

. . . . . . .

72

95

108.7

1886

91.0

. . . . . . .

. . . . . . .

69

92

104.0

1887

92.6

. . . . . . .

. . . . . . .

68

94

102. 0

1888

94.2

. . . . . . .

. . . . . . .

70

101

102.0

1889

94.2

. . . . . . .

. . . . . . .

72

99

106.1

1890

92.3

. . . . . . .

112.9

72

102

108.1

1891

92.2

. . . . . . .

111.7

72

101

109.2

1892

87.6

. . . . . . .

106.1

68

97

. . . . . . .

1893

87.2

. . . . . . .

105.6

68

96

. . . . . . .

1894

79.3

. . . . . . .

96.1

63

95

. . . . . . .

1895

77.2

. . . . . . .

93.6

62

87

. . . . . . .

1896

74.6

. . . . . . .

90.4

61

91

. . . . . . .

1897

74.0

89.7

62

88

. . . . . . .

1898

77.1

. . . . . . .

93.4

64

86

. . . . . . .

1899

83.9

. . . . . . .

101.7

68

87

. . . . . . .

1900

91.2

. . . . . . .

110.5

75

97

. . . . . . .

1901

88.5

. . . . . . .

108.5

70

97

. . . . . . .

1902

93.2

. . . . . . .

112.9

69

89

. . . . . . .

1903

93.7

. . . . . . .

113.6

69

91

. . . . . . .

1904

93.3

. . . . . . .

113.0

70

100

. . . . . . .

1905

. . . . . . .

. . . . . . .

115.0

72

99*

. . . . . . .

1906

. . . . . . .

. . . . . . .

122.5

77

102.5

. . . . . . .

1907

. . . . . . .

. . . . . . .

129.5

80

110

. . . . . . .

1908

. . . . . . .

. . . . . . .

122.8

73

121

. . . . . . .

1909

. . . . . . .

. . . . . . .

126.5

74

106.5

. . . . . . .

1910

. . . . . . .

. . . . . . .

131.6

78

110

. . . . . . .

1911

. . . . . . .

. . . . . . .

129.2

80

113

. . . . . . .

1912

. . . . . . .

. . . . . . .

133.6

85

125

. . . . . . .

1913

. . . . . . .

. . . . . . .

135.2

85

122.2

. . . . . . .

* New base 1901-1905.

a Based on Johnson's Money and Currency (p. 112), down to 1904; data for subsequent years supplied by the Commissioner of Labor Statistics.

Other convenient tables of prices are those published each month by Dun's and Bradstreet's, the former including 350 articles, the latter 106. In both cases the index number is obtained by the simple process of summation, that is, by adding together the prices of all articles included. Tables showing the movement of prices in Canada are published by the Canadian Department of Labor.

No system of index numbers yet devised can be said to give an accurate indication of changes in the purchasing power of money over a long period of years. In the first place the index number shows the relation of the value of money to commodities only, and takes no account of such important items as wages and rent. To determine the value of money with respect to labor it would be necessary to construct an index number based upon wages, but wages vary so widely in different communities and in different employments that it is difficult, if not impossible, to determine the average rate of wages. Then, again, index numbers are based upon wholesale prices rather than retail prices, due in part to the difficulty of obtaining reliable data for retail prices. Though a rough correspondence exists between wholesale and retail prices, the relation is not sufficiently close or constant to make an index number based on wholesale prices an accurate reflection of the purchasing power of money with respect to all goods. Still further, changes in human wants are constantly going on, so that commodities of great importance in one period may become of slight importance in another period, while entirely new articles may come into use. These changes must be taken into account if the index number is to serve its purpose. Frequent revisions of the tables may meet this difficulty in part, but under such conditions absolute accuracy cannot be expected.

Index numbers are constructed with reference to the purpose to be served. If, for example, we want to know the effect of changes in the price level on the workingman retail prices should be used and rents and wages should be taken into account. But, if the purpose is simply to indicate the changes in the general purchasing power of money, then wages and rent can be excluded, for they are already counted in the prices of commodities. For this purpose, too, wholesale prices serve just as well as retail prices. In general, it may be concluded, a table based upon the prices of representative articles of general consumption serves fairly well to indicate changes in the value of money.

1 See Bulletin of the Bureau of Labor Statistics, Wholesale Prices, 1890 to 1912, p. 149.