Wiley, The London School of Economics and Political Science and The Suntory and Toyota International Centres for Economics and Related Disciplines are collaborating with JSTOR to digitize, preserve and extend access to Economica.http://www.jstor.orgThe Suntory and Toyota International Centres for Economics and Related DisciplinesMr. Keynes' Evidence for Over-Population Author(s): William Beveridge Source:Economica, No. 10 (Feb., 1924), pp. 1-20Published by: on behalf of andWiley The London School of Economics and Political Science The Suntory and Toyota International Centres for Economics and Related DisciplinesStable URL:http://www.jstor.org/stable/2547868Accessed: 31-07-2015 10:28 UTCYour use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at http://www.jstor.org/page/info/about/policies/terms.jspJSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and ConditionsMr. Keynes' Evidence for Over- Population By SIR WILLIAMBEVERIDGE IN anaddress on" PopulationandUnemployment"deliveredto theEconomic SectionoftheBritishAssociation last September, I criticizedcertainstatementsmadebyMr.J.M.Keynes.My address hasbeenreprinted,according tocustom,intheEconomic Journal, for December,1923, and isthere followed bya" Reply" fromMr. Keynes,givinghisevidenceforthestatementswhichI challenged.Before examining this evidence, letme trytoclear the issue, byindicating whatis and whatis notin dispute. The one point of direct disagreement is as to whetherEurope was already beforethe war reaching thelimitsofthepopulationthatit couldhopetosupportwithoutloweringitsstandardsofliving. This,inrelationtothemainproblem ofpopulation,isapointof historical detail,and itismuch more important tomethantoMr. Keynes.Ifhisviewbecorrect-thatinEuropetheeconomic tendencies were already adverse and the population excessive before thewar-therecan belittlehesitationinregarding thepopulation as stillmore in excessafter war's destruction of our resources ; the burden of proof certainly lies on anyone who maintains the contrary. If my view be correct, that Mr. Keynes' reading of pre-war conditions waswrong andthattherewasthennosignofover-population in Europe,itisstillopentohimtoarguethatinthechanged con- ditionsthepopulationisexcessiveandthatachecktofurther increaseisurgentlyrequired;theburden ofproof,however,lies on him. There are other pointswhich are pointsofdisagreement onlyin sofar asMr. Keyneshascometodefinite conclusions uponthem, whileIplead forinquiry andsuspendedjudgment.Themost important of these is the definite and immediate advocacy of " birth control " as a means of limiting population.Itis not my view that mankindcanwiselycontinuetopropagateindefinitelywithout considering theconsequences;Iexpressedthecontraryviewas emphaticallyasIcouldatLiverpool.Buttheconsequences and re-actions of " birth control " also require consideration. There are other points on which I am glad to think that we are in completeagreement.Amongthemaretheinterpretation ofour present troubles as mainly due on theone hand tothebreak-down I1 This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and Conditions2ECONOMICA ofinternationaltradeandco-operation, and on theotherhandto uncertaintyastopricelevels;appreciation ofthedependenceof Britain on the prosperity of other countries and on world-wide trade for the maintenance of itspresentnumbers anditsinfluence in the world;andrecognition oftheneedfor discussing theproblem of population,bothquantitativeandqualitative,withoutprejudice and withoutfear. One more preliminary issue mustbecleared.Inmyaddress at Liverpool, I treated Mr. Keynes' fears of over-population as relating toEurope asawholeor totheworld asawhole.Thatmyinter- pretation was justified will, I think, be evident to anyone who reads the full and literal quotations of Mr. Keynes' words in my address or, better still,studies themin their contextin Mr. Keynes' own book. Thefamous secondchapter ofthatbookiscalled " Europe before theWar ";inthesectiononpopulationtheonlycountriesdealt withbynameareGermany, Austria-Hungary andRussia.Later comesthestatement: " InthechaptersofthisbookIhavenot generally hadinmindthesituationsontheproblems ofEngland. ' Europe'in my narration must generally be interpreted to exclude theBritish Isles."Later still,referring back tothe second chapter by name, Mr. Keynesinterprets what he saidthere asanassertion of" thediminishing response ofNaturetoanyfurther increase in thepopulationoftheworld." In his present Replyto me, however, Mr. Keynes more than once makes the point that he was talking only of the " industrial countries ofWesternEurope,"andusesthistorebutmyargumentsand evidence.Thisis,Ithink,arealshiftofpositiononhispart. Howfaritaffectsthevalueofmystatisticsofagriculturalpro- ductionandofprices willbeconsidered later.Itdoesnotaffect atall the criticisms which I have to make on Mr. Keynes' evidence. Thesewillbefoundtoapplywithequalforce,whetheritis theindustrialcountriesofWesternEurope,orallEurope,or alltheworld,whoseover-populationbeforethewarisunder discussion. WiththisprefaceletmepasstoconsiderationofMr. Keynes' Reply,thatistosay,hisdefenceofthestatementswhichI criticizedatLiverpool.ThesestatementsarecontainedinMr. Keynes'well-knownbookontheEconomicConsequencesofthe Peace;as I citedthem fully atLiverpool, Ido not reproduce them here.They are, as Ithen said, incidental tothe main argument of that book or, as Mr. Keynes rightly says, they are obiterdicta.This doesnotmakeitanythelessimportanttodetermine, ifwecan, whether theyare true or false.Nor mustMr. Keynes quarrel with mefor criticizing atlengthhisobiter dicta aboutpopulation.For onething,henowrepeatsanddefendsthem.Foranother,his bookhasbeenreadby-atamoderatecomputation-halfa millionpeoplewhoneverreadaneconomicworkbeforeand probably will not read oneagain.Ithas coloured general thought This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and ConditionsMR.KEYNES'EVIDENCEFOROVER-POPULATION3 onthequestionofpopulationand,inmyview,hascolouredit wrongly. Theevidence on whichMr. Keynesrelies toshowthedanger of over-population, whether inEuropeorinWesternEurope,before thewar,isfoundin a comparison oftheaveragepricesofBritish exportsandimportsinsuccessiveyearsfromI873.Theoriginal authority for these figures is Professor Bowley;from the comparison ofprices, heprepared andpublished intheEconomic Journalfor I903anindexnumberof" thequantityofexports(thekind supposedunchanged)thatweregivenforauniformquantityof imports" in each year from I873to I902.From I900export and import prices on a somewhatdifferent basis havebeen prepared by the Board of Trade and are used by Mr. Keynes to carry on Professor Bowley'sfigures.' These figures were notunknown tome, butIconfess thatIhad nottillnowconsidered themcarefully.Whenmyattentionwas calledtothemwhileIwaspreparing myLiverpoolpaper,they seemed to me to have so littlebearing on the question of population thatIdid notinvestigatethemfurther.HadIrealized thatthey were thebasis ofMr. Keynes' statementsIshould, ofcourse, have discussed them. The actual figures cited by Mr. Keynes in his reply to me aretwo- fold.One set, which may be described as the " general index," deals with British exports and imports gelnerallyfrom I873toi9ii.The other, or " special index," deals with selected groups of articles only -manufacturedexportsandfoodimports-fromi88ionwards. BetweenI88IandI902theonlyexportsincludedare " textiles" and " metalproducts."Mr. Keynestakesthemeanoftheindex numbers ofprices givenby ProfessorBowleyfor thesetwogroups torepresentmanufacturedexportsasawhole;expressesthe correspondingprice index for imported food, drink, and tobacco, as a percentage of thismean, and so getsan indexwhich maybe des- cribed as representing either the" volume of manufactured exports givenforauniformquantityoffoodimports,"orthe " priceof food imports as a percentage of the price of manufactured exports." From I902onwards he uses theBoardofTrade prices for " articles whollyor mainlymanufactured " andfor " importedfood,drink, and tobacco."Itis tothespecial index which he constructs in this waythatMr. Keynesattachesmostimportance; for convenience Ireproduce here thefigures givenbyhIiimwithten-yearaverages, upto9I3.2 1 ProfessorBowley'smemorandaareintheStatisticalJotirnalforI897 (pp. 437-9)andtheEconomicJournalfor1903(pp.628-32).TheBoardof Tradefiguresfor1900-IIwerepublishedinanofficialpaper,Cd.6314,andare continuedupto1913inCd.6782andCd.7432.Mr.Keyneshasanoteon themonp.630oftheEconomicJourncal for19I2. 2 Mr.Keynes,forsomereason,carriesonhistableto i9i6. Theselater figureshavenobearingonthequestionofwhatwashappeningbefore thewax. This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and Conditions4ECONOMICA VOLUMEOFMANUFACTUREDEXPORTSGIVENFORAUNIFORM QUANTITYOFFOODIMPORTS(I902=IOO). YearlyTen-YearYearlyTen-YearYearlyTen-Year Figure.Average.1Figure.Average.Figure.Average. i88II32 I89Iio6 II7 I9OI95 I05 I882130 I892II2 115 I902100 104 I883I28I893II2 II3I903 IOO I03 I884I20I894I07 II2 I904 96I02 I885 II4 i895104 III I905 99IOI I886 II7 I896io6IIOI90692100 I887ii6I897IIOlO9 I907 9298 i888 II4 I898IIIIO9I9089897 I889II6I899 I05 io8I909 I04 97 I890 I07 II9I90093 I07 I9IOIOO98 I9II9898 I9I2I0298 I9I39798 Commenting ontheten-yearaverages, Mr. Keynesargues that down tothedecade ending I907-8they show an "uninterrupted iin- provement," thatis,asteadydeclineinthequantityofexported manufactures required tobeexchanged for auniform- quantityof imported food, and that with thisdecade, ofwhich themiddle year is I903,the improvement came to an end.Inthelight of this table, his "formergeneralization should be modified by placing the turning- point atI903,rather than atI900(the figuresof the period I899- I903beingmuchupsetforpurposes ofcomparison bytheSouth African Warandbytheboomandsubsequentdepression within thatperiod) andbyemphasizing moredecidedlythecessationof improvement and lessdecidedly theextentof theactualdeteriora- tionbetweenthatdateandtheoutbreakofthewar."Thisis substantiallythewhole ofMr. Keynes' case. The first comment that must occur to any impartial reader is that evenas givenbyMr. Keynes,thefigures are singularly indecisive. The index falls from II9in the decade I88I-I890to 97 in each of the decades I899-I908andI900-I909; itthenrises onepointandre- mainssteady at 98 for four years, tothe decade I904-19I3. Even onthesefigures theturning-point, such asitis,comesinI904or I905,ratherthaninI903; theactualminimumforindividual years was reached in I906and I907.But is it sensible to speak ofa " turningpoint "atall ?Anindexwhichhasfallenpointby pointfor twentyyears,remains steadyduring atimeaffected(as Mr. Keynes himself points out) by many special circumstances-the SouthAfrican War, theexceptionaldepression ofI908-9,andthe upward turnofwholesaleprices. Thefigures themselvesgive no reason for assuming that,had no war come in I9I4,theindex would have remained stationary or haverisen; it might just as well have beguntofallagain.Thegeneral indexwasactuallyfalling each 1 The ten-year averages are entered opposite the last year included. This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and ConditionsMR.KEYNES'EVIDENCEFOROVER-POPULATION5 yearfromI9I0toI9I3.1Toinferaturning-pointinthehistoryof European civilizationfromamovementofthisnaturewouldbe rash beyond justification, even if the figures themselves were correct, if theyapplied tothe whole ofEurope or Western Europeandnot merely topart of thetrade of one country,if no similar movement had occurred in them before, and if, finally, they had any bearing on thequestionofpopulationatall.Actuallynotoneofthesefour conditions is satisfied.The figuresas given are statisticallyfallacious and as corrected show no turning-point atall;theyapplytopart of British trade only,and corresponding figures for Germany show nocorresponding movement;ifcarriedbackbeforei88Ithey show an upward movement then far more marked than Mr. Keynes finds later;finally, they are in principle irrelevant to the issue.Let me justifythesecriticisms one byone. I.-Thefigures are fallacious and if correctedshow no turning-point at all.Mr. Keynes, in constructing his index, uses figures from two sources-fromProfessor Bowley for the yearsi88itoI902,in which the only exports included are " textiles"and " metal products," and fromtheBoardofTradefortheyearsI902toI9I3,inwhichall exportedmanufacturesareincludedforwhichquantitiescanbe given;these two sets of figures he treats as equivalent and combines intoasingle series.Unfortunatelythefigures are notequivalent. If Mr.Keynes, instead of using the Board of Trade figures after I902, when Professor Bowley's figures came to an end, had himself carried on the latter, calculating them on Professor Bowley's lines, he would have reached quitedifferent results.Hisindex numbers and ten- yearaverages wouldhavebeenasfollows: Inidexforyear.Teni-YearAverage. 1902.........100 104 1903*.-... ... 97103 1904.........93I01 1905......94 100 I 906.........9 1 99 1907.........9097 1908.........9395 1909.........9995 I9I0.........9495 19II.........9094 1912.........9494 1913... ..... 879 3 The result isstartling;thedecline from i88itoI903isseencon- tinuingwithoutinterruptionuptotheeveofwar.Theactual evidence submittedbyMr. Keynes inhis Replyisthusseen to be worthless;hehascombined twosetsoffigures whosemovements do not agree and he getsa turning-point near I900onlybecause at thatpoint he himself turns from one setof figures toanother. IThis waspointedoutintheBoardofTradeReturnpublished in 1914. "Onthewholeitwouldappear that during recent yearstheaverage values ofBritishexportshavebeenincreasingmorerapidlythanthoseofimported rawmaterialsandfood." This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and Conditions6ECONOMICA Thisdoesnotsettlethequestion.Themarked discrepancy be- tweenthecourseoftheBoardofTradefigures andofProfessor Bowley'sfigures,ifcontinuedafterI902,suggestedtomethe desirabilityofacloser examinationofboth;examinationshowed thenecessityofrevisingProfessor Bowley'sfigures.The" metal products " covered byhis statisticsare named by him as " iron and steelandmanufacturesthereof,copper(wrought),brassofall sorts " ; in estimating their average price, the first of these headings, " ironandsteelandmanufacturesthereof,"hasbeenlumped together.Thisisunsatisfactory,becausetheheadingcoversa greatvarietyofarticlesofdiffering degrees offinish anddiffering price-frompig-iron and rails to tin-plates,wire, and wrought tubes andpipes.Theaverage valueper tonofiron andsteelmanufac- turesasawholemaychange,notthroughareal change ofprices (i.e.,ofthesumgivenfor thesamearticle atdifferent times),but because the composition of those manufactures has changed.There has, in fact, been a marked and progressive change in the character ofthosemanufacturessincei88i;themorefinishedandmore costlyitemsform agrowing proportion ofthewholeandraiseits average price bychanging itscomposition.This error can onlybe avoidedor reduced bya detailed classification of the manufactures andbycalculatingthechangeofpriceseparatelyforeachsub- division,asisdonebytheBoardofTradeafterI900.Ihave accordinglycalculatedafreshthepriceof" metalproducts"as defined byProfessor Bowley,splittingupiron andsteelmanufac- turesintotheseventeensub-divisionsforwhichseparatefigures are givenbacktoi88I.The price oftextileshasalsobeenrecal- culatedwithacloserclassification;thechangeinthefigures is much smaller than withmetalproducts, butinthesame direction. Norecalculation oftheprice offoodimports wascalled for.All three series of prices-exportedtextiles, exported metal products, im- ported food-havebeen carried backtoI865.The revised figures are setoutin Table I.Theresultoftherevisionon Mr. Keynes' position is made clear bythe accompanying chart.(p. 8.) Thebrokenlinebeginningini88i(TextileandMetalExports Unrevised) is basedonProfessor Bowley'sfigures, as givenbyhim uptoI902andcontinuedonthesame principle toI9I3,i.e.,with ironandsteelmanufacturestreatedasaunit.Thedottedline, beginning in I902(Manufactured Exports) is basedon theBoard of Trade prices of exports " whollyor mainlymanufactured'" and of "importedfood,drink,andtobacco."Thefiguresgivenin Mr. Keynes'table(p. 4above)are representedbythebroken line toI902andbythedottedlinethereafter.The"turning-point" appears becauseMr.Keynesswitchesfromonelinetoanother; evenso itis barelyvisibleand whollyindecisive. The continuous line from i865toI9I3(Textile and Metal Exports Revised)isbasedonmyrecalculationoftextileandmetalprices direct from theStatisticalAbstracts toI899and from theBoard of This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and ConditionsTABLEI.-BRITISHEXPORTANDIMPORTPRICES (1902=100). ManufacturedExports ~~FoodImportPrice ManufactulredExports as percentageof Year. Food Manufactured Export Textile,Metal.Mean ofImports, Price. I and 2.10 year Yearly.Average. I. 2.3.4-5.6. I865189132I6II38 86 - I866 193 135I6414286 - I867177128153 156102 i868I66123145155107 i869167121144145 101- I870 I59124141138 98 - JI87I 157I22140I48 io6- 1872I65I68I66 I53 92 - I873 I58192175 15488 - I874 149176I62I5394 9 I875 146r15 148 1I469897 I876 135138137144I0599 I877 132117 124I55I25I01 I878128114I21 I40II6 102 I879123104 113I33I17104 I88o 125II6121 139115 io6 I88I121105113I39123107 I882124Io8II6I39I20 110 I883I22102112 133 II9 II3 I884ii896107I22 114115 I885 11389IOI112III 117 i886io8 85 96io8 I12 117 I887io882 95 io6112ii6 I888io88697 io8112II6 I889I0890 99 III112 115 I890Io61OI104I08 104114 I891 I0599 102 114 III 113 I892100 9497 110 114 II2 I893IOI 8995 I06II2 III I89496 85 9I96Io6III I89593838893 io6IIo 1896978491 95105 1O9 I89795869098 lO9lO9 I8989287go99 110 1O9 I8999399 9698102 I08 i900 103II8 110100 9I I07 I9OI 103 I04I03 10198 I05 19021OO100 1OO 100100 104 1903IOI 101101100 99103 1904110 95 102 9997 102 1905III 95103 101 98IOI I906iI8100 I09 101 93 100 1907125Io8II6Io69I 98 1908I20 101IIIio898 97 I90911597 io6III 105 97 I9IO I2494IO9I12 I03 98 I91-I2995I12 III 9998 1912127 100 II3117103 99 1913 I32 Io6II9 II5 97 98 This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and Conditions8ECONOMICA I.-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Q~~~~~~~ '4j o- I- q s This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and ConditionsMR.KEYNES'EVIDENCEFOROVER-POPULATION 9 Trade Return fromI900toI9I3.Itisasreasonably accurateas sucharecordcanbemade,andshouldbesubstitutedforthe figures used byMr. Keynes.Whatdoes itshow ? Inthefirst place, therevised indexcrosses theincorrectone;it is materially below thelatteratthebeginning oftheir jointcourse (I88I)and as much above it at the end (I9I3).The result of revision istomake theprice of bothtextilesand metals higher ini88iand lower inI9I3thanitwasintheunrevised figures, becausethein- fluence of the change in composition, i.e.,of the growing proportion ofmorefinished andmoreexpensivearticles, iseliminated.The volumeoftextileandmetalexportsexchangedforauniform quantityoffood imports falls less rapidly in truth thanitappeared todo intheunrevisedfigures. Inthenextplace,thereisnothingthatcanbedescribedasa turning-point inthegeneral trendofthecurveatoraboutI900. Itistrue thatifwe follow Mr. Keynesintakingten-yearaverages oftherevised figures as ofthe old we getoncemore a fall,though lessmarked,frorn I88I-90toI900-09followedbyatriflingrise. Butthisonlyillustrates theimperfection ofamechanical ten-year average.Whatthecurve really shows is afairly steady downward slopethroughoutitscourse fromi88itoI9I3,exceptwhere itis broken byanexceptionaldipbetweenI900andI907.Afterthis dipitrises toalevelrepresenting analmostexactcontinuationof itsformer course;thepeaksatI877,i88i,I892,I899,andI909 areroughlyinaline.Thediprecords obviouslytheworkingof special and temporary causes of which theSouth African War was thegreatest.Our newcurveagrees withmuchotherevidencein picking outtheEdwardian ageasamomentary exceptionalphase inBritish economic history.Butitisas far aspossible from sug- gestingasecular change nearI900. ThecorrectionofthefigurestakenfromProfessorBowley's memorandum really disposes ofMr. Keynes'case.Inviewofthe importance of the issue, however, itis worth whiletoproceed with theothercriticismsofit.EveniftheindexconstructedbyMr. Keyneswere thought to show a change of secular trend aboutI900 or should do so later, this would be no evidence of over-population. II.-Thefigures relate to a part ofBritish trade alone and are not typical of othercountries such asGermany.Icriticized Mr. Keynes atLiverpoolnot for anything he had said about Britain, but for what he had said about Europe, and, as Ithought,thewhole of Europe. InhisReply,henowtreatshisargument asreferring only tothe " industrial countries ofWestern Europe? " Butistheparticular British experience on which he bases himself-therelative movement of certain export and import prices-typicaleven of other industrial countries of Western Europe?I have testedMr. Keynes' argument forthemostimportant ofthesecountries-Germany-byworking out series of figurescorrespondingas closely as possible to the British ones.The results are shown in Table II,givingfromi88itoI9II This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and Conditions101NECONOMICA TABLEII.-GERMANEXPORTANDIMPORTPRICES(1902=100). ManufacturedExports.Mean ofImports of British Food Year.AllTextilesFood, Drink,Import Price Textile.Metal.Other.Manu-and Metalsand Tobacco.as percentage .factures.of column(4). ()(2)(3)(4)(5)(6)(7) I88i12388125120 105144 II6 I882 113157124121 135136115 I883112 144132123128 134 Io8 I884Io8138114114123II9 107 18851031OO112107102 lOg 105 I886Io693112 107 100110101 I8871059811210710211799 I888 105105 112io8105 II4 100 I889110 114115113 112I2698 1890lO9 107 II6IIIIo812798 I89I9996io810297 141 112 189292871009589125II6 I893926898918o117117 18948585948985 IOIIo8 18958986969287102101 1896889398939099102 1897887896939393105 189889100929395101 107 1899951129798 104 97100 1900 10311398102Io810298 I9O1981001011OO99102100 1902100100100100100100TOO 1903io693981OO1OO95100 1904io8 85 99100969999 1905114861031041OO10797 190610482 107 10193 105 100 1907Io68311210494113102 I9081O976III10292112106 I90991741079683II61i6 I9IO937611098 85105114 19I19587 11010191 117 110 119112 1913 I914 priceindexnumbersfortextile,metalandothermanufactured exports and for all these together, and for food imports.For reasons described in the Appendix the last of these indices is not a good one; inthelastcolumn ofTable IL, therefore, Ihavesetoutaseries of figures representing therelativepriceofGerman exportedmanu- factures and of British food imports, taking thelatteras typicalof the supplies sent by the new world tosustain the old.These figures, itwill be seen, show no sort of trend, butsimply a large fluctuation betweenthesame upper and lower limits-ii6or II7for thecrests This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and ConditionsMR.KEYNES'EVIDENCEFOROVER-POPULATIONll and 97 or 98 for the depressions.If we substitutetheGerman food importsforBritish, or useanyofthe otherGerman figures, we get curvesequallyorevenmore unlike theBritishone.Mr. Keynes' assumptionthathisBritishfigures aretypicalofindustrialcom- munities generallyiscontrary tofacts.' Thisisnotsurprising whenweconsider whathisfigures really represent.Theyrelate noteventothewhole ofBritishtrade but only to a part of it.For " manufactured exports," Mr. Keynes uses uptoI902themean of separate figures givenbyProf.Bowleyfor " exportedtextilemanufactures " and'exportedmetalmanu- factures."The former does cover mostof our textiletrades.The lattercovers onlywhat isclassified in thetrade returns as " manu- factures of iron and steel,copper (wrought) and brass;thatis to say, it excludes machinery, railway and other vehicles, ships, cutlery and hardware, andelectrical engineering.Allmanufacturesother thantextileand metal,such as dress, chemicals, wood, paper, soap andfurniturearealsoexcluded.Invalue,Prof.Bowley'stwo classes of textileand metal manufactures represented ini88iabout J 35,800,000;this was 65 per cent. of all our exported manufactures and 58 per cent.ofallour exports.Fori895,thecorresponding figureswere?II4,500,000,59percent.and5Ipercent.2This evidencethuscoversafallingproportionofourtotalexportof manufactures:itomits,perforce, from " metals"themostskilled andmostprogressive sections;itrepresents atbottomlittlemore than cotton,wool, tinplates,rails, galvanized sheets and castings. FromI900onwardsthebasisofthefigures isdifferentandin some ways wider.But the widening of the basis is to a large extent illusory;neither before nor after I900is itpossible tomake certain thattheships,machinery,motor-cars andothercomplicatedand infinitelyvariousmanufacturescountedorweighedeachyear represent in each year comparable articles.The most characteristic and most progressive section of British industry is the leastsuscep- tibleofstatisticalmeasurement.3 Some British figures, no doubt, can be taken withoutserious risk, as broadly typical of conditions in Europe or in the world as a whole. In my Liverpool paper, with due warning, I used the Sauerbeck and 1 ProfessorBowleygavesomefiguresforGermanyintheEconomicJournal forI903.Thesedealtwithexportsandimportsgenerally,butreferredonly toselectedyearsofwhichI900wasthelatest.Theyindicatedamovement similarindirectiontothatofBritain,butmuchsmallerinamountandwith markeddifferencesinparticularyears.Theycertainlydidnotsupportthe viewthattheBritishindexnumbercouldbetakenasaccuratelyrepresenting Germanconditionsaswell. 2ForI9IItheywereabout?204,000,000,56percent.and45percent. 3 Fromi88itoI9IIexportsoftextilesandofironandsteelandtheir manufactureseachroseinvaluejustover6opercent.Exportsofmachinery rosemorethan200per cent.,andthoseof chemicalsonlyslightlyless;apparel roseI50percent.;railwaycarriagesandothervehiclesrosefromp227,000 to ?8,I25,,ooo; AlltheseareexcludedfromthefiguresusedbyMr.Keynes toI902. This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and Conditions12ECONOMICA Board of Trade indices of wholesale prices inthis way, to bring out certainstrikingdifferences betweencoal,cornandotherarticles. ButMr. Keynesoughtnottohaveassumed, withoutinquiry,that thelimitedfigures ofBritishtradegivenaboveareatalltypical ofthetradeofothercountries;stilllessthattheyare soexactly typicalthattheslightandindefinite movementobserved in them must have occurred elsewhere.Mr. Keynes' index is vitallyaffected bythepeculiarcompositionofBritishtrade,bychangesinthat composition,bycyclicalfluctuation,and,inthecriticalopening yearsofthiscentury, bytheSouthAfrican War andbyahostof specialcircumstances. III.-TheBritishindexhadrisenpreviously wlten there wasno over-population.Evenifthere hadbeenamarked riseafterI900 in the volume of manufactured exports given for a uniform quantity of food, there would havebeen nothing exceptional in this.Let us returntotheBritishfigures inTableI,andinthechart.Mr. Keynesbegins hisfigures justatthepoint(i88i)from which they happen toshow a steadyfall.If he had gone a littlefurther back, he would havefound a yetmore striking rise.'The ten-year aver- ages mount steadilyfrom 96 ini865-74toII7iR1877-86,a move- ment which makes the subsequent rise from 97 to 99 or 98 just before thewarlookinsignificant-as,indeed, itis.Ariseintheindex obviouslycannotbyitselfbetakenas evidenceofover-population or diminishing returns.Whatisthereal lessonoftheinteresting andstrikingmovementsthatitshows ? The first lesson is that we should be cautious in drawing ainylesson atall.Thisissuggestedbytheobserved serious riskoferror in treating any large class of exports(such as iron and steelmanufac- tures) in the lump, and by the need for the most detailed classification possible, iferror istobeavoided.Professor Marshall ina striking passageoncecalledattentiontothecontinualmovementtowards themoreadvancedstagesofmanufacturing,tothefinishingand final processes, asanoutstandingfeatureofBritisheconomic life, and asthesymbolofitsindustrial rank. " One testofleadership isdoingthingswhichothercountries withsimilar economicprob- lems will be doing a littlelater, but are not ready and able to do yet. One ofthebestindications ofthenature and extentofacountry's leadershipistobefoundinthecharacterofthegoodswhich sheexports."2Suchleadershipisillustratedateverypointof our exporttradeandprices.Almostwithoutexception,inall our main exporttrades, we find themore finished and morecostly growing attheexpenseofthelesscostlyor atleastmore rapidly; whenever,inthetradereturns,twoormorearticlespreviously 1 The " GeneralIndex " givenbyMr.KeynesfromI873,butnotreferred tobyhim,showstheendofthisrise. 2 IndustryandTrade,p.3.Comparealsoanotherpassageonp.26: " In- dustrialleadership...isthepowerofdoingnowwhatotherswillpresently bedoing,oratalleventstryingtodo." This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and ConditionsMR.KEYNES'EVIDENCEFOROVER-POPULATIONI 3 combined are separated, the more costlyor more finished ofthem is seen thereafter togainontheothers.Tinplates,wire, galvanized sheets gainonpigiron,bolts,bars,andrails;wroughtoncast iron;steelmanufactures on steelingots;bleachedyarnon grey; printedanddyedpiece goodson plain ones;all-woolclothsand coatingsonmixtures.Thisisafeatureofoureconomiclifeen- couragingpractically,butratherdepressingtothestatistician. Every improvement in the classification of our trade returns, making itmore nearly certain thatweare comparing likewithlike,makes theaverage price in later years appear lower thanit would without thatimprovement.Butnoclassificationcanbeperfect.We cannot,or, atleast,donotpublishseparatestatisticsforeach different qualityof yarn or piece goods,or class of pipesor wire or girders;wecan onlyinour indexofprices allow for thechanging character of British trade when the change shows itself in the relative growthofseparatecategories;achangewithinacategorygoes unmarked.Yetsuchchangestherecertainlyare;itiscommon knowledge thatonthewholethetendencyofcottonspinning has beentowards the finer counts.Ultimatelyitisnotpossibletosay howmuchoftheriseofexportpricesrelativetoimportprices showninthefallofourindexfromi88iisapparentonly,how much represents a real gaininpurchasing power ofmanufacturing intermsofagricultural products.One canionly say thatthe main movements of the index, bothup beforeI877anddown afteri88i, lookfar toolarge tobe explainedawayaltogether. Withthiswarning, wemayseecrystallizedinthemovementsof our index,a good deal of interesting economic history.Theindex represents a fraction, with the price of food imports in the numerator and theprice oftextileand metalexportsinthedenominator.It rises whenthelatter become relativelycheapandfallswhenthey becomerelativelydear;inparticular itfallswithgoodharvests and as the after-effect of wars.The American Civil War, the Franco- German war, and the South African War all raised the relative price of manufactures.We are at this moment repeating this experience; the index for i92i,I922and the first nine monthsof I923has stood at73, 77, 8o.1The mostmarked feature of thecurve, however, is the sheer rise from I873(the boom afterthe Franco-German War) to I877and the long downward trendthereafter.The natural inter- pretation is that in the early 'seventies we were shipping tothe new lands beyond the seas large quantities of railway material and similar products, and thereafter reaped theharvestinagrowing stream of cheaper food.2Nowthecurvehascomebacktosomethinglike the levelseen before theuprush ofthe'seventies. One thing isclear-asharp rise oftheindexmay herald notthe 'SeeMr. Keynes'Reply(pp. 480-IoftheEconomicJournal)for this,tohim, ratherdisconcertingfact. 2 Thevolumeof railwaymaterialexportedin thefouryearsI869-72wasnot equalledagaintillI887-90. This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and Conditions14ECONOMICA end,butthebeginningofaneraofprosperity.Theremustbe somethingwrong withthelogicofanyargumentthatconnectsit inevitablywith the former.This brings me to my final criticism. IV.-Arise in the index has no logical connectionwith over-popula- tion.Evenif the index used byMr. Keynes were representative of thewholetradeofEurope andnotmerelyofpartofthetradeof Britain, and even if its movements since I903showed anunmistak- ableandunprecedentedupwardtendency,thiswouldaffordno evidenceofover-population or of adiminishing response of Nature toman's efforts.There is a gap in the argument which twoquota- tionsfromMr. Keynes'writingswillmakeclear. The first quotationis from his noteon the Board of Trade statis- ticsof export and import prices, in theEconomicJournal." There isnowagain,"hetherewroteini9i2,"asteady tendency fora givenunitofmanufactured product topurchaseyearbyyeara diminishing quantityof raw product.The comparative advantage intradeismovingsharplyagainstindustrial countries." Thesecondquotationisoneof thosealreadygivenbymeat LiverpoolandrepeatedbyMr. KeynesinhisReply.'" Upto aboutI900aunitoflabou-rappliedtoindusiryieldedyearby year a purchasing power over an increasing quantityof food.Itis possible that about theyear i90othis process begantobereversed andadiminishing yieldofnaturetoman'seffortwasbeginning tore-assert itself."The italics in each case are mine. Thefirstquotation,apartfromtheunjustifiedinferencefrom Britain to all industrial countries and the exaggeration of the words " movingsharply,"isadefensiblecommentonthefiguresthen under review.Thesecond quotation,whichMr. Keynestreatsas no more than a translation of the first, is something absolutely differ- ent. A " unit of manufactured product " and a " unit of labour applied to industry " are no more identical terms than are a pair of boots and a boot-maker;thetransition from one totheother is indefensible. Mr. Keynesignoresallchangesinmanufacturing technique,both absolutelyandrelativelytoagricultural technique. The price of any product is vitallyaffected bythe cost of produc- tion.The main objectand usual effect of improvements in manu- facturing technique are to lessen the costs of production, to produce alargerquantityofgoodsbythesameamountoflabour,and (almost inevitably) to lower the price in order to find a market for the largerproduction.Amarkedimprovementinthetechniqueof making anyparticular product ofgeneral utilityalmostinevitably lowers theprice relativelytootherthings,thatistosay,thepur- chasing power ofeachunitofthatproduct.Butitincreases, not diminishes, thereturn toeach unitof labour applied tomaking the product.Thephenomenon whichMr. Keynestreatsasevidence Qf over-population and ofdiminishing returns, namely,decrease in 1 FromTheEconomicConsequences ofthe Peace. This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and ConditionsMR.KEYNES'EVIDENCEFOROVER-POPULATIONI5 theprice ofBritishmanufactures relativelytofood,would cccur, other things being equal, whenever industrial technique was advanc- ingmore rapidlythanagricultural technique;itmightoccur,in suchcircumstances, whetherpopulationwasgrowing orfallingor stationary, whether returns to labour in agriculturewere increasing or diminishing.The special index is simply an expression of the price of certain manufactures in relation to the price of food.The course ofsuchanindexistheresultantofseveralindependentforces, namely,efficiency ofproduction inindustryorinagriculture and demandforindustrialoragriculturalproducts.Herearefour variables at least.There is no justification for attributing a change in the resultant to one of these variables alone, and building thereon asweepinggeneralizationofdiminishingreturnsinagriculture. The change observed is just as good evidence of increasing returns in industry.Thequestionofmanufacturing efficiency isdealtwith byMr. Keynesin hisreply as follows:" Fromi88itoi9oothere wascertainlyagreatimprovementinmanufacturingtechnique. Thus, notonlydid a unitofmanufacture purchase more food,but itcost less labour....Between thattime(I900)and the outbreak ofthewarthesituationmayhavebeenhelpedbysomefurther improvement inmanufacturing technique;andthevolumeofour tradewasstillincreasing;buttheotherfactor-thepurchasing power of our manufactures-ha.dceased to help and seems from the abovedatatohavebeguntoturnadverse."Hethenmaintains thatthe " bestevidence available " stillsupports his contentionas tothefallingreturn sinceI900toeachunitoflabourappliedto industry.From this passage Iinfer thatMr. Keynes has begun to suspect the gap in his argument and is making a half-hearted attempt tofillitbysuggestingthatimprovementsoftechniquesomehow ceased or become negligible after I900; that this variable, therefore, maybe leftoutofaccountandthewholechange beattributedto diminishing returns inagriculture. Iknow of no grounds for believingthatimprovements inmanu- facturingtechnique-includinginvention,replacementofoldby newplant,andprogress intechnical education-becameless rapid afteri90othanbefore.YetforMr. Keynes'case,itisnecessary to hold not merely that progress became less rapid but that it stopped altogether;only on thatsuppositioncanitbeassumed thateach unitofmnanufacturedproductrepresentsthroughoutthesame arnount of labour applied toindustry. AllthroughMr. Keynes'Reply,thereisnorecognitionofthe effect of technical improvements in cheapening the product, thatis to say, of the connection between cost of production and price.The point was dealt with, however, in myLiverpool paper, in a passage to which Mr. Keynes has really not paid enough attention.I there explainedthatoneway,insubstancetheonlyway,inwhichthe rising price ofcoal and metalintermsofcorn could bereconciled with a falling price Qfindustrial products based on coal and metal in This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and Conditionsx6ECONOMICA terms of corn, was through an increase of manufacturing efficiency. Ipointedoutthatthiswasnotonlyareal possibilitybutaprob- ability."Itisjustinthespheres ofmanufacturing and distribu- tionthatincreased efficiency mostnaturallyaccompanies agrowth inpopulation,andthatinventionandorganization wintheirlast victoriesoverdiminishing returns.Butthecheapening ofmanu- facture in this way involves not a decreasing but an increasing return toeach unitof labour in industry;itwould cause a fall of thereal cost of corn measured in labour."Actually,the combination of Mr. Keynes'figures, of therelative prices of exported manufacture and importedfood,withmyfigures oftherelativepricesofcoaland metalascompared withcorn,suggestthattherewasprobablya substantialimprovement of manufacturing efficiency betweeni9oo and theoutbreak of thewar.Ifwefirst and foremost consider, as from the point of view of this country we are justified in considering, labour in manufacturing as distinct from labour in extractiveindus- tries, itis all but certain thata unit of labour applied to industry in thiscountry continued after I900as before to secure year by year a purchasing power over a continually increasing quantityof food. ThetablewhichIhavebeencriticizing represents thewholeof Mr.Keynes'evidence.Atleast,hehascallednootherwitness. Under cross-examination thewitness breaks down hopelessly. His character is bad;he doesn't say what Mr. Keynes wants him to say; andwhateverhesaidwouldbebesidethepoint.Hewasnever within a hundred miles of the murder that he is asked todescribe. Ontheotherhand,thereasonsthatIgaveatLiverpool, for doubting whether there had been any murder at all, are untouched by Mr. Keynes' criticism.Of theweakness of wholesale prices, limited practicallytorawmaterials,asproofoftheratioofexchange betweenindustrialandagriculturalproducts,Iwaswellaware; ingivingwholesalepricesIdealtatsomelengthwiththis issue; theyremain as secondary evidence strongly suggestiveof continued gainbyindustrialcountriesinbargaining withagricultural ones; by taking export prices Mr. Keynes does not really get substantially nearer to measurement of the return to manufacturing labour.The increased yieldofcorn per acre throughoutEuropeanditssettle- mentsuptotheeveofwarisalsosecondaryevidenceonly: it shows thatwe were still able to extend cultivationtonew fields and toincrease theaverageyield.Itcould beargued, however,that this was only happening atthecostof puttingmore labour intothe taskof cultivation,eitherdirectly orin the form offixed capital- machinery, railroads, andthelike.Butthisargumentisallbut impossible toreconcile withthelast and most important fact in my paper-ofasteadilyincreasing yieldper headofthetotalpopu- lation,alikein Europe and in the countries settledfrom Europe up tothe very eveofwar.ThereconciliationofMr.Keynes'views withthisfactinvolvesaseries ofunproved assumptions so highly This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and ConditionsMR.KEYNES'EVIDENCEFOROVER-POPULATION I7 improbableinthemselvesasnottowarrantexamination.The total population includes those engaged in providing the agricultural machinery or fertilizers or the goods to be exchanged forthem. Mr. Keynes, indeed, now takes the line thathe was speaking only of the " industrial countries of Western Europe," and thatinclusion of figures for other parts of Europe " vitiates" my argument.This newpositionrequires examination.There is,asIpointedoutat Liverpool, a theoretical difficulty, in these daysof nationalspeciali- zationand co-operation, in considering thepopulationquestionfor anyone countryor small group of countries apart from therestof the world.Mr. Keynes' own method of inquiry-basedon the ratio of exchange between industrial and agricultural products-isparti- cularlyill-adaptedforyieldingconclusionsaboutoneorafew countries in isolation from therest;his original inference from the unfavourable movement which hethought he observed in his index was,quitenaturally,oneofadiminishingresponse ofNatureto population oftheworld asawhole,notincertain countries alone. Ifweare considering particular countries,factssuch asIgavefor Britain, atLiverpool, are far more tothepoint, and, as ithappens, are better reasons for anxietyabout Britain than anythingthatMr. Keynes has said;but as I also showed at Liverpool, the faltering of Britishmaterialprogress recorded insomanyindicesduringthe Edwardian agewasprobablyinpartapparentonlyandinpart real, but due to transient causes.Mr. Keynes, however, still speaks of the industrial countries of Western Europe, notofBritain alone. My evidenceprovesthatthesecountrieswiththeothercountries on which theymainly depend for food supplies, were between them producing per head of the total population both more corn and much more ofthebasicmaterialsofindustryinthesixyearsI908-I3 than in i898-I903;this is true whether we limit our view to Europe or take in the lands overseas occupied by men of European race and typeoflife.Unlesswemaketheunprovedandreallyfantastic assumption thatsomehow thewholeofthisgainwasabsorbed by landsotherthanthe " industrialcountriesofWesternEurope," we cannot speak of a falling or even a stationary response of Nature topopulation evenin thesecountries bythemselves.Mr. Keynes' evidence atanyrate-evaporatingasitdoes under test-doesnot help ustosuch an assumption. The case, then, stands thus.There is no positive evidence at all to support Mr. Keynes' views, whether as to Europe as a whole or as to thewestern industrial communities beforethewar.On theother hand,there isstrong, ifnotconclusive, evidence negativingthem; so far as can be seen, material progressin Europe continued to the eve of war at a hardly diminished rate.This does not settlethe popula- tion problem for us now.It does no more than clear the ground for a real discussion of theproblem.That 'prelimirnarydestructionof unproved assertions isthesoleobjectofthispaper. Mr.Keyneshasdonegreatserviceinbringing theproblem of This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and ConditionsI8ECONOMICA population again toprominence.Butindoing so, he has coloured withpremature gloomthewholeatmosphere inwhich ithastobe discussed.Hehasseenthewriting onthewall,tellingthat" the magnificent episode of the nineteenth century"was over, that even before the war Europe's prosperityhad reached its climax, and, war or orno war, wasonitsdownward slope.Hehasseenandhehas dazzled theeyesofa generation.And after all,itseems, he was a visionary-Cassandra,right or wrong, withno reasons for his fears. Inour ante-chamber of war there was no writing visibletohuman eyes;onthehuge highwayof material progress one nationmight gain or lose on others, butall swept swiftlyon;there was nothing, uptothemidnighteveof war nothing,tosuggestanyfaltering of thegeneral pace,anysudden steepeningoftheroad. APPENDIX NOTEONTABLEI ThefiguresincolumnsI,2,and4ofTableIshowthecourseofprices,by expressingthedeclaredvalueofthespecifiedexportsorimportsineachyear asapercentageofwhatwouldhavebeentheirvalueatthepricesofthebase year;thislatterfigureisobtainedbymultiplyingthequantitiesincachyear bythepricesinthebaseyear.Fromi88Ito I9I3, I902(thelastyearin ProfessorBowley'stables)istakenasthebaseyear;beforeI88Itheprices ofi88ihavebeenusedtocalculateinthefirstinstancethevaluesforcom- parisonwiththedeclaredvaluesandthepercentageshavebeenreduced subsequentlytothebasis1902=IOO. Column3 givesthemeanofcolumnsiand2(textileandmetalprices),and column5istheresultofdividingthepriceoffoodimports(column4)bythis mean.Itshowsthepriceoffoodimportsinrelationtothepriceofexported textileandmetalproducts;alternatively,asMr. Keynesputsit,itshowsthe changefromyeartoyearinthevolumeofsuchexportsgivenforauniform quantityoffoodimports.Toavoidcumulationofsmallerrors,Ihavetaken thetwoexportpricesandtheirmeantooneplaceofdecimalsthoughIdo notshowthesedecimalsinthetable. Column6givesten-yearaveragesofthefiguresincolumn5, theaveragefor eachdecadebeingsetdownoppositethelastyearofthedecade. Thefirstcolumn, " Textile,"coverspracticallyalltextilemanufactures. Fromi 900to1913thefiguresare basedonthosegivenbytheBoardofTrade forCottonManufactures,WoollenandWorstedManufactures,andother TextileManufactures(ImportandExportPrices,Cd. Papers6314,6782,7432). FromI865toi 900theyrepresentanewcalculation.Broadly,everyitemin GroupH-YarnsaiidTextileFabrics,ofthe " Articleswhollyormainly manufactured"forwhichquantities aregiven intheStatisticalAbstractsis included(otherthanWool-FlocksandRagwool,Waste,Shoddy,Mungo, NoilsTops;andSilk-Thrown, TwistorYarn),andistreatedseparately. ThisgiveseighteenseparateitemsfromI865toi88ItwentyfromI882to I889andthirty-sixfromi 890onwards,ascomparedwithfourteenin ProfessorBowley'scalculation. Thesecondcolumn,"Metals,"meansGroupAofthe" Articleswhollyor mainlymanufactured"intheStatisticalAbstracts(" IronandSteeland Manufacturesthereof'),withthreeitemsfromGroupB,namely,Brassof AllSorts;Copper,Wrought orPartlyWrought-MixedorYellowMetal; Copper,WroughtorPartlyWrought-ofothersorts.Aswithtextiles,the figuresfromI900to1913arebasedontheBoardofTradeReturnofImport andExportPrices,andfromi88itoI900on a newcalculation;in this, "Iron andSteelandManufacturesthereof,"treatedbyProfessorBowleyasaunit, issplitupintoseventeenseparateitems,makingwithbrassandcopper This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and ConditionsMR.KEYNES'EVIDENCEFOROVER-POPULATIONI9 twentyitemsaltogether.Beforei88ithesamegroundiscovered,butthe classificationislessdetailed-withtwelveseparateitemsonly. ThefifthcolumnrepresentstheBoardofTradefiguresfrom1900toI9I3, andProfessorBowley'sfromi88itoI899.Thelatterincludedthirty-four separateitems(assetoutintheStatisticalJournal,1897,p.438).Inmy calculationfor theyearsbeforeI 88I,a fewitemshavehadtobecombinedand afewofnoimportanceinthoseyearshavebeenomitted(Mutton;Preserved Meat;Cocoa;Confectionery;CondensedMilk;Raisins;OliveOil;Palm Oil).Theseomissions(representingabout2percent.ofthewhole)can makenoappreciablechangeinthefinalfigures;twenty-fourseparateitems remain.TheseriesfromI865to1913incolumn5ofmytablegivesasetof foodpriceswhichhasatleastoneadvantageoverotherseries-ofallowing forthechangingimportanceofdifferentarticles;theBoardofTradeprice indexexaggeratesthepricesin earlieryearsbygivingtosugarthesameweight inI871,whenitwasdearandlittleused,aswhenitwascheapandcommona generationlater. TherevisionofProfessorBowley'sfiguresfromi88ito1902makeslittle differencein thetextilegroup,buta greatdifferenceinthemetalgroup.Thus theprice of exportedmetalproductsinI 88 Iisgivenbyhimas go, whereas itshouldbe I05, andthatinI89Iasiiiwhenitshouldbe99(1902being treatedasIooineachcase).FromI900to19I3thetwosetsoffiguresrunas inthetablebelow.Arepresentsthecorrectfigures,basedontheBoardof TradeReturn,withitsdetailedclassification;BismycontinuationofPro- fessorBowley'sEconomic journal figures.Thelastcolumncorrespondsto thebrokenline (---) inthechart. MvleanofFood Import Textiles.Metals.Textiles anidPrice asper- Metals.centage of A.B.A.B.B. Columnn (5). (l)(2)(3)(4)(5)(6) I900...103 102II8III 107 93 I9OI...103103104 Io8Io695 1902...100100100100100100 1903...101 103 101 103103 97 1904...IIOlo895 103 Io693 1905... *I II1109510310794 1906...II8II8100 104 III91 1907...125125I08IIIII890 I908...120122101110II693 I909...I I5 I I697lO9111299 19IO...1241269411211994 1911...129130 95I i612390 1912...12712910012112594 1913...132134io613213387 From1902to1913themeanofthetextileandmetalprices(basedonthe BoardofTradeReturns),andthepriceofwhollyormainlymanufactured exportsas a whole(drawn from thesamereturn),followmuchthesamecourse. IthasnotseemedworthwhiletocarrythelatterseriesbackwardsbeforeI900. Atestcalculationcoveringallmanufacturesotherthantextileandmetal forwhichquantitiesareavailableinI88i,yieldsinthatyearapriceof I05, (onthebasisi902ioo).Thisisthesameasforthemetalproducts.The exportsincludedareAlkali,Gunpowder,Bags,Bleacching Materials,Candles, Cement,CordageandTwine,Glass-Flint,GlassBottles,Glass-other, Leather-TannedUnwrouglht,Leather-BootsandShoes,Zinc,Oiland FloorCloth,Paper-Writing,etc.(excludinghangings),Paper-Unenumer- ated,SkinsandFurs-BritishForeignDressed,Soap.Theseexportsini88i This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and Conditions20ECONOMICA hadadeclaredvalueof/12,253,000,lessthanone-tenthoftheexported textilesandmetalproducts. NOTEONTABLEII ForGermanythenumbersfromi88ItoI91IshowninTableIIhavebeen constructedfromdataintheAbstractsofForeignStatisticsonthesameprin- ciplesastheBritishfiguresinTableI.Thearticlesincludedareasfollows, withthedeclaredvaluesin1902: Textiles.-CottonYarn;CottonManufacturesSilkManufactures; WoollenYarn;WoollenManufactures./38,800,ooo. Metals.-Iron,Pig;IronBars,Malleable;IronWares,Coarse;IronWire (fromI884)./14,600,000. Other Manufactures.-MachineryofallkindsincludingLocomotives;Musi- calInstruments;GlassandGlassManufactures;Paper;Leather-Dressed, Dyed;LeatherWares,exceptGloves;Skins-Dressed;andfromI884,in addition,Dyes;WearingApparel;andBooks,Maps,Engravings,Litho- graphs,etc.,47,000,0 00. Food,DrinkandTobacco'Imports.-Wheat,Barley,Maize,Rye, Oats(groupedas "Grain,FlourandMeal"beforeI894);Coffee;Herrings; Tobacco;Wine. ?49,400,000? GermanFoodImportsdonotrepresentnearlysowidearangeofarticles asBritish(excludingamongotherthingsCheese,Eggs,Bacon,Butter,Tea, SugarandMeat).Graindominatesthemaltogether;unfortunatelyforgrain beforei 894 thefigures for differentcrops-wheat,rye,barley,maize,oats-are notshownseparately;apparentchangesofpricemayrepresentonlychanges intheproportionsofthedifferentcrops.Toogreatreliancecannotbe placed onthesefigures. Incolumn(7)accordinglythepricesofGermanmanufacturedexportshas beenshowninrelationtothepricesofBritishfoodexports;thatis,itdiffers fromcolumn 5 inTableI,onlybythesubstitutionforcolumn3 ofTableI,of column (4) fromTableII. Themovementof theMean of TextileandMetalPricesafter1905is remark- able.Uptothatyearithasfollowedthegeneralcoursetypicaloftheother indices,bothBritishandGerman,fallingtoaminimumaboutthemiddle 'nineties,risingtoa markedpeakinI900and fallingagainwiththetradecycle. ButwhereastheBritishindicesbothofexportedmanufacturesandoffood importsandtheGermanindexof" other"manufacturedexportsthensoar upwardsto19I3,theGermantextileandmetalindexfallsviolently.Thisis averysuspiciouscircumstance;probablyitrepresentsachangeinthecom- positionof theGermanExportsor of theirclassification.Itis an addedreason fortrustingexportandimportpricessparingly. This content downloaded from 164.11.203.58 on Fri, 31 Jul 2015 10:28:02 UTCAll use subject to JSTOR Terms and Conditions