The depression, like other depressions in past times, keeps within narrow limits.

But while the facts stated are beyond dispute, the fact of rather more outcry being made than usual remains to be accounted for and explained. The explanation I have to suggest is the condition of prices for many years past. But for the facts as to prices which have to be noticed, I should be disposed to say that the present depression would perhaps hardly be noticed at all as a depression. Comparing it with former periods, it is easy to see that it possesses no very marked feature. Usually a great depression succeeds a great period of inflation. In 1867 and 1868 the country was liquidating a great deal of bad finance in connection with the formation of limited companies and the construction of contractors' railways. From 1873 to 1879, though the depression of that period was aggravated by other causes, there was a similar liquidation of the bad finance of foreign loans which had been accumulating for twenty years before. At the present time there is no such liquidation going forward. In the few prosperous years which succeeded 1879 there was a slight boom on the English Stock Exchange and in shipbuilding; a still stronger inflation in the United States, from which in turn there has been a greater reaction than anything witnessed in this country, though the inflation and reaction even in the United States are both smaller than on former occasions; and a considerable mania on the Paris Bourse, which came to a disastrous close in 1882. But, taking the world of business all in all, there was in 1883 no such accumulation of bad business all round, and in connection with such special mischief as the foreign loans craze, as there has often been in previous periods of inflation. The progress of a period of inflation to its usual term appeared, in fact, to be arrested in 1882; and just as the inflation was less marked than usual, so the present reaction exhibits hardly any reduction in the amount of business done. If there were not some special reason such as I believe to exist in the condition of prices, the present period would hardly appear to be one of depression at all. It would be described as what it really is, a period of "marking time. marking time" in a new development of industry which commenced at the close of the long depression which ended in 1879. That depression itself involved a much smaller variation in the production of the country than it has been the fashion to represent; but the improvement and retrogression which have since taken place are both on a very different scale from those which went before.

What has happened, however, at the present time is a very special decline of prices. A fall of prices, as already stated, is a usual feature in every depressed period, and accentuates and very largely creates the depression. If, then, there has been an unusual fall of

prices of late, no matter from what cause, an unusual amount of gloom is very easily accounted for. That there has been such a fall, and that for a long time past the course of prices has been such as specially to affect trade and to diminish the appearance of inflation at one time and to aggravate depression at another, is not difficult of proof.

The facts as to the most recent decline of prices are stated in the "Commercial and Financial History of 1884" given by the Statist in January last as follows:-

"The conspicuous feature of the year, and the cause of its unprofitableness as far as wholesale merchants and manufacturers are concerned, has undoubtedly been the remarkable fall of prices which has taken place. Low as was

the range of prices at the time when we wrote a year ago, the fall of the past year not only brought down that range of prices temporarily, but seems to have brought it down in a lasting manner, the low range having now continued for several months. We cannot do better than go over the list of articles in our Tabular Appendix.

"Beginning with iron, we find that Scotch pig iron warrants, which were 43s. 4d. in January last, have fallen to 42s. 3d. in December, the price of 41s. 2d. having been touched at the end of June, and even a somewhat lower figure than what appears in the table having been quoted. This price of 428. 3d. in December compares with what we noticed as the very low price of 478. 6d. in January, 1883. Similarly, Middlesbro' No. 3 pig iron, which was 42s. 6d. in January, 1883, and 378. in January, 1884, was only 35s. 6d. in December. Staffordshire bars, which were £7 17s. 6d. in January, 1883, and £7 12s. 6d. in January, 1884, were only £6 10s. in December. Welsh bars (Wales), which were £5 178. Gd. in January, 1883, and £5 68. 3d. in January, 1884, in December last year were only £5 2s. 6d. Copper (Chili bars), which commenced in January, 1883, at £65 per ton, had fallen to £56 12s. 6d. in January, 1884, and in December was only £48 per ton. This last price, it is noticed in the trade circulars, is not only about 12 per cent. lower than the lowest price upon record previously, but 30 per cent. lower than the lowest price at which it used to be considered that the article could profitably be produced. Straits tin, which was £92 158. per ton in January, 1883, and £84 12s. 6d. in January, 1884, in December was £75 only, the price of £73 15s. having been touched in October. Tin-plates, which were 21s. 6d. per box in January, 1883, and 21s. in January, 1884, in December were 19s. only. Lead, which was £13 12s. 6d. per ton in January 1883, and £12 78. 6d. in January, 1884, was in December £11 6s. 3d. only, the price of £10 178. 6d. having been touched in September. In coal, amongst the important metals and minerals, there is exceptionally hardly any change; but generally it may be said that there is at least a fall of 10 to 15 per cent. during the past year in these leading articles, and a fall of nearly 20 per cent.-in some cases of more than 20 per cent.-if we extend the comparison for two years.

"In chemicals there has been a steady fall for the year. Bleaching powder, from 10s. 74d. per cwt. in January, fell to 78. 10d. in December; saltpetre, from 24s. 3d. in January, to 22s. 6d. in December; and soda, from £3 148. per ton in January, to £2 15s. 9d. in December. In these cases, however, the fall to some extent has only been the loss of an advance which took place in the previous year, although the range is still comparatively low. In dyes and oils, particularly linseed oil and petroleum, there is also comparatively little change for the year, although the range of prices, it must 1

understood, is somewhat low. In other articles, however, there is a decided fall.

"Coming to textiles, we find the changes, as already stated, less marked. In cotton there has, in fact, been hardly any change of more than a fractional kind for nearly two years, the price commencing at 51d. per lb. in January, 1883, and ending at 518d. per lb. in December last, the highest price recorded in the interval being 63d. in May, 1884, and the lowest price 5d. in July, 1883, and October, 1884. The price of yarn manufactured has also varied very little, beginning at 93d. in January, 1883, and also ending at 93d. in December last. In wool likewise there has been very little change, the prices of the different kinds of wool, as will be seen from the details in one of the trade reports subjoined, having varied in different directions. The range of prices in wool, it must be understood, is comparatively low. In jute, where a year ago some recovery had taken place from the extremely low prices which had ruled in 1883, that recovery being to £16 10s. per ton, there has since been a decided fall, the price at the close of the year being only £12 15s. per ton. In silk there has also been a somewhat heavy fall during the two years -namely, from 16s. 43d. per lb. in January, 1883, to 15s. 3d. per lb. in January, 1884, and 13s. 3d. in December last.

"Turning next to the chief articles of food, we find that the fall has been very severe indeed. The Gazette average price of wheat, which was low in January, 1883, at 40s. 4d. per qr., was only 38s. in January, 1884, and in December was 31s. 5d. only, even somewhat lower figures having been touched during the autumn months; good red English wheat, weighing 63 to 64 lbs. per bushel, has, in fact, been sold during the year at a price lower than the Gazette average-namely, at 29s. per qr. Similarly, the price of red wheat per bushel in New York has fallen from $1.18 in January, 1883, to $1.5 in January, 1884, and 86c. in December, the quotation of 833c. being actually recorded in November. Maize in New York began at 71 c. per bushel in 1883, and fell to 60c. in January, 1884, and 50c. per bushel last November, recovering in December to 56c. per bushel. In barley and oats the fall is somewhat less, but still there is a slight fall. In bacon there is a fall from 869. per cwt. in January, 1883, to 678. in January, 1884, and 638. in December last. In coffee there is a fall from 77s. 6d. in January, 1883, and even higher figures during 1883, to 758. in January, 1884, and 678. 6d. in December last. In tea during the past year there is apparently a rise from 54d. per lb. in January to Cd. in December, these prices being higher than those of 1883, but being still a comparatively low range of prices. In sugar the greatest decline has occurred, the decline being, in fact, almost unprecedented in regard to any article of produce. The price of good refining West India was 20s. per cwt. in January, 1883-a low price; but in January, 1884, it was only 16s. to 16s. 6d. per cwt., while the price in December last was only 9s. 9d. to 10s. per cwt. Similarly, beetroot sugar has fallen from 19s. 44d. per cwt. in January, 1883, to 10s. 3d. per cwt. in December last.

"The remarkable feature about these declines in price, it cannot be too often repeated, is the fact that they have occurred after a range of prices had already been established which was so low as to excite a great deal of remark."

It is clearly unnecessary to assign any other cause for the gloom of the last year or two. Given a fall of prices like what is herc described, arising from any external cause whatever, "depression must ensue. In point of fact, there have been serious losses and failures among the capitalist classes, whose outcry gives the cue to public discussion on such questions. As already explained, these classes are poorer in consequence of such a course of prices as is

here described, while they feel themselves poorer than they really

are.

The point to which I would now draw special attention is that mentioned in the last paragraph of the above quotation. The most disastrous characteristic of the recent fall of prices has been the descent all round to a lower range than that of which there had been any previous experience. It is this peculiarity which more than anything else has aggravated the gloom of merchants and capitalists during the last few years. Fluctuations of prices they are used to. Merchants know that there is one range of prices in a time of buoyancy and inflation, and quite another range in times of discredit. By the customary oscillations the shrewder business people are enabled to make large profits. But during the last few years the shrewder as well as the less shrewd have been tried. Operations they ventured on when prices were falling to the customary low level have failed disastrously because of a further fall which is altogether without precedent. Similarly, landowners and other capitalists who are usually beyond the reach of fluctuations have had their margins invaded; rents, which rose so steadily for twenty years before 1873, have consequently fallen heavily; the change is more like a revolution in prices than anything which usually happens in an ordinary cycle of prosperity and depression in trade.

Hence the special connection I have ventured to suggest between the present depression of trade and low prices. But for the low prices, there is not only nothing remarkable about the present depression, but it is even less marked than most depressious on record by characteristics of severity and duration. The low prices, however, are most striking, and have sufficed to draw to it attention and discussion of a most unusual kind and degree. The question of the low prices themselves, their origin and probable continuance, and the various consequences that may ensue, thus becomes in turn, in my opinion, the question of most interest arising out of the present depression. It is no longer a side issue incidental to the problem of the depression itself. The effect of the prices on the depression becomes interesting mainly by way of illustration and as part of a topic of wider and more general interest.

A more extended examination of the facts fully confirms the impression that prices of wholesale commodities have lately fallen far beyond a customary low level. To appreciate fully what has happened, it is necessary, indeed, to look more closely at the facts, and follow the movements of prices, not only of late years, but over a very considerable period.

Let us look first at the direct evidence as to the recent fall being in every way unusual. In 1879, in a paper read before

the Statistical Society, discussing the fall of prices which had then taken place, I produced a short table, which may be usefully continued to the present date. We may read clearly in it how great has been the descent lately as compared with what it was even in a year like 1879:

PRICES OF LEADING WHOLESALE COMMODITIES IN JANUARY, 1873, 1879, 1883, AND 1885, COMPARED.

Thus, in hardly any case was the price in January, 1885, higher than it was six years before, and while in those cases the price was not much higher, cotton being the most prominent example, the price in several instances is notably lower. In wheat the fall is very marked, and also in sugar and copper. Another peculiarity is that the intermediate improvement in price between 1879 and 1885, as shown by the quotation for January, 1883, is only to a point very much lower than in 1873, which was the starting-point of the table. To take the first item in the list, pig iron, which fell from 127s. in 1873 to 43s. in 1879, only rises in 1883 to 47s. 8d.-a somewhat higher price, which was touched for a short period after the low price of 1879, being still far short of the price quoted for 1873, which was itself much under the highest point of the inflation of that period. Similarly, copper, which was £91 per ton in 1873 and fell to £57 in 1879, only rises in 1883 to £65, to fall in 1885 to about £48. Wheat in like manner falls from 55s. 11d. in 1873 to 39s. 7d. in 1879, and only rises to 40s. 4d. in 1883, to fall to 34s. 11d. in 1885. Cotton falls from 10d. per lb. in 1873 to 5 d. in 1879, and has only risen since to 5d. in 1883, and 6d. in 1885 a very immaterial rise from the lowest point of 1879, though in this instance, as already noticed, the price in 1885 is somewhat higher than in 1883. Thus, we have not only the fact of a descent to a lower range of prices in the present depression than in 1879, but the fact that in the intermediate period of good trade and rising prices the ascent was very far short of the high level which had been reached in 1873. In other words, the minimum prices of the period through which trade has passed since 1879 are not only lower