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Economic inquiries and studies (Volume 2) online

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Southern Branch
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XIII. The Utility of Common Statistics i

XIV. On International Statistical Com-

parisons . . . . -41
XV. The Gross and the Net Gain of

Rising Wages .... 79
XVI. The Recent Rate of Material

Progress in England ... 99
XVII. Protection for Manufactures in

New Countries . . . -145
XVIII. Note on the Gresham Law . .162
XIX. Fancy Monetary Standards . .166
XX. Protectionist Victories and Free

Trade Successes . . .178

XXI. Consols in a Great War . .189
XXII. Some Economic Aspects of the

South African War . . . 204

XXIII. The Relative Growth of the com-

ponent Parts of the Empire . 222

XXIV. The Standard of Strength for

our Army: a Business Estimate 242

XXV. The Statistical Century . . 268

XXVI. Are we Living on Capital ? . . 278
XXVII. A Financial Retrospect — 1861-

1901 ...... 306



XXVIII. The Importance of General Stat-
istical Ideas . . . • 337
XXIX. The Wealth of the Empire, and

HOW IT should be USED . . 363

XXX. The Dream of a British Zoll-

verein . . . . . -3^7
XXXI. The Present Economic Conditions
AND Outlook for the United
Kingdom ..... 405
Index 431




IN commencing our labours for another session, we
are painfully reminded that during the past twelve
months the Society has sustained two heavy losses, in
the death of Mr. Newmarch and Professor Jevons.
At a meeting like the present, some tribute is due to
the memory of these distinguished members. To some
extent a record of Mr. Newmarch's death and services
has already been preserved in our proceedings, but
something, I feel, ought also to be said at this in-
augural meeting, considering his many and diversified
statistical labours, and the length of the period during
which he was identified with us, first as Secretary and
Editor of the " Journal," and afterwards as President.
The death of Professor Jevons — all the more to be
regretted as a lamentable accident — has occurred since
the last meeting of last session, and this is the first
opportunity we have had of paying a tribute to his

With regard to Mr. Newmarch, it will be unnecess-
ary to go over the record of his life in detail, or to
enumerate his various works; of these a very full
account will be found in the March number of the
"Journal" of this year. What I should like to do
now is to put on record the special consideration in

' Inaugural Address as President of the Statistical Society. De-
livered on Tuesday, 21st November, 1882.
II. p.


which he was held here for his knowledge of economic
statistics, especially trade and banking statistics, and
his skill in using them. He was remarkable not merely
as a statistician, but as a man of business and as an
economist, and his special y"^r/^ as a statistician was to
throw light on problems connected with the theory of
business — especially banking — -and on the applications
of political economy to the real world by means of
statistics. In labours of this kind he was among the
first in the field. Mr. Tooke, whom he recognized as
a master, had preceded him as a pioneer, showing the
way to reason out disputed points in the theory of
currency and banking by statistical illustrations from
actual business experience : his demonstrations on such
points as the dependence of prices on credit, and the
fact of a rise of prices preceding and not succeeding
the expansion of a paper currency, being still among
the best examples of the right use of statistics in eco-
nomic discussions. But Mr. Newmarch followed in the
steps of his great master with a command of facts, and
a power of analyzing and grouping figures, which in
the same field were at that time without example. His
most signal achievement was the preparation of the
last two volumes of the " History of Prices," a book
well known here, though it has been long out of print.
The information and comments in those two volumes
on the orreat economic chang-es about the middle of
the present century, including the introduction of free
trade, the Bank Charter Act, the Irish famine, the
French revolution of 1848-51, the gold discoveries
in Russia, California, and Australia, and finally the
Crimean war, make them still a most valuable record;
while the discussion on many points of banking prac-
tice and economic theory, especially on all points re-
lating to the use and abuse of credit, and the periodicity
of movements in trade, remains to this day the fullest
exposition on these topics to which the student can be
referred. There are better books perhaps on single
points, such as Mr. Bagehot's " Lombard Street," in


which the constituent elements of the money market
are described, and the theory of a bank reserve is set
forth and illustrated; but the number and variety of
topics in Mr. Newmarch's book, and the way in which
the various economic movements of the time are
grasped and set in one picture, make it of unique
value. Whether it is the effect of the gfold discoveries
in bringing new resources into the money market, and
giving a vast impetus to trade, or the effect of a great
movement of migration on the trade of old and new
countries alike, or the financial consequences of a great
war, Mr. Newmarch is at home in the discussion.
Apart also from the light it throws on the special
questions treated, and as regards which \t may be of
course superseded by fuller and later statistics, and by
wholly new circumstances, the book must long remain
of value, I believe, as a specimen of method and of
what can be done by the use of statistics. Indirectly,
I believe, it has been the beginning of much financial
writing, as it is really the parent of a book like M.
Neumann-Spallart's "Annual Review of the World's
Trade," on the one hand, and of much of that writing
on "trade and finance" and those columns of "City
notes" which we now see in many newspapers. Mr.
Newmarch, in fact, popularized the idea that the daily
chang-es in the movement of business can be Qreneralized
and referred to the working of the laws of human
nature, and in a thousand ways the idea has been
worked out and made useful to the world. That in
the end the course of business will be better under-
stood generally, with useful results both to business
men and to society, there can be little doubt.

Besides thus recognizing Mr. Newmarch's special
place as a statistician, we are bound to say a few words
here on his special services to the Society. Among
these I would place in the first rank his labours as
editor of the "Journal." Looking over the back num-
bers, it may be perceived that from the time he took the
"Journal" in hand there was not only a considerable


improvement in the miscellaneous information, which
was more particularly in his own care, but an improve-
ment as well in the general character of the papers
read at our meetings. One explanation of this improve-
ment must of course have been the steady growth of the
Society in numbers and resources, and in the standard
of statistical excellence ; but the improvement was not
altogether a spontaneous growth from below, it was
encouraged from above in a variety of ways. I can
speak from personal knowledge of Mr, Newmarch's
exertions to make the best use of his materials, and to
diffuse a genuine love and appreciation of the study
he favoured. It was extremely characteristic of him
that to the last he was strongly interested in young
men. Wherever he could see any talent or liking for
economics and statistics in a younger generation than
his own, he was the first to applaud. I am proud to
acknowledge for myself that I owe the beginning of
my close connection with the business of the Society
to Mr. Newmarch's kindness, and I have had reason
to observe in many other cases his warm interest in
youth, and the pains he took to encourage and bring
others forward. His services, however, were manifold,
and it is only fitting that, as he identified himself so
closely with us, we should do honour to his name. The
success of the Newmarch Memorial Fund must be to
all of us a matter for satisfaction. The memory of the
great services he rendered will be perpetuated in an
appropriate manner.

In the death of Professor Jevons the Society has
also sustained a very great loss. Partly because he
was so much junior to Mr. Newmarch, and had prob-
ably many years of life left in which to render us dis-
tinguished service, and partly because of the engross-
ing nature of his literary work, which made formal
business distasteful to him, Mr. Jevons never took the
prominent part in the daily work of the Society for
which his eminent gifts and labours as a statistician
so well qualified him. He was for some years, how-


ever, one of our secretaries, a regular attendant of our
meetings, and a frequent contributor to the "Journal."
In the proper work of a statistician, moreover, there
are few men who have left a better name on our records.
I need only refer specially to three of his principal
works. Twenty years ago, when he was still compara-
tively a young man, his book on the depreciation of
gold arising from the gold discoveries justly attracted
no small attention, both from the completeness of the
method employed, and the striking character of the
conclusion which he came to — that while there had
been depreciation to a moderate extent, there had been
no such depreciation as many great economists had
anticipated. A few years afterwards his book on the
" Coal Supply " drew attention to a problem which
is inevitably raised by the limited character of the
English coal field, and the rapidly increasing demands
upon it. This book had a wide success of notoriety,
and it was unfortunate, perhaps, that it was only too
popular, the public, which seldom makes nice distinc-
tions, running away with the notion that Mr. Jevons
predicted the actual speedy exhaustion of the English
coal supply. This, of course, was nonsense. His real
conclusion, however, viz., that one of the present con-
ditions of English prosperity was rapidly altering for
the worse, was undeniable, and was amply justified by
the experience of the coal famine of 1873. Few more
interesting books have, perhaps, been written; and
there are few better examples of the kind of statistical
works which ought now, with the increasing breadth
of statistical data, to be more largely written, viz.,
those dealing with the characteristic social and eco-
nomic problems of the age. It is to such works states-
men and politicians must look for a right comprehen-
sion of their task. Shortly afterwards, in 1868, Mr.
Jevons read a paper on the state of our gold coinage,
in which the same thoroughness and completeness
exhibited in all his statistical works was asfain con-
spicuous, and which has since been the model of more


than one similar inquiry. Besides these, Mr. Jevons
wrote many smaller works, which were all character-
ized by great completeness of method; but these three
larger works are quite sufficient to found his reputa-
tion. They all show inventiveness and resource, and
a careful attention to every point which can qualify
the figures so that the real facts, and not the apparent
ones, are brought out. An index number, such as he
used in the first paper of all on the gold question, has
proved an instrument of great value since in all in-
quiries on prices; and for this institution of an "index
number" we may consider ourselves indebted to Mr.
Jevons.^ In the later years of his life Mr. Jevons be-
came even better known as an economist and a writer
on logic than as a statistician, the place he took being
a high one; and without discussing his work in that
capacity, we must recognize how his qualifications for
other departments of literature were no disqualification,
but the reverse, for the study and practice of statistics.
His statistics would not have been as good as they
were if he had not had wider interests, and a remark-
able faculty for clear scientific exposition in other
branches of science.

Such are the two men we have lost within the short
period of twelve months. The loss is a heavy one;
but few would have been more ready to recognize than
those we have lost that the work remains, whatever
becomes of the individual. With Mr. Newmarch this
feeling, as I have already hinted, was always present.
It was always of good work in statistics and not of his
own good work he was thinking. If younger men could
be induced to come into the field, he was but too well
pleased to give up the task to them, so long as the
work was done. His example and spirit will be handed

^ An index number was used by Mr. J- B. Smith as long ago as
1840 in giving evidence on the Bank Acts. Practically, Mr. Jevons
was the first to systematize the use of the method. [See my evidence
given to the Gold and Silver Commission for after-acquired informa-
tion on this point,]


down, I trust, through many generations of labourers
at these meetings. In another point also the example
and spirit of both Mr. Newmarch and Mr. Jevons, it
may be hoped, will be imitated. I have already glanced
at the point, but it may be specially emphasized. It is
that they were neither of them specialists, but they
were both otherwise distinouished — Mr. Newmarch as
a man of business and an economist; and Mr. Jevons,
as a litUrateur, a man of science, and a logician. It
will be an unfortunate day for us if men of business
like Mr. Newmarch, and men of general scientific and
literary eminence like Mr. Jevons, do not take an in-
terest in our pursuits. Statistics are related to so many
different sciences, and the knowledge of them is so
essential to the politician and historian, that there is
no study which is more certainly failing to obtain its
proper place, if it is not known to and made use of by
those who are identified with other pursuits and by
men of general culture.

I am sure you will not think I have taken up too
much of your time in doing honour to the friends whom
we have lost. I pass on with some diffidence to deal
with some topic of general interest, such as you have
been accustomed to have dealt with in their intro-
ductory addresses by my predecessors. In recent years
the field has been very fully occupied. You have had
such papers, for instance, as that of Mr. Lefevre, on the
use and abuse of statistics, covering a great deal of the
ground for discussion on the theory of statistics. You
have had other papers by experts in particular branches
of statistics, such as the addresses by my distinguished
immediate predecessor,^ on the agricultural depression
of the country and the probable future of the agri-
cultural industry. The field of new observation has
thus been greatly reduced. It has occurred to me,
however, that without attempting a new discussion on
the theory of statistics, or giving an address on some

' Sir James Caird.


particular topic of urgent interest, I may perhaps be
able to say something useful, by pointing out some of
the uses to society of the more common figures of
statistics, especially those figures which assist in modify-
ing or directing the political thought of the time, or in
presenting problems for politicians and philosophers
to consider, even if they do not much assist in the
solution. The greater successes of statistics, and their
main uses, though not so well known as they should
be, are nevertheless fairly understood. The construc-
tion of life insurance tables, for instance; the means of
comparing rates of mortality in different places, and
between the same places at different times; the con-
stant utility of statistics in political discussion, and their
equal utility in daily business — are all matters tolerably
well known and admitted. But what seems not to be
so well understood is our indebtedness to the common
figures of statistics for many wide and far-reaching
political ideas, which influence and guide political
thought and action and philosophic speculation insens-
ibly. With the systematic collection of statistics con-
tinued for many years, there has come to be published
a whole library of statistical annuals — whether they are
official statistical abstracts or anntiaires, such as many
countries now publish, or unofficial publications like
the "Annuaire d'Economie politique," or the "States-
man's Year Book," orM. Neumann-Spallart's "Annual
Review of the World's Industry." These books, it
seems to me, besides having many practical uses, supply
a necessity of political thought at the present time, and
are constantly and insensibly guiding political and
philosophical speculation. What I propose to discuss
to-night, then, are some of the more common figures
which lie on the surface of the most accessible books.
As with other good and common things, we have be-
come so used to such books that we hardly know what
we should miss if they were blotted out, — if public men
and writers were without them, as in fact they were
without them until about half a century ago. If we


attempt to realize what we should do without such
books, we shall not fail to see that statistics have many
unsuspected uses, and not least are they useful for
the knowledge they insensibly diffuse throughout the

I shall deal more especially with the most common
figures of all, viz., those of population. The utility of
the most general notion which we derive from statistics
of the distribution of the earth's surface among dif-
ferent races and nations is palpable. We can see at
once that a small corner like Europe is closely peopled
by the European family of nations, whilst the northern
peoples of that family also possess a large new field of
territory in North America, Australia, and Northern
Asia, and the more southern peoples a large new field
of territory in Central and South America. The Euro-
pean family is thus de facto in possession of a large
tract of the earth's surface for its own habitation, per-
haps a half or more of the area available for producing
the food of civilized races. Further consideration
would show what races in particular, among the nations
of Europe, have this inheritance; but the point is, the
predominance of the European race in mere extent of
territory, coupled with the peculiarity that the bulk of
this population is still living on a comparatively narrow
tract in Europe. The rest of the world — China, India
and Africa — is possessed by races of greatly differing
type, on whose territory Europeans do not press as
colonists, though they may settle in small numbers as
governors, or traders, or both. Granting, on the
average, a difference in point of material strength per
unit of population between these European and all
other races, it is easy to understand at once the idea
that the future of civilization belongs to the European
group, and that the problem of how the other races
are to live in harmony with the European group with-
out being jostled, and in what way they are to be
affected by the European civilization, is one of the


most curious presented for the solution of modern
societies. If the European numbers were less, the
problem might well be whether European civilization,
in spite of its assumed superiority in type, could main-
tain itself. The numbers and rate of increase being
what they are, it is easy to see that the main problem
resulting from the relations of the European and non-
European races cannot be whether the European
civilization will be able to maintain itself by force, but
how it will be affected by its varying relations to the
other races.

Confining ourselves again to the European group,
and first of all to the nations within European limits,
another leading fact in international politics is imme-
diately suggested by the statement of the numbers of
the people. This is the existence of five leading powers
— Russia, Germany, Austria, France, and the United
Kingdom — each greatly stronger than any of the other
powers not among the five, except two ; each big enough
to " take care of itself," though there are, of course,
differences of strength between them; and besides
these, the two others excepted, viz., Italy and Spain,
which come short of a first place, but by a less degree
than the minor States. All these relations of the great
powers are based largely on the mere enumeration of
the peoples. Three out of the five, viz., France,
Austria- Hungary, and the United Kingdom, have each
about the same population, in round numbers, 35 to
38 millions; one of the others — Germany — has about
one-fourth more, and Russia only has a much larger
number in Europe, viz., 80 millions. While numbers,
therefore, are not everything, or Russia would be pre-
ponderant, which is notoriously not the case, and Ger-
many would not, as it does, count for more than in
proportion to its numbers, and the United Kingdom
would not have a peculiar position among the others,
on account of the undeveloped state of its military
resources on the one side, and the immensity of its



wealth and latent strength on the other side, yet it is
obvious that the mere numbers are a most vital element
in appreciating the political position of these five powers
and the lesser powers around them. Perhaps if states-
men were always wise, and rulers and peoples free
from prejudice and passion, the popular knowledge of
the figures would be even more serviceable than it is in
demonstrating the absolute insanity of offensive war.
It is impossible to conceive what object any of these
five great powers could gain by the misery and suffer-
ing of war with another, adequate to repay that misery
and suffering: the very magnitude of the wars forbids
the possibility of gain.

The past history and future prospects of the balance
of power among these nations are also illustrated by a
mere consideration of the numbers. We have only to
glance at the population of the different States as at the
close of the great wars in 1815 and as they are now, to
see that great changes have happened:

Russia in Europe
Germany ' . .
Austria- Hungary
France . . .
United Kingdom

Total .



Population! Per Cent. 'Population! Per Cent.
in I of ' in ! of






Millions. '



















Thus in 181 5 a compact France possessed several
millions more than the population of Germany, nearly

^ The exact figure by the last census is 84 millions, but I have
preferred to be a little under the mark, so as to allow a little for more
exact enumeration in the latter censuses. For the present purpose the
difference between 80 and 84 is immaterial.

" Germany was also much divided in 181 5.



twice that of the United Kingdom, and more than half
that of Russia. Austria- Hungary also came near, as it
now does, to the French numbers. Now the population
of Germany considerably exceeds that of France; that
of the United Kingdom is nearly equal, and that of
Russia is more than double. These facts correspond
very closely with the transfer of military preponderance
on the Continent from France to Germany, and with
the increasing prominence of Russia, which would prob-
ably be much more felt but for the simultaneous growth
of Germany. They also explain why it is that the
United Kingdom, with an economic and social develop-
ment resembling that of France in many respects, has
fallen less behind in the political race; why its relative
position among European powers, though not what it

Online LibraryRobert GiffenEconomic inquiries and studies (Volume 2) → online text (page 1 of 39)