If then, it is true that the people of the United States possess the widest area of fertile soil, the greatest variety of favorable conditions in respect to climate, the largest supply of ores, coal and timber, the best schools, the lightest taxation, the greatest freedom in interstate commerce and service, it must of necessity follow that with the exception of a few tropical products or a few branches of industry, like the preparation of tea which is absolutely a handicraft, or the preparation of raw silk which in the reeling is also absolutely a handicraft,-the people of the United States will produce the largest product at the lowest cost and will therefore secure the highest rates of wages or earnings; such is proved to be the fact by statistics which cannot be gainsaid.

The working of these laws may be to some extent retarded or obstructed by legislation; one of the worst cases of injurious or obstructive legisla tion is the substitution of fiat money such as Government notes or other forms of inconvertible paper, in place of true coined money made of metal which carries its own value in its own substance. There can be no better examples of the possible abuse of statistics than an exhibit of the relative conditions of prices, wages and volume of money in circulation for the last twenty-five years, which taken separately wholly mislead the compiler.

I have taken from the Census Volume No. xx the statistics of wages of all the mechanics, engineers, carpenters, machinists and painters which are given separately in all the returns of specific establishments contained in that volume. They constitute a class whose earnings or wages at any given time are more nearly even and more near to the average of all wages than that of any other single class of operatives or working people. They have been much misled by special statistics. For instance, in 1860, reference being made to the Table which accompanies this treatise, their average daily wages came to $1.56; in 1865 their average daily earnings came to $2.34. Their minds were abused by these statistics and they thought they were better off; but when we take the price of food, fuel and materials for clothing corresponding to the average consumption of this class of men and their families, the same quantities of the same kinds which could be bought at 30.95 cents per day in 1860 had risen to 55.69 cents in 1865, so that a mechanic misled by his high wages could yet buy with his 300 days' work only 1261 portions of this food, fuel and materials for clothing against 1572 portions in 1860; after 1870 wages began to decline, but prices went down faster; after the resumption of specie payment in 1880 the rate of wages advanced, but the quality of the money being good, prices still continued to decline; and in 1885 and 1886 this same set of mechanics earned $2.40 a day in gold with which they could buy 2400 portions, or very nearly double what they could get at substantially the same rate of wages in 1865, then paid in depreciated paper.

Unless all the qualifying conditions are taken into view, almost all statistics of wages are absolutely worse than useless.

Again, much importance is attributed to the quantity of money in circulation. A few words may be devoted to this subject.

According to a compilation recently made by the Secretary of the Treasury, the quantity of all kinds of money which was in circulation in 1860 was

$14.06 per capita; in 1865, after the issue of the fiat money, the quantity was $33.96 per head; yet, as I have proved to you, the condition of the workman was much worse at this time than it had been in 1860 when the quantity of money in circulation was only $14.06 per head. From 1865, down to the resumption of specie payment in 1879, the quantity of money per capita steadily diminished through the withdrawal or contraction of the paper money. In 1880, after the resumption the quantity of all kinds of money in circulation redeemable in coin, or in coin itself, was $24.08 per head, nominally nearly $10 less per capita than in 1865; yet every one prospered, business was active, the rate of interest was low, the rates of wages were nearly as high as they had been in 1865, while the purchasing power of the money had greatly increased, as the diagram will show.

Since 1880, there has been a steady expansion of the quantity of money in circulation. The instruments of exchange now consist of gold coin or certificates based thereon; silver coin or certificates; legal tender notes and bank notes, all practically redeemable on a gold basis; the amount in use, or available for use, is now $27.25 per capita; yet prices are not as high as they were in 1880, while wages are higher and the purchasing power of wages is greater than ever before.

There are now, however, certain forces in action which tend to diminish the amount of money per capita. The excess of revenue tends to an accumulation of money in the Treasury of the United States and there is a fear lest there should be an undue contraction of the currency. This fear may perhaps be dispelled by a consideration of the actual facts.

The excess of revenue falls into the Treasury either in legal-tender notes which, when in the Treasury, become evidence of so much debt paid; or else the revenue comes in coin with which these notes may be redeemed. This accumulation may go on to the extent of the probable excess of revenue for one year to come, to wit, $125,000,000. It may all consist of legaltender notes; this accumulation will reduce the currency per capita $2.00 per head. Does it not of necessity follow that there will not be enough? Deduct $2.00 per head from the amount now in use or in circulation, to wit, $27.25, and the remainder $25.25 will exceed the whole volume of currency of 1880 which was sufficient to do all the work that was required of it. It might not therefore be any misfortune if Congress should fail to reduce the revenue and if this accumulation should go on until every legaltender note should either be liquidated by taxation or be sustained by coin, dollar for dollar, in the Treasury of the United States.

To this end all the statistics now point.

I have thus brought before you in a very concise way the relation of prices, wages, purchasing power of wages, and volume of money per capita at intervals of five years from 1860 to the present time. You are all witnesses to the abuse of statistics in the separate comparisons of rates of wages and prices of goods, on which separate comparisons many adverse conclusions as to the condition of the country have been based. Does not the true use of these statistics wholly consist in grouping them together, ascertaining their relation each to the other and then deducing from these facts such conclusions as they may indicate? In other words, may it not

No. 3

be held that unless statistics are made use of as a basis of economic reasoning by persons competently trained, they become a mere snare and pitfall, working more harm than good through the false deductions that may be made from them, while, on the other hand, the economist who attempts to reason on the conditions of men in their relation to each other, without regard to the statistics of prices, wages, volume of currency and other elements by which the exchange of services is controlled or measured, will of necessity be a mere theorist whose unsustained hypotheses may or may not come near the mark?

RELATION OF WAGES-PRICES-PURCHASING POWER OF WAGES AND VOLUME PER CAPITA OF MONEY OR CURRENCY IN CIRCULATION AT THE RESPECTIVE DATES GIVEN.

.5569

ets.

PAPER

4353

cts.

3869

cts.

.3324

1261

$33.96

Price of one days supply

30 cts. of food, fuel and cloth.

$23.33

Money or Currency in circulation per Capita.

$24.08

$20.75

No. 1. Average wages of mechanics, such as engineers, carpenters, machinists, and painters, connected with the mills and works treated in Vol. XX, United States Census-establishments in eastern, middle and western states.

No. 2. Average cost of one day's supply of food, fuel and materials for clothing, customarily used by such mechanics, computed at retail prices in twenty shops-ten east and ten west of Buffalo, N. Y.

No. 3. Variation in the purchasing power of 300 days' wages in money expended for equal portions of the same kinds of food, fuel and cloth, as above given.

No. 4. Quantity per capita of coin, convertible bank notes, legal tender notes, in circulation or in use as money at the respective dates.

The foregoing table has been computed by taking the prices of equal quantities of the same kinds of food, fuel and materials for clothing at different dates, corresponding in kind and quantity to the average consumption of good mechanics in the eastern and middle states. The upper line numbered VI, represents the loss in the purchasing power of the income of ten thousand dollars invested in safe securities. The result is reached by dividing the price of a single portion or day's supply of food, fuel and ma. terials for clothing at the different periods named, into the sum of the interest which could be earned at the different dates on ten thousand dollars invested in the safest manner.

The next line crossing the table diagonally from left to right gives the average decline in the rate of interest on the best commercial paper between the dates named.

The third line numbered v, represents the purchasing power of one hundred dollars of lawful money converted into portions representing a quantity equal to one day's supply of food, fuel and materials for clothing at the respective dates named.

The four lines, starting from the same point numbered in Roman numerals, I, II, III, and IV, represent the purchasing power of three hundred days' wages at the average rates earned, when converted into similar portions or days' supply of food, fuel and material for clothing.

I.

Specially skilled mechanics, overseers, foremen and the like.

II. Journeymen, mechanics of average skill and capacity.

III. Operatives in factories of various kinds, textile, wood-working, boots and shoes, metal works and the like.

IV. Common laborers.

The data from which these rates of wages and their purchasing power have been compiled are taken from one hundred establishments reported in volume twenty of the United States Census, compiled by Joseph D. Weeks. In selecting the establishments the writer chose among a very much greater number, one hundred which he had reason to suppose had been in substantially continuous occupation throughout the period from 1860 to 1885-6; or if subject to temporary stoppage, yet for very short periods.

In making these compilations the attempt has been made to devise a multiple standard at the prices prevailing of the actual necessities of life as a substitute for the unit or standard of money, which has varied so greatly between 1860 and 1885-6 in consequence of the issue of inconvertible paper money.

These tables are given as examples of what the writer considers the true use of statistics, in which the variation in prices, in the rates of wages and in the purchasing power of money are compiled and compared.

The common abuse of statistics consists in treating prices and rates of wages without any consideration of the quality or purchasing power of the money in which these prices and rates of wages are given. The depreciation of the legal tender notes of the United States from 1861 to 1879 have utterly vitiated all the statistics of that period relating to prices and wages unless the figures are adjusted to the variations in the value of the currency.

NEED OF A FOREST ADMINISTRATION FOR THE UNITED STATES. By B. E. FERNOW, Chief of Forestry Division, U. S. Department of Agriculture, Washington, D. C.

POLITICAL economy, as the name implies, is that science which teaches us, as a nation, to manage our resources, to avoid waste-waste of energy, waste of resources. In the United States it will be readily admitted this science of avoiding waste has not been much practised; our natural resources, especially, abundant as they were, have been and still are squandered in a manner which must needs frighten him, who has a thought for those that come after us.

Among the most useful resources to a nation of pioneers must have been the supply of material which the forest furnishes, and yet these very supplies so essential to the pioneer civilizer have been not only squandered most ruthlessly and unnecessarily, but the possibility for their natural recuperation by which the forest excels all other natural resources to a large extent, been wantonly destroyed or deteriorated.

has,

That the farmer who needs the ground for agricultural use should have cleared away the timber growth immoderately, and often imprudently; that the lumberman and private forest owner should have prized the present realization of his forest value more than its higher prospective value, and should have cut and slashed without thought of economy, and, to overcome competition, expensive transportation, etc., should have wasted rather more than necessary, we can perhaps understand, explain and excuse.