This difficulty is aggravated by the fact that in economics the full effects of a cause seldom come at once, but often spread themselves out after it has ceased to exist.
To begin with, the purchasing power of money is continually changing, and rendering necessary a correction of the results obtained on our assumption that money retains a uniform value.
This difficulty can however be overcome fairly well, since we can ascertain with tolerable accuracy the broader changes in the purchasing power of money.
Next come the changes in the general prosperity and in the total purchasing power at the disposal of the community at large.
The influence of these changes is important, but perhaps less so than is generally supposed.For when the wave of prosperity is descending, prices fall, and this increases the resources of those with fixed incomes at the expense of those whose incomes depend on the profits of business.The downward fluctuation of prosperity is popularly measured almost entirely by the conspicuous losses of this last class; but the statistics of the total consumption of such commodities as tea, sugar, butter, wool, etc.prove that the total purchasing power of the people does not meanwhile fall very fast.Still there is a fall, and the allowance to be made for it must be ascertained by comparing the prices and the consumption of as many things as possible.
Next come the changes due to the gradual growth of population and wealth.For these an easy numerical correction can be made when the facts are known.(8*)6.Next, allowance must be made for changes in fashion, and taste and habit,(9*) for the opening out of new uses of a commodity, for the discovery or improvement or cheapening of other things that can be applied to the same uses with it.In all these cases there is great difficulty in allowing for the time that elapses between the economic cause and its effect.For time is required to enable a rise in the price of a commodity to exert its full influence on consumption.Time is required for consumers to become familiar with substitutes that can be used instead of it, and perhaps for producers to get into the habit of producing them in sufficient quantities.Time may be also wanted for the growth of habits of familiarity with the new commodities and the discovery of methods of economizing them.
For instance when wood and charcoal became dear in England, familiarity with coal as a fuel grew slowly, fireplaces were but slowly adapted to its use, and an organized traffic in it did not spring up quickly even to places to which it could be easily carried by water..the invention of processes by which it could be used as a substitute for charcoal in manufacture went even more slowly, and is indeed hardly yet complete.Again, when in recent years the price of coal became very high, a great stimulus was given to the invention of economies in its use, especially in the production of iron and steam; but few of these inventions bore much practical fruit till after the high price had passed away.Again, when a new tramway or suburban railway is opened, even those who live near the line do not get into the habit of making the most of its assistance at once; and a good deal more time elapses before many of those whose places of business are near one end of the line change their homes so as to live near the other end.Again, when petroleum first became plentiful few people were ready to use it freely; gradually petroleum and petroleum lamps have become familiar to all classes of society:
too much influence would therefore be attributed to the fall in price which has occurred since then, if it were credited with all the increase of consumption.
Another difficulty of the same kind arises from the fact that there are many purchases which can easily be put off for a short time, but not for a long time.This is often the case with regard to clothes and other things which are worn out gradually, and which can be made to serve a little longer than usual under the pressure of high prices.For instance, at the beginning of the cotton famine the recorded consumption of cotton in England was very small.This was partly because retail dealers reduced their stock, but chiefly because people generally made shift to do as long as they could without buying new cotton goods.In 1864however many found themselves unable to wait longer; and a good deal more cotton was entered for home consumption in that year, though the price was then much higher, than in either of the preceding years.For commodities of this kind then a sudden scarcity does not immediately raise the price fully up to the level, which properly corresponds to the reduced supply.
Similarly after the great commercial depression in the United States in 1873 it was noticed that the boot trade revived before the general clothing trade; because there is a great deal of reserve wear in the coats and hats that are thrown aside in prosperous times as worn out, but not so much in the boots.
7.The above difficulties are fundamental: but there are others which do not lie deeper than the more or less inevitable faults of our statistical returns.
