The Value of MoneyAnderson, Benjamin M. (Benjamin McAlester)
General
The Value of Money
Anderson, Benjamin M. (Benjamin McAlester)
Money
It may be noticed that my figures for net income in 1900 and 1890 do
not correspond very closely with the figures for the same years as
independently estimated by King. My figure for 1900 is $12,900,000,000,
where his is $17,965,000,000; for 1890, my figure is $9,300,000,000,
where his is $12,082,000,000. I am inclined to the view that the figures
in my tables come closer to the facts for these years than do his
figures, assuming that _his figure_ for 1910 is correct. It will be
noticed that on his figures there was an increase of about 50% from 1890
to 1900, and an increase of only about 66% in the decade following. This
seems to be an unlikely relation. One would expect a much greater rate
of increase for the decade 1900-10, as compared with the preceding
decade, than King's figures show. The period from 1890 to 1900 included
the terrible panic of 1893 and the prolonged depression ensuing. The
panic in 1907 was trifling in comparison, and recovery, as shown by our
index numbers in the tables below, was very much quicker. Moreover,
falling prices characterized much of the earlier decade. The highest
prices of the whole ten years were in 1891. The period from 1900 to 1910
is a period of rapidly rising prices, on the whole. On the basis of our
general knowledge of the two periods, one would expect a greater
percentage gain by far for the second decade, and I therefore trust the
results of the index of variation here chosen, which show that. Similar
results are obtained by applying to the base figure for 1910 an index
of variation derived from Kemmerer's and Fisher's figures for trade[306]
and prices. My figure for 1890 may, moreover, be checked by comparison
with the figure given by C. B. Spahr in _The Present Distribution of
Wealth in the United States_ (p. 105) for the net income of the country
for that year: $10,800,000,000. It may be that my figure for 1890 is too
low, but I have not sought to "doctor" it by an arbitrary "correction
factor" to make it correspond more closely than it does with the other
estimates. It is striking enough that a figure derived from an index of
variation, twenty years away from its base, should come as close as this
to figures calculated from wholly different data.
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