On the Economy of Machinery and Manufactures Part 10

196. The frequent speculations in oil, tallow, and other commodities, which must occur to the memory of most of my readers, were always founded on the principle of purchasing up all the stock on hand, and agreeing for the purchase of the expected arrivals; thus proving the opinion of capitalists to be, that a larger average price may be procured by the stock being held by few persons.

NOTES:

1. Apothecaries frequently purchase these phials at the old bottle warehouses at ten s.h.i.+llings per gross; so that when their servant has washed them, the cost of the phial is nearly one penny.

2. I have understood that the price of camphor, at the same time, suffered similar changes.

Chapter 16

On the Influence of Durability on Price

197. Having now considered the circ.u.mstances that modify what may be called the momentary amount of price, we must next examine a principle which seems to have an effect on its permanent average. The durability of any commodity influences its cost in a permanent manner. We have already stated that what may be called the momentary price of any commodity depends upon the proportion existing between the supply and demand, and also upon the cost of verification. The average price, during a long period, will depend upon the labour required for producing and bringing it to market, as well as upon the average supply and demand; but it will also be influenced by the durability of the article manufactured.

Many things in common use are substantially consumed in using: a phosphorus match, articles of food, and a cigar, are examples of this description. Some things after use become inapplicable to their former purposes, as paper which has been printed upon: but it is yet available for the cheesemonger or the trunk-maker. Some articles, as pens, are quickly worn out by use; and some are still valuable after a long continued wear. There are others, few perhaps in number, which never wear out; the harder precious stones, when well cut and polished, are of this later cla.s.s: the fas.h.i.+on of the gold or silver mounting in which they are set may vary with the taste of the age, and such ornaments are constantly exposed for sale as second-hand, but the gems themselves, when removed from their supports, are never so considered. A brilliant which has successively graced the necks of a hundred beauties, or glittered for a century upon patrician brows, is weighed by the diamond merchant in the same scale with another which has just escaped from the wheel of the lapidary, and will be purchased or sold by him at the same price per carat.

The great ma.s.s of commodities is intermediate in its character between these two extremes, and the periods of respective duration are very various. It is evident that the average price of those things which are consumed in the act of using them, can never be less than that of the labour of bringing them to market.

They may for a short time be sold for less, but under such circ.u.mstances their production must soon cease altogether. On the other hand, if an article never wears out, its price may continue permanently below the cost of the labour expended in producing it; and the only consequence will be, that no further production will take place: its price will continue to be regulated by the relation of the supply to the demand; and should that at any aftertime rise, for a considerable period, above the cost of production, it will be again produced.

198. Articles become old from actual decay, or the wearing out of their parts; from improved modes of constructing them; or from changes in their form and fas.h.i.+on, required by the varying taste of the age. In the two latter cases, their utility is but little diminished; and, being less sought after by those who have hitherto employed them, they are sold at a reduced price to a cla.s.s of society rather below that of their former possessors.

Many articles of furniture, such as well-made tables and chairs, are thus found in the rooms of those who would have been quite unable to have purchased them when new; and we find constantly, even in the houses of the more opulent, large looking-gla.s.ses which have pa.s.sed successively through the hands of several possessors, changing only the fas.h.i.+on of their frames; and in some instances even this alteration is omitted, an additional coat of gilding saving them from the character of being second-hand. Thus a taste for luxuries is propagated downwards in society', and, after a short period, the numbers who have acquired new wants become sufficient to excite the ingenuity of the manufacturer to reduce the cost of supplying them, whilst he is himself benefited by the extended scale of demand.

199. There is a peculiarity in looking-gla.s.ses with reference to the principle just mentioned. The most frequent occasion of injury to them arises from accidental violence; and the peculiarity is, that, unlike most other articles, when broken they are still of some value. If a large mirror is accidentally cracked, it is immediately cut into two or more smaller ones, each of which may be perfect. If the degree of violence is so great as to break it into many fragments, these smaller pieces may be cut into squares for dressing-gla.s.ses; and if the silvering is injured, it can either be resilvered or used as plate-gla.s.s for glazing windows. The addition from our manufactories to the stock of plate-gla.s.s in the country is annually about two hundred and fifty thousand square feet. It would be very difficult to estimate the quant.i.ty annually destroyed or exported, but it is probably small; and the effect of these continual additions is seen in the diminished price and increased consumption of the article. Almost all the better order of shop fronts are now glazed with it. If it were quite indestructible, the price would continually diminish; and unless an increased demand arose from new uses, or from a greater number of customers, a single manufactory, unchecked by compet.i.tion, would ultimately be compelled to shut up, driven out of the market by the permanance of its own productions.

200. The metals are in some degree permanent, although several of them are employed in such forms that they are ultimately lost.

Copper is a metal of which a great proportion returns to use: a part of that employed in sheathing s.h.i.+ps and covering houses is lost from corrosion; but the rest is generally remelted. Some is lost in small bra.s.s articles, and some is consumed in the formation of salts, Roman vitriol (sulphate of copper), verdigris (acetate of copper), and verditer.

Gold is wasted in gilding and in embroidering; but a portion of this is recovered by burning the old articles. Some portion is lost by the wear of gold, but, upon the whole, it possesses considerable permanence.

Iron. A proportion of this metal is wasted by oxidation, in small nails, in fine wire; by the wear of tools, and of the tire of wheels, and by the formation of some dyes: but much, both of cast- and of wrought-iron, returns to use.

Lead is wasted in great quant.i.ties. Some portion of that which is used in pipes and in sheets for covering roofs returns to the melting-pot; but large quant.i.ties are consumed in the form of small shot, or sometimes in that of musket b.a.l.l.s, litharge, and red lead, for white and red paints, for gla.s.s-making, for glazing pottery, and for sugar of lead (acetate of lead).

Silver is rather a permanent metal. Some portion is consumed in the wear of coin, in that of silver plate, and a portion in silvering and embroidering.

Tin. The chief waste of this metal arises from tinned iron; some is lost in solder and in solutions for the dyers.

Chapter 17

Of Price as Measured by Money

201. The money price at which an article sells furnishes us with comparatively little information respecting its value, if we compare distant intervals of time and different countries; for gold and silver, in which price is usually measured, are themselves subject, like all other commodities, to changes in value; nor is there any standard to which these variations can be referred. The average price of a certain quality of different manufactured articles, or of raw produce, has been suggested as a standard; but a new difficulty then presents itself; for the improved methods of producing such articles render their money price extremely variable within very limited periods. The annexed table will afford a striking instance of this kind of change within a period of only twelve years.

Prices of the following articles at Birmingham, in the undermentioned years

Description 1818 1824 1828 1830 s. d. s. d. s. d. s. d.

Anvils cwt 25 0 20 0 16 0 13 0 Awls, polished, Liverpool gross 2 6 2 0 1 6 1 2 Bed-screws, 6 inches long gross 18 0 15 0 6 0 5 0 Bits, tinned. for bridles doz. 5 0 5 0 3 3 2 6 Bolts for doors, 6 inches doz. 6 0 5 0 2 3 1 6 Braces for carpenters, with 12 bits set 9 0 4 0 4 2 3 5 b.u.t.tons, for coats gross 4 6 6 3 3 0 2 2 b.u.t.tons, small, for waistcoats gross 2 6 2 0 1 2 0 8 Candlesticks, 6 in., bra.s.s pair 2 1 1 2 0 1 7 1 2 Curry-combs, six barred doz. 2 9 2 6 1 5 0 1 1 Frying-pans cwt 25 0 21 0 18 0 16 0 Gun-locks, single roller each 6 0 5 2 1 10 1 6 Hammers. shoe, No. 0 doz. 6 9 3 9 3 0 2 9

Description 1818 1824 1828 1830 s. d. s. d. s. d. s. d.

Hinges, cast-b.u.t.ts, 1 inch doz. 0 10 0 71/2 0 31/4 0 21/4 k.n.o.bs, bra.s.s, 2 inches for commodes doz. 4 0 3 6 1 6 1 2 Latches for doors, bright thumb doz. 2 3 2 2 1 0 0 9 Locks for doors, iron rim, 6 inches doz. 38 0 32 0 15 0 13 6 Sad-irons and other castings cwt 22 6 20 0 14 0 11 6 Shovel and tongs, fire-irons pair 1 0 1 0 0 9 0 6 Spoons, tinned table gross 17 6 15 0 10 0 7 0 Stirrups, plated pair 4 6 3 9 1 6 1 1 Trace-chains cwt 28 0 25 0 19 6 16 6 Trays, j.a.panned tea, 30 inches each 4 6 3 0 2 0 1 5 Vices for blacksmiths cwt 30 0 28 0 22 0 19 6 Wire, bra.s.s lb. 1 10 1 4 1 0 0 9 --, iron, No. 6 bund. 16 0 13 0 9 0 7 0

202. I have taken some pains to a.s.sure myself of the accuracy of the above table: at different periods of the years quoted the prices may have varied; but I believe it may be considered as a fair approximation. In the course of my enquiries I have been favoured with another list, in which many of the same articles occur, but in this last instance the prices quoted are separated by an interval of twenty years. It is extracted from the books of a highly respectable house at Birmingham; and the prices confirm the accuracy of the former table, so far as they relate to the articles which are found in that list.

Prices of 1812 and 1832 Reduction per cent in price of Description 1812 1832 1812 s. d. s. d.

Anvils cwt 25 0 14 0 44 Awls, Liverpool blades gross 3 6 1 0 71 Candlesticks, iron, plain 3 103/4 2 31/2 41 screwed 6 41/2 3 9 41 Bed screws, 6 inch square head gross 7 6 4 6 40 flat head gross 8 6 4 8 45 Curry-combs, 6 barred dozen 4 01/2 1 0 75

Reduction per cent in price of Description 1812 1832 1812 s. d. s. d.

Curry-combs, 8 barred dozen 5 51/2 1 5 74 patent, 6 barred dozen 7 11/2 1 5 80 8 barred dozen 8 63/4 1 10 79 Fire-irons, iron head, No. 1. 1 41/2 0 73/4 53 No. 2 1 6 0 81/2 53 No. 3 1 81/4 0 91/2 53 No. 4 1 101/2 0 101/2 53 Gun-locks, single roller each 7 21/2 1 11 73 Locks, 1 1/4 bra.s.s, port. pad 16 0 2 6 85 2 1/2 inch 3 keyed till-locks each 2 2 0 9 65 Shoe tacks gross 5 0 2 0 60 Spoons, tinned, iron table gross 22 6 7 0 69 Stirrups. com. tinned, 2 bar dozen 7 0 2 9 61 Trace-chains, iron cwt 46 91/2 15 0 68

Prices of the princ.i.p.al materials, used in mines in Cornwall, at different periods [I am indebited to Mr John Taylor for this interesting table]

ALL DELIVERED AT THE MINES

Description 1800 1810 1820 1830 1832 s. d. s. d. s. d. s. d. s. d.

Coals wey 81 7 85 5 53 4 51 0 40 0 Timber (balk) foot 2 0 4 0 1 5 1 0 0 10 (oak) foot 3 31/2 3 0 3 6 3 3 Ropes cwt 66 0 84 0 48 6 40 0 40 0 Iron (common bar) cwt 20 6 14 6 11 0 7 0 6 6 Common castings cwt 16 0 15 0 8 0 6 6 Pumps cwt 16s. & 17s. 17s. & 18s. 12s. & 15s. 6 6 6 10 Gunpowder 100 lbs. 114 2 117 6 68 0 52 6 49 0 Candles 9 3 10 0 8 9 5 11 4 10 Tallow cwt 72 0 84 0 65 8 52 6 43 0 Leather lb. 2 4 2 3 24 22 21 Blistered steel cwt 50 0 44 0 38 0 2s. nails cwt 32 0 28 6 22 0 17 0 16 6

203. I cannot omit availing myself of this opportunity of calling the attention of the manufacturers, merchants, and factors, in all our manufacturing and commercial towns, to the great importance, both for their own interests, and for that of the population to which their capital gives employment, of collecting with care such averages from the actual sales registered in their books. Nor, perhaps, would it be without its use to suggest, that such averages would be still more valuable if collected from as many different quarters as possible; that the quant.i.ty of the goods from which they are deduced, together with the greatest deviations from the mean, ought to be given; and that if a small committee were to undertake the task, it would give great additional weight to the information. Political economists have been reproached with too small a use of facts, and too large an employment of theory. If facts are wanting, let it be remembered that the closet-philosopher is unfortunately too little acquainted with the admirable arrangements of the factory, and that no cla.s.s of persons can supply so readily, and with so little sacrifice of time, the data on which all the reasonings of political economists are founded, as the merchant and manufacturer; and, unquestionably, to no cla.s.s are the deductions to which they give rise so important. Nor let it be feared that erroneous deductions may be made from such recorded facts: the errors which arise from the absence of facts are far more numerous and more durable than those which result from unsound reasoning respecting true data.

204. The great diminution in price of the articles here enumerated may have arisen from several causes: 1. The alteration in the value of the currency. 2. The increased value of gold in consequence of the increased demand for coin. The first of these causes may have had some influence, and the second may have had a very small effect upon the two first quotations of prices, but none at all upon the two latter ones. 3. The diminished rate of profit produced by capital however employed. This may be estimated by the average price of three per cents at the periods stated. 4. The diminished price of the raw materials out of which these articles were manufactured. The raw material is princ.i.p.ally bra.s.s and iron, and the reduction upon it may, in some measure, be estimated by the diminished price of iron and bra.s.s wire, in the cost of which articles, the labour bears a less proportion than it does in many of the others. 5. The smaller quant.i.ty of raw material employed, and perhaps, in some instances, an inferior, quality of workmans.h.i.+p. 6. The improved means by which the same effect was produced by diminished labour.

205. In order to afford the means of estimating the influence of these several causes, the following table is subjoined:

1812 1818 1824 1828 1830 1832 Average Price of L s d. L s. d. L s d L s. d L s d L s. d Gold. per oz 4 15 6 4 0 3 17 61/2 3 17 7 3 17 91/2 3 17 10 1/2 Value of currency. per cent 79 5 3 97 6 10 100 100 100 100 Price of 3 per cent consols 591/4 781/4 935/8 86 893/4 821/2 Wheat per quarter 6 5 0 4 1 0 3 2 l 3 1 1 10 3 14 6 2 19 3

English pig iron at Birmingham 7 l0 0 6 7 6 6 l0 0 5 10 0 4 l0 0

English bar iron at Birmingham 10 10 0 9 10 0 7 15 0 6 0 0 5 0 0 Swedish bar iron in London, excluding duty of from L4 to L6 10s per ton 16 10 0 17 10 0 14 0 0 14 10 0 13 15 0 13 2 0

As this table, if unaccompanied by any explanation, might possibly lead to erroneous conclusions, I subjoin the following observations, for which I am indebted to the kindness of Mr Tooke, who may yet, I hope, be induced to continue his valuable work on High and Low Prices, through the important period which has elapsed since its publication.

'The table commences with 1812, and exhibits a great falling off in the price of wheat and iron coincidently with a fall in the price of gold, and leading to the inference of cause and effect. Now, as regards wheat, it so happened that in 1812 it reached its highest price in consequence of a series of bad harvests, when relief by importation was difficult and enormously expensive. In December, 1813, whilst the price of gold had risen to L5, the price of wheat had fallen to 73s., or 50 per cent under what it had been in the spring of 1812; proving clearly that the two articles were under the influence of opposite causes.

'Again, in 1812, the freight and insurance on Swedish iron were so much higher than at present as to account for nearly the whole of the difference of price: and in 1818 there had been an extensive speculation which had raised the price of all iron, so that a part of the subsequent decline was a mere reaction from a previously unfounded elevation. More recently, in 1825, there was a great speculative rise in the article, which served as a strong stimulus to increased production: this, aided by improved power of machinery, has proceeded to such an extent as fully to account for the fall of price.'

To these reflections I will only add, that the result of my own observation leads me to believe that by far the most influential of these causes has been the invention of cheaper modes of manufacturing. The extent to which this can be carried, while a profit can yet be realized at the reduced price, is truly astonis.h.i.+ng, as the following fact, which rests on good authority, will prove. Twenty years since, a bra.s.s k.n.o.b for the locks of doors was made at Birmingham; the price, at that time, being 13s. 4d. per dozen. The same article is now manufactured, having the same weight of metal, and an equal, or in fact a slightly superior finish, at 1s. 9 1/4d. per dozen. One circ.u.mstance which has produced this economy in the manufacture is, that the lathe on which these k.n.o.bs are finished is now turned by a steam-engine; so that the workman, relieved from that labour, can make them twenty times as fast as he did formerly.

206. The difference of price of the same article, when of various dimensions at different periods in the same country--and in different countries--is curiously contrasted in the annexed table.

Comparative price of plate gla.s.s, at the manufactories of London, Paris, Berlin, and Petersburg