To dispose of these irregularities and uncertainties and show the general trend of commodity prices, in dex numbers or composites which sum up, a group of constituent prices have been compiled. Of these in dex numbers the best known are Bradstreet's, Dun's, the Annalist's, Gibson's and the compilations of the United States Bureau of Labor Statistics. Brad street's number is the product of adding together the wholesale prices of one pound each of a miscellaneous list of ninety-six commodities. Gibson's number, which is furnished to subscribers to the Gibson serv ice, is the average cost of foodstuffs, embracing twenty-two articles, and calculated on the Dun sys tem of weighing. Dun's index number is the sum of a list of wholesale prices calculated separately for hreadstuffs, meats, dairy and garden products, other food products, clothing, metals and miscellaneous. These are combined into a general number by being added together. The Annalist's index number is the price of twenty-five foods at wholesale. "The re lation of the mean price of each selected commodity. during the week to the average price for the base period—the ten years the relative. The sum of the twenty-five relatives, divided by the number of commodities, gives the index number." The revised index number of the United States Bu reau of Labor Statistics is the arithmetic mean of the relative prices of 145 commodities, the base price or 100 being the average of the period Be cause of insufficient appropriations, the Bureau of Labor is unable to issue this number and other valu able index numbers compiled by it until the close of each year. They appear too late, therefore, to be of more than historical value to the investor.
The various numbers which have been referred to here tell practically the same story in so far as the in vestor's interest is concerned. They are slow in their accommodation to the changes which stock movements forecast. In 1907, Bradstreet's number rose for three months after stocks had turned downward. In 1908, it continued to decline for four months after stocks had turned upward. In the winter of 1909 1910, there was no definite indication given by it, ex cept that prices were very high, .yet stocks did not break for six months. In 1912, when prices were equally high, stocks did not break for eight months. Prices continued high for six months after stocks broke. High commodity prices require the use of
more money to do business, and they lessen the profit of a given mass of business. A rise of prices implies, with equal clearings, a smaller amount of business being done.
A comparative table, for a recent period of sonic of the index numbers referred to is as follows : 8. clearings are the volume of checks presented at banks other than the banks where the deposits drawn upon are located. Accordingly they form a part of the records of transactions be tween banks. Since from 90 to 95 per cent of Amer ican business is done by checks and drafts, these rec ords form one of the best barometers of the speed and volume of business. The exact composition of the statistics depends upon what items are reported by the banks, and these change somewhat from time to time. Bank consolidations decrease the total in a locality. The growth of the check using habit in creases it. An increase in commodity prices increases clearings thruout the country; an increase in secur ity prices increases the clearings of New York City. The clearings of the United States, exclusive of New York City, are fairly steady. They are slow in mak ing accommodation to changes impending. They rep resent the gradual growth of agriculture, manufac ture and merchandising. The clearings of New York City, which are about 60 per cent of the total, are fluctuating, and represent especially the activity of the operations of speculation and investment. New York City clearings, therefore, conform closely to stock prices. In a period of liquidation, clearings in the West continue to increase for some time after those in the East have begun to decline. When clear ings in New York City after several months of sharp liquidation fall to a small sum, the indication is that the shifting of property incident to liquidation is com pleted, that the sails of business are properly trimmed and that speculation is dead, so that the way is cleared for a gradual improvement. Seasonal change in clearings is very great, and should be allowed for in preparing figures to reveal the state of the cycle of trade.
The statistics of clearings are compiled by Brad street, Dun's Review, and by the Commercial and Financial Chronicle. The Chronicle figures for a re cent period are as follows (in billions of dollars) :