resorted to by our rivals abroad; but we may wisely give heed to the warning of Sir Brooke Robertson and other consuls, and abandon the attempt to make trashy goods at impossible prices.

In the preceding pages it has been shown how our trade has fallen away from a state of expansion and inflation which it was impossible to maintain. We cannot claim a monopoly, but we ought to retain our share of the textile industry of the world. We have not escaped the almost universal depression of trade; but we must not despair of a return of prosperity.

Losses in the iron

trade.

Scotch pig-iron.

CHAPTER IV.

THE IRON TRADE.

THE depression in the iron trade may be tested, as in the case of the cotton trade, by the value of the shares in ironworks conducted on the joint-stock principle. Thirty-five companies were enumerated in the Statist,' which have suffered an average depreciation in the price of their shares of 46.5 per cent. as compared with the high quotations of 1873. The market value of their capital fell from 20,500,000l. in January 1874, to 11,085,000. in May 1878. We must add to the loss from the depreciation of capital the loss sustained on almost every manufacturing operation, in order to obtain a full view of the injury the iron trade has sustained.

The fall in the prices of Scotch pig-iron may be appreciated from the following figures, published by Messrs. Fallows of Liverpool:

fluctua

prices.

The fluctuations in the prices of pig-iron during Recent 1878 were given in detail in an article which appeared tions of in Engineering' in February last : 'Influenced occasionally by speculative buying, and by political events at home, on the Continent, and in India, the price fluctuated now and then during the spring and summer, but always with a more or less declining tendency till the beginning of October, when the banking crisis burst out, bringing with it a sudden decline to 43s. 6d., from which there was subsequently an improvement to 45s. 44d., which was paid on the 8th of October. That advance, however, was not maintained, and by the 26th of November 42s. 3d. was accepted, which was the lowest price touched during the past twenty-six years. From that point there was a little rallying, and the year closed with the price standing at 43s. 6d., the average over the year being 48s. 5d. as compared with 54s. 4d, for the previous year, to which it had declined from the year 1873, when the average price was 117s. 3d., or almost double what it was only two years previously. And here we may mention that over the nine years, 1862 to 1871, the yearly average never rose higher than 60s. 6d. per ton (1866), nor fell lower than 52s. 9d. (1868).'

The average price of rails, plates, bars, and angle iron, fell from 117. 18s. 11d. per ton in 1874, to 61. 158. per ton in 1877. The scale of prices is now lower than in any year since 1851.

causes.

Let us endeavour to ascertain the cause of these Their remarkable fluctuations. In 1871, at the close of the Franco-German War, an extensive and sudden demand

F

Supply and demand.

arose for machinery and railway material both on the Continent and in America. The result was shown by Mr. Lowthian Bell in his report on the Exhibition at Philadelphia. 'In pig-iron,' he says, an increased production of about 664,000 tons in 1871 enabled this country to keep pace with the additional demand on its resources, and prices remained stationary. The following year, however, with a still further rise in the make of about 110,000 tons, the supply was in deficit; and small as this shortcoming may have been, it sufficed to cause a rapid rise in value, prices having reached 122s. 6d. in August. In 1873 the quotations for four months averaged 127s. 6d., the average for the whole year being 1158. It is needless to point out the immense inducement to manufacturers to strain every effort to keep up their output; nevertheless the quantity made fell off to the extent of 175,000 tons. This diminution was chiefly due to the difficulty of obtaining raw materials. Coke, which in 1870 could be had for 128. or 13s. per ton, commanded as high a price as 40s. to 42s. in 1873.'

The course of prices in the iron trade affords an illustration of the disproportionate enhancement in the price which invariably results from a deficiency in the supply of an article of primary necessity. When the demand for an article exceeds the supply, competition takes place on the side of buyers, and the value rises, not, however, in the ratio of the deficiency, but in a ratio which varies according as the article in question is in a greater or lesser degree an article of necessity. 'If there be a deficiency,' says Mr. Mill, 'in a necessity

of life, which, rather than resign, people are willing to pay for at any price, a deficiency of one-third may raise the price to double, triple, or quadruple its former amount. The price of corn, in the era preceding the repeal of the corn laws, has risen, according to Tooke, from 100 to 200 per cent., when the utmost computed deficiency of the crops has not been more than onefourth or one-third below the average. The rise in price ceases when the competition of buyers ceases—in other words, at the point which equalises the demand and the supply.'

coal.

As in the case of cotton, so in the coal and iron Output of trades, high prices have led to excessive production. The continued increase in the output of coal is a most remarkable phenomenon in our recent commercial history. The following details are taken from an article published in the Times' of January 3, 1879. In 1873 the production of coal was 3,519,000 tons more than that of 1872. This was a much smaller increase than that of 1872 over 1871, which amounted to 6,145,000 tons. In 1874 the total production of coal showed a decrease of 1,948,000 tons. It was generally regarded as the inevitable reaction from the inflation of the two previous years. Hence, when the returns of 1875 exhibited an increase, concurrently with intensified weakness in other industries, of 6,799,000 tons in the output of coal, it was deemed a result altogether outside the regular sequence of events. The output of 1876 exhibited a yet further increase of 1,477,000 tons on the output of 1875. The latter year, as everybody knows, was disastrous.